After a global „drumbeat“ it has become quite silent around the Deutsche Börse Cloud Exchange (DBCE). However, I am often asked about the cloud marketplace, which have the pretension to revolutionize the infrastructure-as-a-service (IaaS) market, and asked about my estimation on its market potential and future. Well, summing up I always come to the same statement, that I, regarding the present situation, not yet believe in the DBCE and grant it a little market potential. Why? Read on.
Two business models
At first, I see two business models within the DBCE. The first one will become real in 2014. The marketplace for the supply and demand of virtual infrastructure resources (compute and storage), which should be used by enterprises to run their workloads (applications, store data).
The second one is a dream of the future. The trading of virtual resources, as we know it with Futures. Let’s be honest, what is the true job of a stock exchange? The real task? The core business? To organize and monitor the transfer of critical infrastructure resources and workloads? No. A stock exchange is able to determine the price of virtual goods and trade them. The IaaS marketplace is just the precursor, to prepare the market for this trade business and to bring together the necessary supply and demand.
Provider and User
For a marketplace basically two parties are required. The suppliers and demanders, in this case the user. Regarding the suppliers, the DBCE should not worry. If the financial, organizational and technical effort is relatively low, the supply side will offer enough resources quickly. The issues are on the buyer side.
I’ve talked with Reuven Cohen on that topic who released SpotCloud as the first worldwide IaaS marketplace in 2010. At the peak of demand, SpotCloud administrated 3.200 provider(!) and 100.000 server worldwide. The buyer side looked modest.
Even if Reuven was too early in 2010 I still see five important topics who are in charge of, that the adoption rate of the DBCE will delay: Trust, psychology, uses cases, technology (APIs) and management.
Trust and Psychology
In theory the idea behind DBCE sounds great. But why is the DBCE trustworthier compared to another IaaS marketplaces? Does a stock exchange still enjoy the confidence for what it stands respectively it has to stand for as an institution? In addition, IT decision maker have a different point of view. The majority of the enterprises is still overwhelmed with the public cloud and fear to outsource their IT and data. There is a reason why Crisp Research figures show that the spending’s for public IaaS in Germany for 2013 are just about 210 million euro. On the other side investments in private cloud infrastructures are about 2.3 billion euro.
This is also underwritten by a Forrester study which implies:
“From […] over 2,300 IT hardware buyers, […] about 55% plan to build an internal private cloud within the next 12 months.”
This, an independent marketplace does not change. On the contrary, even if it should offer more transparency, it creates a new complexity level between user and provider, which the user needs to understand and adopt. This is also reflected in use cases and workloads that should run on the DBCE.
Why should someone use the DBCE? A question that is not easy to answer. Why should someone buy resources through a marketplace, even if he can purchase them directly from a provider who already has a global footprint, many customers and a stable infrastructure? The price and comparability could be essential attributes. If a virtual machine (VM) at provider A is today at a reduced rate compared to provider B, then the VM of provider A is used. Really? No, this leads to a more complex application architecture which will be not in due proportion to its use. Cloud computing is too complex, that a smart architect to refrain from doing this. In this context you should also not forget the technical barriers a cloud user have to deal with by adopting current but further developed cloud infrastructures.
One interesting scenario that could be build with the DBCE is a multi-cloud concept to spread the technical risks (eg. outage of a provider).
Where we come to the biggest barrier – the APIs.
API and Management
The discussions on „the“ preferred API standard in the cloud do not stop. Amazon EC2 (compute) and Amazon S3 (storage) are deemed to be the de-facto standard which most of the provider and projects support.
As a middleware the DBCE tries to settle between the provider and user to provide a consistent own(!) interface for both sides. For this purpose the DBCE sets on the technology of Zimory, which offers an open but proprietary API. Instead of focusing on a best-known standard or to adopt one from the open source community (OpenStack), the DBCE tries to make its own way.
Question: Against the background, that we Germans, regarding the topic of cloud, not to cover us with own glory. Why should the market admit to a new proprietary standard that comes from Germany?
Further issues are the management solutions for cloud infrastructures. Either potential user already decide for a solution and thus have the challenge to integrate the new APIs or they are still in the decision process. In this case the issue comes with the non-supported DBCE APIs by common cloud management solutions.
System integrator and Cloud-Broker
There exist two target groups who have the potential to open the door to the user. System integrators (channel partner) and cloud-broker.
A cloud service broker is a third party vendor, who, on the demand of its customer, enriches the services with an added value and ensures that the service fulfills the specific requirements of an enterprise. In addition, he helps with the integration and aggregation of the services to increase its security or to enhance the original service with further properties.
A system integrator develops (and operates) on the demand of its customer a system or application on a cloud infrastructure.
Since both are acting on behalf of the user and operate the infrastructures, systems and applications, they can adopt the proprietary APIs and make sure, that the users don’t have to deal with it. Moreover, system integrators as well as cloud-broker can use the DBCE to purchase cloud resources cheap and setup a multi-cloud model. Therefore the complexity of the system architecture in the cloud plays a leading role, but which the user may not notice.
It is a matter of time
In this article I’ve asked more questions as I’ve answered. I don’t want to rate the DBCE too negative, because the idea is good. But the topics mentioned above are essentially important to get a foot in the door of the user. This will become a learning process for both sides I estimate a timeframe of about five years, until this model leads to a significant adoption rate on the user side.