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The flawed analogy: The Electricity Grid & the Grid Computing Utility

Jon Udell is dead-on in his discussion of Amazon's S3 (simple storage service) and metered web services. And this raises an important point that many in the utility computing / grid utility sectors have yet to fathom: namely, that what's missing from the successful recipe is a rich metering, billing, accounting, and settlement infrastructure. What's interesting is that so few of the commercial providers of "grid computing" utilities or technology destined for such utilities, have given this any attention. It's a mystery to me, but unless something changes pretty quickly -- because these technologies are a lot harder to build and deploy than one would think -- we will all be living with re-worked versions of the metering & accounting systems from venerable systems management companies (think CA, Symantec/Veritas and BMC), telco billing suppliers (like Amdocs and Convergys), or the likes of EDS. How does that make you feel?

The other point that caught my attention in Jon's article is his clear thinking about the flawed analogy between the electricity grid and the provision of grid computing as a utility. He makes the point that, unlike the electric grid, what's delivered by a grid computing utility is hardly fungible to the point that we can go without itemization and "flavors" of service. The metrics aren't that simple because grid computing is not a single value-proposition.

I have some other issues with the analogy -- and believe me, I have to live with it WAY too much given what I do in my day job. (It's hard being co-founder of a grid infrastructure company, created with the three people most responsible for the "grid" terminology and many of the most crucial contributions to grid computing.) But, I'll let that list simmer for a while. Perhaps a post in a week or two that addresses why the analogy takes us all down the wrong path. In the meantime, I applaud Jon for raising this issue and specifically in the context of metering and metrics.

Metered Web services

More generally, I’d like to find out whether metering infrastructure services in this way will prove technically and economically viable. When we talk about a grid of Web services, we like to compare it to the power grid, but the analogy is deeply flawed in at least one way. My electric bill isn’t itemized. I don’t know what it costs me to run each of my appliances, or how long it will take to amortize the cost of replacements. Lacking this feedback, we make poor individual decisions that, collectively, add up to a tragic misallocation of resources.

Creating what’s called the “energy web” -- a marketplace where smart producers and consumers of power exchange price signals in real time -- will require a massive overhaul of our legacy power grid. There’s just no way for us to start from scratch. But in the realm of Web services, we’re just now building the grid. Given a clean slate, perhaps we can figure out how to aggregate demand, meter usage, and value services for what they do rather than just for the eyeballs they attract.

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Reader Comments (5)


You've put your finger on the right issue, but I'm afraid I can't agree with your conclusion. If utility computing is to thrive we MUST have simplified billing. Let's not repeat the mistakes of the phone system, where the cost of billing exceeds the cost of making the call.

Mar 26, 2006 at 4:05PM | Unregistered CommenterBert Armijo
Hi Bert! Actually, I must not have been as clear in my conclusion as I thought I'd been. (My excuse: jet lag.) I definitely agree that we are doomed if the cost of billing exceeds the cost of supplying the utility services. And it's the "usual suspects" I mention above who are most likely to deliver exactly that kind of ponderous billing/accounting system.

However, though we might want "simplified" billing, I'm more inclined to wish for a rich and appropriate set of metrics, generated as a natural byproduct of providing the utility service. By appropriate, I mean that metric used correctly reflects the value derived.
Mar 26, 2006 at 8:23PM | Unregistered CommenterRich Miller
Rich,Yes, we can measure all this -- down to which CPU cycle went for which transaction -- but won't it be better if we don't have to do it? If the cost is so low that the convenience of being able to "plug in" outweighs the dollars that could be saved with complex analysis tools.

I am sure that if I had a per-appliance meter at home (here is that analogy again:), I will know much better how I spend my electricity money and I will be able to reduce the bill -- but is that something that I want to add to my chores? One of the goals of utility to computing is to drastically simplify IT.

I agree that the computing grid is not as fungible as the electric grid is today; billing doesn't have to be one of those obstacles.

I am looking forward to the follow ups in your post on the analogy.
Mar 27, 2006 at 1:59AM | Unregistered CommenterPeter Nickolov

Let me add my 5c as well :-) When you look at the evolution of telephony services, it seems to be moving from rich billing 15 years ago, when Ma Bell was telling me to the penny why they charged me $0.25 per minute for a local call, to flat "all you can eat" monthly fee that my current VoIP provider is charging me for calling anywhere in the US.

I think it will be best if the grid just skips the first phase and moves straight to the flat monthly fee approach...
Mar 27, 2006 at 8:25AM | Unregistered CommenterVladimir Miloushev
Rich -

I have to disagree with the commentors. As someone with experience in both grid computing and electricity billing, I have a bit of perspective on both.

First of all, it's just not true that electric bills are simple nor that end users don't know where their electrons are going. You can't compare billing of grid computing to home electricity billing--to make a fair comparison, you have to compare it to large-scale industrial or commercial electricity billing.

Have you ever seen a bill for an industrial customer? Those bills are very complicated--meter readings every 5 minutes, complex power quality metrics, etc. The rates are even more complex: not just time of use pricing, but demand pricing, kVAR as well as kW (and their cousins, kVARH and kWH), demand ratchets, usage ratchets, real-time pricing, etc.

Add to that the fact that most industrial customers do sub-metering so they can indeed know just how much electricty each "appliance" is using.

Suffice it to say: billing for electricity is very complicated. Billing for compute time will be just as complicated.

All of that said, however: I completely agree that the analogy between electricity and computes ultimately fails. I wrote a long post about this recently; you can check it out here if you like:http://westcoastgrid.blogspot.com/2006/03/because-121-gigaflops-just-arent-121.html
Mar 31, 2006 at 8:38AM | Unregistered CommenterDan Ciruli

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