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.

Use Cases

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.

At the beginning of 2014, the Deutsche Börse will step into the area of cloud marketplaces and offer their own broker for infrastructure-as-a-service under the brand „Deutsche Börse Cloud Exchange AG“. As the basis technology, the company relies on the German cloud management provider Zimory with which they also founded a joint venture.

Independent cloud marketplace for infrastructure services

The cloud marketplace will start in early 2014 and serve as a marketplace for cloud storage and infrastructure resources. In order to realize the technical side, the Deutsche Börse has established a joint venture with the German cloud management provider Zimory. Thus, Zimory will have the responsibility to ensure that all customers can seamlessly access the cloud resources they purchase.

With the cloud market place, both companies focus on the public sector as well as research institutions, which require more infrastructure resources such as memory and computing power on demand, or even have excess capacity and would like to offer in the marketplace.

The Deutsche Börse Cloud Exchange is organized as an international and vendor-neutral cloud-marketplace and is responsible for standards such as product offerings, the admission process, changing suppliers and the warranties of the purchased resources. Customers should be able to choose their providers freely and thereby be able to decide in which jurisdiction the data is stored. For this, the specifications and standards as well as the technical provisioning is aligned in close collaboration with the participants of the marketplace. As potential partners, the Deutsche Börse Cloud Exchange named cloud providers from the traditional IT sector and national and international medium-sized enterprises and large corporations. These include inter alia CloudSigma, Devoteam, Equinix, Host Europe, Leibniz data centre, Profi AG, T-Systems and the TÜV Rheinland.

Comment: An independent and standardized marketplace provides more confidence in the cloud

A cloud marketplace as the Deutsche Börse is offering is basically nothing new. The first marketplace of its kind was launched as Spotcloud by Reuven Cohen. Even the Amazon Web Services provides the ability to trade, based on their Spot Instances, with virtual instances. However, it is a proprietary marketplace. And that is the crucial advantage for the Deutsche Börse Cloud Exchange, it is vendor independent. Which certifies a greater range of resources and on the other hand more confidence by the dependency is resolved to a single vendor. Another credit of trust the Deutsche Börse provides itself. Those is trading in its context all along with securities, energy and other raw materials as virtual goods. Why shouldn’t they do that with virtual IT resources. The Deutsche Börse is therefore the face to the outside and take care for the organizational safety and awareness, whereas Zimory is responsible for the technical execution in the background.

Another important fact, which maybe a key to success, is the topic of standardization. Since the beginning of the cloud the discussion is on „standards in the cloud“ and who will care for THE standard. With the Deutsche Börse Cloud Exchange we maybe have found a serious initiative from the industry, which will ensure that there will soon be a uniform cloud standard. This of course depends on the appropriate involvement of the cloud provider. Nevertheless, the first partner ahead CloudSigma, Equinix and T-Systems (is also using OpenStack in some of their services) show their interest in this direction. In this context it is to be seen how the open cloud community is set up for this purpose.

In the first version the Deutsche Börse Cloud Exchange will be a pure marketplace for cloud infrastructure. A next evolutionary step should be to take also external value-added services within the marketplace, with which the infrastructure resources can be used effectively to motivate developers using the resources to create new web applications and backend software for mobile apps. Furthermore, the market place should be set up as a true cloud broker.