Editorial & Analysis
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26 Feb 2013
IP EXPO Online sits down with Simon Aspinall, chief of vertical markets, strategy and marketing at cloud company Virtustream, to discuss how the company is betting on the evolution of cloud exchanges, where communities of companies will buy and sell spare compute capacity.
It's been a year since enterprise cloud provider Virtustream, which specialises in on- and off-site private cloud deployments, closed its deal to buy cloud platform pioneer Enomaly for an undisclosed sum.
Over the intervening period, little has been said about the acquisition, but executives at the company are now ready to talk about the new capabilities and, in particular, the bet they are placing on the evolution of cloud exchanges, where communities of companies use the cloud to buy and sell excess compute capacity.
Cloud exchanges are all about turning a data centre’s unused capacity into a revenue stream, according to Simon Aspinall, chief of vertical markets, strategy and marketing at Virtustream. “As cloud adoption has moved from early experimentation to serious adoption, many organisations have seen areas of their dedicated IT environment become redundant,” he says. “When the organisation layers cloud software onto existing IT, they can combine many more applications onto fewer pieces of physical equipment. So what we’re starting to see is data centres running at utilisation rates of 40% and 50%. That’s a lot of capacity sitting idle.”
From the start, the main focus of the Virtustream/Enomaly deal was clear: first and foremost, Enomaly had developed what it claimed was the first cloud exchange, SpotCloud - a marketplace where customers using its Elastic Computing Platform (ECP) software, an open source virtualisation technology, could buy and sell spare capacity from each other.
(Other benefits to the deal included technology in ECP that Virtustream could usefully incorporate into its own enterprise cloud product, xStream, to provide a lower cost way for organisations to stand up virtual machines for non-mission-critical, test-and-development purposes, plus an established sales channel in China.)
“What we discovered, after the deal closed, is while the underlying code for SpotCloud was very good, there were a couple of areas that needed improving. We’ve added more security and compliance - because if people are borrowing your capacity for an hour, a week or a month, you’re going to want high security. You’ll want to maintain, at the very least, a virtual wall between what you’re doing and what they’re doing,” says Aspinall.
Virtustream has also extended the software so that SpotCloud doesn’t just integrate with ECP, but also with its own xStream cloud platform. “We are also adding [integration for] companies using VMware or KVM [Kernel-based Virtual Machine] clouds,” he adds.
Virtustream has a couple of customers in beta at the moment, he says, and is planning a formal cloud exchange launch “in the next couple of months”. It has already gone public, however, with the establishment of a cloud exchange for NJVC, a US-based systems integration company specialising in the public sector. Using cloud exchange capabilities, NJVC has created a government cloud exchange, Cloudcuity Government Marketplace, where it can mount apps on behalf of government departments and agencies with suitable levels of compliance, but that also provides a market where they can buy and sell spare capacity.
Virtustream is also seeing interest in the cloud exchange concept from organisations in healthcare, education and the financial services sector, Aspinall claims. “In finance, you tend to see groups of insurers or groups of banks with demand for occasional ‘burst’ capacity,” he explains. “For example, once a week, banks have to run large, complex analytics around value-at-risk. They take a large number of positions and run a large number of scenarios against these, in order to assess their risk position. This involves very complex maths and very large volumes of data, culminating in peak demands once a week or so - a scenario that works very well if you’ve got access to a pool of shared capacity and can agree with other members of your community how much you’ll be using and when.”
“We believe this is the beginning of an evolution in which communities of cloud connect together,” Aspinall says. “At first, they’ll be specific communities with similar requirements and semi-private networks, as we’ve already seen in government. But over time, three or four different organisations or companies could come together and pool computer resources in a way that allows them to increase their own capacity when needed without heavy investment and to share capacity on a commercial basis with each other.”