>In a big negotiation to find an ISP for our new VM environment, I have dealt with two solutions proposed.
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>The first one is dedicated hardware. So, the ISP recommends we have our own host, a dedicated PC for the domain controller, a dedicated SAN. The ISP justifies this as per our needs in order to guarantee that no one else would have any impact on our CPU processing time. So, basically, they buy a PC for the domain controller, they buy the hardware for a dedicated host and so it goes for the SAN. Then, we have a monthly fee based on a 2-year term or 3-year term.
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>The other ISPs recommend their VM host solutions, where the hardware is already in place serving pretty much everyone in their client list. So, we simply have access to the host to allocate resources such as CPU, RAM and disk space.
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>The result is transparent between both solutions. The other ISPs confirm that I will never be affected by other clients making very big process on the CPUs, which sit on the VM host. So, I ask them, if this is one major VM host serving it all, how is it that I would still never be affected by other client's process? They mention this is new technology and our CPU are under the VM host but dedicated 100% to us. The first ISP counter justify this telling me that this is not the case and I will be affected by other clients, which is why they are suggesting we have our own hardware, which, of course, costs very much more on a montly basis.
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>What are you thoughts on this?

I'd go with VMs.

(a) If you have a dedicated server and it goes down your out of business. Most cloud services will automatically spool up a replacement instance.
(b) Most cloud services can be configured for a guaranteed number of cores (Amazon has 'Burstable' options where credits for CPU under use can be used against high usage periods). AFAICS bottlenecks are more likely to be at the NIC level - but that would apply to dedicated servers as well.
(c) If you use VMs it's easier to scale up/down as demand dictates and you only pay for what you use.

My 2c.....