Jack Clark at ZDnet recently published a great series of articles on the current state of cloud computing, which included an article on utility computing called “Cloud computing’s utility future gets closer“. It’s one of the best reviews of where we are in the progression toward utility computing I’ve seen recently – probably since John Cowan’s blog series on a similar topic or the GigaOm white paper by Paul Miller called Metered IT: the path to utility computing.

A few key takeways from the article:

• First, Clark states the cloud is changing nearly every aspect of the technology markets and more importantly how technology is accessed and used by organizations and individuals. Completely concur. The question of “what is cloud” is getting clearer every day. Cloud computing is clearly not just a new term for an old model, but a very real shift in the way IT resources are delivered and consumed.
• Clark then defines a utility market as occurring “when an item has been commoditised to the point that it becomes very hard to differentiate on a technology basis, and instead companies distinguish themselves through different levels of service, availability and support.” In some ways, we have certainly gotten to that point in cloud computing and infrastructure-as-a-service (IaaS) as you see AWS adding new service levels, Google slashing prices, and Amazon responding with further price cuts, but keep in mind this focuses on the supply side of the equation – only half of the equation. There is also the demand side of the equation, which is more important given the fact that there are hundreds of IaaS suppliers out there today with many adding capacity as we speak. So how does that demand get fulfilled and what’s missing?
• Clark then turns to what’s missing. Among other things… “There is not yet a clear market mechanism for homogenising compute and storage from different providers making them truly interchangeable.” Absolutely agree and this is the primary reason 6fusion created the WAC to create a single unit of measure for the measurement and metering of IT resource consumption across any environment – public, private, virtual or physical. One thing Clark didn’t mention was the fundamental need for a single unit of measure being a foundational component of any utility – think kilowatts in electricity or kilogram in coal.
• What else is missing? “A trading methodology” according to Clark. I would add a trading platform is missing as well – or more specifically a marketplace of cloud brokers that serve as intermediaries between the supply and the demand of computing. As a further example, we agree with James Mitchell from Strategic Blue that “at the moment, cloud pricing is not rational”. To borrow another quote from Mitchell: ““can you imagine letting your electricity supplier bill you for your electricity using a measurement that they have made, using a meter that they invented, and then quoting it to you in a unit that they have pulled out of thin air, that cannot be compared to their competitors?  Ridiculous!” A single unit of measure and trading methodology and platform are critical here.

Clark concludes with this: “As cloud computing continues on its path to become a utility, the benefits to IT consumers will grow as prices are successively cut, but companies that cannot operate at the necessary scale of a utility are likely to run into problems.” Agreed – we are in the very early stages of utility computing and the land grab has just begun. However, the beauty of a commoditized utility is that anyone that can participate, both on the supply and demand side. You are likely to see a long tail market emerge with some very large players at the top (AWS, Google, Microsoft, etc) and many mid-size and smaller players survive in the market with access to global demand through utility computing exchanges when the immovable asset becomes movable.

What are your thoughts? How close are we to utility computing? What are the big barriers to getting there from your perspective?

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