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A Place for Cloud Marketplaces

August 27, 2013  |  Written by John Freimuth, Sr. Director of Business Development

There has been a growing and, in many cases, spirited debate around the value and viability of cloud marketplaces. Those who oppose the marketplace construct point to the fact that cloud services are easy to procure; in fact, in most cases a buyer is just a few clicks away from having an infrastructure environment supporting any number of application use cases. How much easier and what value could a third party marketplace then offer to users?

Another widely accepted challenge deals with the ability to standardize the requisite IaaS resources required to provide market comparability of resources across the growing number of cloud service providers who offer such resources, albeit with varying technical units of measure and specifications. Lack of comparable standards clearly presents challenges. However, proponents would point out that marketplace brokers themselves are already establishing product catalogs that define common elements for basic compute and storage to which participating cloud service providers must adhere. How and if marketplace brokers will be able to standardize and support the growing set of higher value cloud solutions for disaster recover, big data, security, application management, content delivery and many others presents a much more formidable challenge.

Cloud Marketplace Roots

One could argue that the growing model of cloud marketplaces has its roots in the notion of interconnecting IaaS providers' cloud environments to load balance traffic, accommodate spikes to better match supply and demand, or cloud federation. Federated clouds are also about providing buyers with geographically dispersed infrastructure to support low latency sensitive applications that are a critical element to the success of all forms of digital businesses. Federated cloud models were further envisioned to provide the interoperability and portability of workloads that would provide the benefit of not being locked-in to any single service provider platform.

So, given the wealth of economic and business benefits, why hasn’t the pure federated cloud model been fully adopted? Technology standards for data normalization and interoperability are evolving issues being addressed by industry innovators and various standards seeking committees. The lack of a strategic focus and business value placed on federated clouds by service providers themselves present the overriding business obstacle. The proliferation of so many new IaaS providers and fierce competition for market share are just a few of the realities that have subordinated the priority of federated clouds for many service providers.

Emergence of Cloud Marketplaces

In the meantime, cloud marketplaces have been evolving to offer some of the same supply and demand side benefits to buyers that were the promise of federated clouds. For example, cloud brokers work as intermediaries to offer single sign-on, immediate provisioning and aggregated billing across many cloud service providers.

While the outlook for cloud marketplaces is uncertain, what is clear is there are already a growing number of industry leading cloud providers that are offering their services through third party cloud brokers. The ability to choose from a fairly dense set of cloud providers and, in some cases, to select the specific city location of the underlying service globally is both impressive and increasingly user-friendly. Some brokers are also aspiring to create cloud exchanges with the vision of trading compute and storage, not unlike the commodity trading typically associated with agriculture, metals or energy.

The bottom line is that cloud marketplaces are a reality today and as brokers enhance the added value they offer as intermediaries this business model has great growth potential. The key elements that will likely determine how this growth is realized and the benefits of cloud marketplaces themselves are topics saved for follow-up blogs.