Forbes – The Next Chapter In The Cloud Brokerage Story

Forbes – The Next Chapter In The Cloud Brokerage Story

TECH  1,833 views

The Next Chapter In The Cloud Brokerage Story – CME Tech Used To Launch An Exchange

Whenever an item becomes commonplace (some might use the word “commoditized”) we see marketplaces and brokerages rise up to make money from this commoditization. Cloud computing is an area in which brokerages have been long talked about (ever since vendor Enomaly launched its ultimately ill-fated, but arguably prescient marketplace SpotCloud many years ago). The theory behind these cloud brokers is that they allow the relationship between vendor and customer to be optimized such that better outcomes are delivered for both parties.

Or that’s the theory at least – it’s fair to say that brokerages haven’t really taken off. True, the Deutsche Boerse did launch a cloud exchange platform, the so called Cloud Exchange AG but for whatever reason, the concept has never really taken off. Many suggest that this is because there is no common unit of measure for cloud infrastructure. Unlike electricity for example, which comes in nicely bounded kilowatt hour chunks, a unit of compute from AWS isn’t really comparable to a unit of compute from Google GOOG -3.66%Microsoft MSFT -0.97%, Rackspace or whomever. As I stated previously:

… A marketplace for electricity, for example, can resolve all the different methods of generation (hydro, solar, nuclear etc) into a simple measure, the kilowatt-hour. IaaS on the other hand, has no such simple unit of measure. There is no “compute-hour” or “storage-block” that we all accept as standard. This is becoming ever more the case as vendors (most notably AWS) move further up the stack and deliver differentiated services on top of simple compute and storage.

For more on the debate about the validity or otherwise of cloud marketplaces, see my wrap up of a panel I moderated last year in San Francisco. Given all this angst about cloud broking, it’s always interesting to get an update from 6Fusion, a company directly tackling the problem of finding a standard economic measure of IT infrastructure. 6Fusion has the unenviable task in this early and rapidly developing space of ensuring a consistent unit of measure upon which they can enable marketplaces to be built. No mean feat.

It is therefore interesting to see that CME Group, a broad derivatives marketplace, have agreed to collaborate to create an IaaS commodity exchange which leverages 6Fusion’s Workload Allocation Cube (WAC), the standard unit of measure for IaaS that 6Fusion has developed. The exchange, due to be rolled out in beta later this year, will feature contracts using the WAC as the standard unit of measurement and is planned to be available for trading on an electronic platform using technology licensed from CME Group CME +0.8%. In terms of actually fulfilling contracts, 6fusion’s UC6 software platform will be used to track fulfillment of physically delivered contracts traded on the spot exchange.

Every time someone announces a new initiative about cloud brokerage, the same criticisms are raised – that IaaS isn’t fungible, that it’s moving too fast, that buyers and sellers can have a direct relationship and hence an intermediary isn’t needed. All those arguments still hold. I made a comment when looking at marketplaces a year or so ago:

…the bottom line is whether or not there is both the ability for what they offer to occur and sufficient call for what these vendors are providing for them to build viable businesses. Is IaaS sufficiently fungible for marketplaces to flourish? Are there enough willing buyers and sellers, and enough margin to be made, for these financial intermediaries to survive.

While this 6Fusion announcement is interesting, my viewpoint hasn’t really changed. I’d be interested to see an IaaS marketplace really gain traction but I’m not overly confident it’ll happen any time soon.


Tags: , ,