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10.08.2013

Towards a cloud IT utility marketplace

As noted in an earlier post, cloud IT infrastructure from different providers are rapidly being commoditized and comparable through public pricing and T&Cs: VMs rapidly approaching same-same pricing, performance and specifications, more or less the same for basic file storage and IP networking.

As an aside, commodity and IT are often used in common and thrown around when a given IT service or piece of hardware has been in the market for some time available from many providers, but as outlined by Wikipedia, "The more specific meaning of the term commodity is applied to goods only. It is used to describe a class of goods for which there is demand, but which is supplied without qualitative differentiation across a market".

So even of cloud IT services and IaaS isn't a "class of goods" in it's own right, certainly we are seeing IT services delivery demand that can be "supplied without qualitative differentiation across a market", albeit with some, over time not critical, different service and operational levels (i.e. SLAs and OLAs).

For cloud IaaS compute or processing, a growing trend seems to the development of IaaS marketplaces for CPU core or VM resources. This has come about in many ways, but some drivers to me seems to be

  • Public IaaS pricing and T&Cs coupled with partner or re-seller programs enabled the birth of cloud aggregators, that could aggregate and offer cloud IaaS services across many IaaS providers and hosters, using different providers for different use cases, regions or application sets.  Customers still had to be or were aware the underlying IaaS provider for their apps and had to go with their IaaS service provisioning workflow and set-up.
  • Another set of companies like IT monitoring, TCO/pricing, security and compliance specialists like TÜV Rheinland developed their IT service catalogs to include cost baselines for basic IT components like CPU compute, storage and networking.  These IT product catalogs with IT baseline pricing benchmarks can also be applied to cloud based IT delivery.
  • Mature companies and cloud users adopted an multi-cloud business delivery strategy to avoid one vendor lock-in.
  • IT vendors and cloud specialists developed proper cloud aggregation or marketplace service delivery platforms that made the hoster or cloud provider and the VM production platform and site in the marketplace transparent towards the cloud buyers.
  • Players from the broker, stock and derivatives market side realized cloud IT could be viewed as separate, atomized, billable utility units and are teaming up with cloud platform providers in the aggregation or marketplace area.


A special note can be made for Amazon and their dominating AWS cloud offering.  No doubt many of the cloud marketplace initiatives and offerings are established as a way to compete with Amazon AWS in terms of pricing and cloud IT feature set as currently apparently nobody is able to reach the "default cloud provider" and position of Amazon AWS (besides maybe Google).

Some early cloud IaaS "open marketplace" contenders are:
  • ComputeNext: The ComputeNext platform makes it possible to "compare cloud services and find the best cloud provider to service a given geography, while factoring in price, uptime, and other performance factors such as provisioning consistency, speed, and machine reliability", working with a range of local hosters and cloud providers.
  • Deutsche Börse Cloud Exchange (DBCE)/Zimory: DBCE is using the IaaS cloud management software of Zimory for their vendor-neutral marketplace for compute and storage capacity in 2014, targeting corporate and medium-to-large enterprise companies, as well as organizations from the public sector, aiming to make it as easy to trade IaaS capacity as it is to trade energy or stocks.
  • CME Group/6fusion Marketplace: CME Group (Chicago Mercantile Exchange Group) and one of Europe’s largest derivatives exchanges, has partnered with 6fusion, a company that specializes in the economic measurement and standardisation of IT infrastructure, to develop a spot and over-the-counter marketplace for trading computing resources and financial contracts.  And is a good example of a trading company using its electronic trading platform together with an cloud aggregation or marketplace platform.  

No doubt this is a developing market, and there are a range of players looking at early positioning and options, but for the cloud IT market and development, it's an encouraging sign that commercial market exchanges and börse's are looking to engage their trading platforms with this market area, leading to increased standardization and hopefully increased supplier choice for cloud buyers.

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