There has been some talk of late about the definition of cloud brokers, and whether or not they provide a technical intermediation, financial, or both. Ideally a cloud brokerage should bring business requirements into harmony with IT, saving time and money on bringing applications to market.

Douglas Steele, COO, 6fusion, in his blog Will a Real Cloud Broker Please Stand Up?, observed

“Cloud brokering is about enabling the financial intermediary; it is not about the underlying technology to resell or interconnect different cloud providers”

and

“Every Company that offers the opportunity to help customers connect to many providers via a single web portal call themselves as broker”

In a recent post, On Cloud Brokers, Ben Kepes identified cloud brokers as a

“a financial intermediary layer that sits between cloud vendors and customers”

and further added that

“vendors offering a technical single pane of glass to heterogeneous infrastructure, what you do is vitally important, just please don’t call it brokerage.”

IMHO, To usurp the term cloud broker to mean a financial intermediary and nothing else, seems short sighted on the potential of what cloud brokering and brokerages mean, and can do for cloud computing. The definition of cloud service brokerage must account for the intertwining of financial and technical procurement.

Execution is a key concept in Brokering
A quick look at the definition of broker (e.g. Wikipedia, Investopedia) will indicate that the task of brokering is not complete until the deal between the buyer and seller is executed. In the case of cloud broker, when is the deal executed? Is the deal deemed executed when the financial transaction is complete, or, when the services are delivered and used? In the case of stock brokerage, the deal is executed when the shares are transferred from the buyer to the seller and the appropriate financial transaction is complete.  In cloud computing, the deal is executed when the service is consumed.

Types of Brokerage
There are different types of brokers and different models that go with the operations of their business. This includes real estate, commodities, freight, and foreign exchange. Even in the financial industry, the selection includes – Full Service brokers, Discount brokers, Deep Discount brokers, Broker-Dealer and Market Makers with varying levels and types of service to consumers.

NIST has come up with definition and working documents on cloud broker and recently, cloud management broker. It broadly identifies Service Intermediation, Service Aggregation, and Service Arbitrage, as facets of a Cloud Broker.  Gartner has similar classification for Cloud Service Brokerage as Aggregation, Customization, and Integration. A number of players have been identified to offer solutions and services that cover one or more of these capabilities.

All these are important ‘brokering’ components of a cloud ecosystem. The kind of options users want depends on their specific needs.  Individual customers determine the kind of brokering they want to realize their needs.

Is it Cloud Business Broker?
We can define a broad category of Cloud Business Broker to cover an individual or party that brokers the financial transaction between a cloud service provider and cloud consumer.

Ben and Douglas refer to Cloud Options CEO James Mitchell’s quote:

“The guys that are trying to sit in between the cloud suppliers and the cloud buyers in the billing chain, allowing each to buy or sell on a financial deal that suits their own circumstances, are true cloud brokers. They are the guys that hedge against the risk of changing expectations of future cloud pricing and buying on larger volumes for longer durations, only to further break those volumes into smaller blocks that match a buyer’s forecast cloud needs”

There are several ways to interpret and map this to existing brokerage categories:

In the financial world, this corresponds to a Market Maker: A market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn.

In IT and supply-chain world, this reads like a Reseller, who is also a broker of some form: A reseller is a company or individual (merchant) that purchases goods or services with the intention of reselling them rather than consuming or using them. This is usually done for profit (but could be resold at a loss).

There are different types of brokers in other domains. Why take a narrow definition when it comes to cloud computing?

If you have already identified which cloud providers you are going to use for your business, you use a cloud management brokerage to broker and realize what you want. If you want to search and discover cloud services to define “your cloud” before deciding where and how your cloud will be run, you should look towards aggregation brokers. If you want predictability of the financial transaction associated with your cloud usage, you use a cloud business broker.

The whole purpose of a broker is to offer choice, help decide and satisfy a customer’s needs.

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