Is Cloud Computing Becoming A Commodity?

In recent years, cloud computing has grown quickly in the UK. By 2016, it’s expected to account for roughly 20% of the UK’s total IT market. At the same time, the technologies behind data centres and cloud storage are developing at breakneck speed.

The advantages of cloud computing, where cloud providers deliver computing resources, such as servers, storage and infrastructure, on-demand over the internet, are increasingly tangible. It’s quick to get up and running and flexible. It’s also immediately scalable and inherently elastic. Users take the computing resources they need as and when they need them, from wherever they are as long as they can get on the internet.

With cloud, there are no major up-front costs for investment in servers and infrastructure. Because businesses rent, rather than own computing resources, cloud effectively changes computing into an operating cost as opposed to a capital expenditure. It can be paid for annually, monthly, hourly, or even by the minute or second.

Cloud needs less management than traditional on-premise implementations and reduces outlay on maintenance and in-house technical expertise. It saves office space and means lower electricity bills.

Although by no means a slow adopter, there has been some resistance within UK businesses to take up cloud. While cost savings and productivity gains are the main drivers of cloud adoption, it’s been held back by concerns about reliability, trust and security.

Commoditisation requires standardisation and regulation

As UK businesses accept and adopt cloud technology and the market matures, could cloud computing providers become like utility companies? Could cloud computing provision become a regulated, standardised industry with a few key suppliers selling uniform metered units of computing in a similar way to gas or electricity?

While technology continues to develop quickly, adoption rises and economies of scale come in to play, prices could well reduce. At the same time, organisations involved in delivering cloud-computing will inevitably grow, merge, specialise and adapt to meet increasing demand. On the face of it, we could already be on the road to commoditisation. However, there’s still a way to go yet.

Commodities such as electricity, gas or water have defined and regulated standards. Unlike utility companies, there’s currently massive variation in what cloud computing providers deliver. In particular there’s limited agreement on ‘units of cloud computing’.

Lack of standardisation is currently making comparisons between providers difficult and slowing commoditisation. Cloud providers have different specifications of hardware and data centre infrastructure and charge differently for their products and services. They have their own ways of pricing, usually based on cloud equivalents of varying combinations of specifications of CPUs, cores, amount of RAM, storage, bandwidth and so on.

Although there are defined measurements of each of these individual components, there’s generally little common ground between providers in measurement and charging of the resources they supply. There’s even a difference between what one some providers consider cloud, as well as significant variance in terms of support, add-ons and customer service, which also play a major role. For the end-user, it’s looking for cloud providers in what’s often a case of buyer beware, and using an established, reputable and experienced Managed Hosting provider.

Are we counting down to cloud as a commodity?

The European Union is formally starting to look at standardising the cloud. As part of a European Cloud Computing Strategy, a body within the EU has started to get public authorities and industry to work together to build an EU Digital Single Market for cloud computing. However it has yet to publish if, how and whether it can standardise and regulate computing and set a time table.

Cloud computing is certainly here to stay, but it’s a way off maturity yet. So, could it ever become a commodity?

Maybe, but not for a while. In a step towards standardisation, larger cloud providers may be starting to homogenise the product, but technology moves fast. What could constitute a recognised unit of computing today may be superseded or irrelevant in a few years. Similarly regulation, unless a major shift or compelling event occurs, looks further off still.

There are pros and cons to commoditisation and if it is occurring, whether it’s a good thing or not, is open to debate. As well as setting out minimum quality specifications, it could also drive costs right down and service quality up. Conversely it could head towards over regulation, monopolisation and could stifle innovation. Commoditised or not, cloud has significant benefits to offer to a wide range of businesses right now. What’s more, many of these benefits are still to be seen.

Peter Elgar joined UK hosting specialists CWCS Managed Hosting in September 2012. A commercially published author, in recent years Peter has closely followed the rise of cloud computing and cloud-based applications. Prior to joining CWCS Peter has worked for software developers, business software resellers and technology providers.

  • Shashank Wagh

    niice and sharable information provided…

    :-)