Caveat Emptor: Be sure to align your goals for cloud computing with provider models before you sign up

Elasticity (adj) the ability of a cloud computing environment to expand or contract automatically on-demand according to real-time computing needs

One of the promises of an on-demand cloud computing environment (that's redundant, I think) is the ability to burst resources. Much in the same way that ISPs have long offered contracts that include the ability of the organization to exceed its allotted bandwidth for a fee, it is expected that cloud computing providers offer a mechanism for "bursting resources" that allows an organization to exceed its agreed upon resources for a fee, based on any number of factors such as bandwidth, requests per second, server resources consumed, etc...

Surprisingly, some of the providers being grouped under the "cloud computing provider" moniker do not offer the ability to burst resources. Seriously. I was reading through "Who provides what in the cloud" over at InfoWorld and came across this description of a cloud computing provider:

Terremark Worldwide: Resource pool for on-demand servers
The Terremark Enterprise Cloud is designed to give datacenters an Internet-optimized computing infrastructure. Enterprise Cloud clients buy a dedicated resource pool of processing, memory, storage, and networking, from which they can deploy servers on demand. A Web portal allows server to be dynamically provisioned from a pre-allocated pool of dedicated computer resources. Terremark promises that its cloud servers behave exactly like their physical counterparts, allowing applications to be run without modification.

That sounds more like managed hosted services than cloud computing. There's no indication whether you can "burst" resources if you consume all the dedicated resources you have purchased, but the requirement to "buy a dedicated resource pool" pretty much seems to say that you can burst within your resource pool, but you can't burst beyond that limit.

Certainly there's always going to be a physical limit on resources in a cloud computing environment. After all,the provider only has so many resources you can use and, just like in your data center, you can't expand beyond the physical limits of your servers. But artificially limiting resource availability based on what you buy seems to run counter to most often cited benefits of cloud computing: scalability and efficiency. If you aren't using all the dedicated resources, isn't that inefficient? If you can't scale beyond your dedicated resources, isn't that limiting your scalability?  

Yes, it does. But if the reason you're looking at "cloud" computing is to reduce management and maintenance and procurement costs, then a dedicated "cloud" model is probably a good one. It mitigates concerns over the provider having enough compute resources to ensure service level agreements and availability by dedicating resources to your applications, yet provides some flexibility associated with truly elastic cloud computing within that dedicated pool.

If, however, you're looking at cloud computing primarily to gain the benefits of scalability and efficient use of resources, then a dedicated cloud computing solution is probably not for you.

So make sure you know why you're considering cloud computing before you start shopping around and align those goals by choosing a provider with a model that suits your needs. Otherwise you may find yourself needing an umbrella.