By Steve Hodgkinson

Amazon's December announcement of a spot market for EC2 virtual machine instances shows just how fast the commoditization of IT is moving. What's next?

SPOT PRICE COMPUTING ON TAP
WHEN THE PRICE IS RIGHT

A book retailing company is once again at the forefront of teaching the IT industry how to provide computing infrastructure. Amazon has launched a new EC2 Spot Instances service into beta.

The service operates in a similar manner to 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 that matches 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.

How far removed is this scenario from the way we understood the data center business to operate a few years ago?

There will no doubt be gremlins that need to be worked out to ensure that the spot market operates fairly, but what happens when you strip away the whole idea of IT as a customized, hand-crafted resource purchased at great effort via bilateral contracts is astonishing.

Why not turn it into a standardized, ubiquitously available commodity bought on a spot market?

THE PLODDING MARCH OF ENTERPRISE IT
COMMODITIZATION MAY YET BECOME A HORSERACE

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

The days of enterprises being held to ransom by inflexible fixed commitments to customized and out-of-date computing resources are drawing to a close. A range of options are opening up, which offer much more flexibility and will change the way enterprises buy IT and who they buy it from.

CIOs have been chasing standardization 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. However, it has been a tough-plodding journey, and many are finding that the destination is not as attractive as it looked from a distance.

Big centralized IT shops put together from the disparate appendages of large corporations 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 sleek new private clouds is significant - perhaps on par with training Frankenstein to win the 100-metre sprint.

The point is that enterprise CIOs have previously not had any option but to attempt such a feat in order to create an IT utility. 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. The cloud will accelerate the plodding pace of commoditization to a jog, or maybe even to a sprint.

SPOT PRICE IT REQUIRES NEW
THINKING AND NEW EXPECTATIONS

We 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-mile-traveled basis, and dangerous. Car owners, however, see public transport as smelly, inconvenient and in many places non-existent. The train or the bus is fine for many people and many journeys. It is just a matter of setting your expectations appropriately and knowing how to travel well.

Buying computing cycles from a spot market will be great for some types of organizations and workloads. Standing back from it, though, it makes you think. ENS