Spot price computing anyone?

Spot price computing anyone?

Buying computing cycles off a spot market is sure to create a new wave of innovation in the pricing of cloud services.

Last year cloud computing started to pick up some serious momentum, with the IT industry playing catch-up to a book retailing company providing computing infrastructure as an online service. Amazon continued to push its innovation pedal to the metal all year, surprising us all by launching the ultimate commoditised IT service into beta in December – the EC2 Spot Instances service. The service operates in a similar manner to demand-side bids in the spot electricity market. Customers place orders, or bids, for a virtual machine instance at a specified price. The system dynamically sets the spot price at a level matching supply and demand, and if your bid is at or above the spot price your workload runs. If not, it remains pending until the spot price falls to your bid price or below.

Wow. How far removed is this scenario from the way we understood the datacentre business to operate a mere few years ago?

There will no doubt be gremlins that need to be worked out to ensure the spot market operates fairly, and to learn which computing workloads are practical for a spot market. Notwithstanding this though, it is astonishing what happens when you strip away the whole idea of ‘IT’ as a customised, hand-crafted, resource. Why not turn it into a standardised, ubiquitously available, commodity bought on a spot market?

The plodding march of enterprise IT commoditisation may yet become a jog

When you look at this announcement it is easy to dismiss it as at the lunatic fringe end of cloud computing … which many enterprise folks still regard as at the loopy end of the IT industry anyway.

Let’s see the wood from the trees. The days of enterprises being held to ransom by inflexible fixed commitments to customised and out-of-date computing resources are drawing to a close. A range of options are opening up that offer much more flexibility, which will change the way enterprises buy computing capacity and who they buy it from.

CIOs have been chasing standardisation and consolidation strategies for decades via common corporate applications, internal shared services and outsourcing strategies. An explicit aim has been to make infrastructure services a utility-like commodity, driving down cost and redirecting money and effort to higher business-value adding activities. It has been a tough plodding journey, however, and many are finding the destination is not necessarily as attractive as it looked from a distance.

Big, centralised, shared IT services shops cobbled together from the disparate appendages of large organisations have a bit of a ‘Frankenstein’ feel to them – and all too often turn out to be anything but sleek and efficient examples of best practice IT. The investment and management effort required to turn them into hyper-efficient, new private clouds is significant – perhaps on par with training Frankenstein to win the 100m sprint at an Olympics. My grandmother might have remarked about the futility of trying to “make a silk purse out of a sow’s ear”.

The point is that enterprise CIOs have previously not had any option but to attempt exactly such a feat in order to create an IT utility. However, cloud computing gives new options. It enables IT to be bought as a commodity instead of building an in-house utility or entering into long-term outsourcing contracts. Cloud will accelerate the plodding pace of commoditisation to a jog, and maybe even to a sprint.

New thinking, new expectations

I often use the metaphor of public transport to distinguish cloud computing from in-house IT, which is more like owning a car. The car has many benefits, but is expensive on a per-kilometre travelled basis and dangerous (despite the fact that we all think of ourselves as highly-skilled racing drivers). Car drivers, however, see public transport as smelly and inconvenient. The train is perfectly OK for many folks and many journeys. It is just a matter of setting your expectations appropriately and knowing how to travel well.

Think of cloud computing as more like public transport – with the EC2 Spot Instances service, and others that will no doubt follow, providing a new level of market-based transparency around the value of the ticket.

Buying computing cycles off a spot market will be great for some types of organisation and some discretionary or non-urgent workloads. In practice it may well not suit many organisations, but it is sure to create a new wave of innovation in the pricing of cloud services.

It is interesting how far, and how fast, cloud computing has evolved in 2009. Whatever next?

Steve Hodgkinson is research director, public sector at Ovum. Email comments to

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Tags cloud computingWeb 2.0ovumanalystSoftware as a serviceTech trendshodgkinsonnew technologies

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