GigaSpaces XAP 7, The “Real Option” for the Cloud and On-Premise

I’m currently reading an interesting book called ‘Real Options: Managing Strategic Investment in an Uncertain World’. A theme of the book is that having flexibility and options create value and that therefore such factors need to be taken into account as much as any ROI, TCO or ROA analysis and that actually using only such models could actually seriously underestimate what option values exist.

For most IT managers, Real Options will not be familiar. It is used extensively in the finance vertical where an “option” contract on a given stock enables (but does not mandate) the contract holder to buy a fixed number of shares of the stock at a specified date for a specified price. Real Options substitutes nonfinancial, or real, assets for financial ones.

The end goal is to create a situation in which a company is able to benefit from the upside potential of a project, software etc, whilst controlling downside risks. Much of the premise of Real Options for IT is based around an incremental investment policy. An example would be the deployment of a Customer Relationship (CRM) management system. If you spend a small amount on a comprehensive study of that CRM system and the results are not  encouraging then any losses are minimal as compared with proceeding with an Enterprise wide CRM project. Alternatively  if the results  look encouraging, the investment in that study has a value gain . This value can be established using a financial markets proxy and valuation tools that originate from financial markets according to  Amran & Kulatilaka, the authors of the book.

Lets look at a real world project in terms of GigaSpaces and the Cloud. Recently we had a UK Telco outsource one of their services to the Cloud. I have blogged about this previously. The aim of the Cloud deployment was to market an entirely new service which had unknown business value. The company already use GigaSpaces in their internal data centers so could have easily built this in-house, but the estimated cost to do this in terms of hardware, environmental setup and test was in the hundreds of thousand of dollars. There was also the issues of other projects competing for the same resource so that the delivery data would have been pushed out. The Cloud option enabled the company to have the flexibility to make a choice and GigaSpaces XAP was an enabler in regards to the agility to make it happen. 

So far so good, we expect the flexibility and agility from anything Cloud. What else ? Well, the actual cost of getting the application on the Cloud was a few hundred dollars rather than a few thousand dollars. This was a huge saving and demonstrates the economic impact that using the Cloud can have. As it turned out, the actual service did not have the huge amount of traffic expected and in fact it was found that it was going to take a more focused marketing campaign with a wider visibility to get the service being used as anticipated.  The Cloud instances that were being used were scaled back as the expected load and use did not materialize.

This is a great demonstration of how the use of options and flexibility created value. As GigaSpaces XAP 7 is an enabler for Organisations to deploy and manage the same application to the Cloud or internally which  gives project planning / deployment flexibility as well as investment options that traditional static middleware does not have. This type of value will not appear on any NPV but it is tangible and real nevertheless.  The differential between a few hundred dollars and a few hundred thousand dollars demonstrates this.

GigaSpaces ability to scale on demand can also be factored into the Real Option methodology. The ability to use GigaSpaces unique scale on demand features enables systems to scale to deal with growth in real time.  The difference in investment between using GigaSpaces as a single node and GigaSpaces scaling out to support growth is essentially the real option price. Factor in revenue that is enabled by this dynamic scalability and one can see the tangible asset that is underpinned by GigaSpaces XAP.

The dynamic nature of Cloud infrastructure and the dual deployment features of GigaSpaces XAP make a killer combination with a TCO & ROI value that can easily be established but that have a value far above and beyond that.

GigaSpaces UK at First Gaming Scalability Meeting on 9th July

I’ll be presenting at the first Gaming Scalability meet up in the UK on 9th July at 11.40 on the GigaSpaces ‘Space Based Gaming Advantage’. The event is now fully subscribed but videos from the event will be posted online by SkillsMatter and I’ll post the presentation after the event on SlideShare.

Matthew Fowler will also be presenting the CloudSave product that makes it easy for Java developers to write large applications running at grid speeds that are as reliable as today’s databases. The product leverages GigaSpaces as its base infrastructure.

After the event I’ll be at CloudCamp for anyone who wants to meet up, just email me (James AT GigaSpaces DOT com) if you wish to have a chat.

Enterprise applications using and integrating with Gigaspaces XAP

When I am dealing with customers and Partners it never ceases to amaze me how innovative many of  the solutions and products, that have GigaSpaces embedded, are. I thought it would be well worth a quick review of some of these:

ActivePivot: ActivePivot™ by Quartet is a real time object oriented OLAP engine that provides information dashboards from front office to back office including trade blotters, value-at-risk drill down analysis, inventory positions, cash flow and security inventories, credit risk, online risk and hedging analytics in real time. You can view a case study of a combined ActivePivot / GigaSpaces at a major French bank here.

An example of using active Pivot with GigaSpaces could be that market data feeds are written into a space using any of GigaSpaces’ APIs . ActivePivot is able to connect to the core in-memory data and register for  events. When a tick is updated in-memory, GigaSpaces sends a notification to ActivePivot which in turn re-aggregates the relevant cube branch. This means that the aggregated cube is always updated and reflects the latest market state. In addition ActivePivot queries GigaSpaces for the raw data when Excel sends a drill-down request, which enables ActivePivot to deliver a very quick response time.

GigaSystemsBuilder: This uses the model driven development (MDD) capabilities of JeeWiz to generate Grid and Cloud-based systems under Gigasystems technologies.  Comprehensive PoC’s take less than a week and using JeeWiz to generate 90% plus of the final system is an efficient and low cost to utilise these emerging technologies. You can see a screencast of this in action here.

Excel Federated Grid:  This builds on our core Excel integration to enable organisations who use Excel in a trading scenario to scale their use of Excel to prevent bottenecks, to parallelize processing, or to automate algorithmic trading that uses Excel. You can read more about this in a prior blog post. To learn more about the GigSpaces/Microsoft Excel Integration and its applicability to finance have a read of this Microsoft written article.

Contact Centre: Nortel’s Contact Center application portfolio provides a single interface for blending inbound/outbound voice, e-mail, web chat, and IM customer interactions, businesses can collaborate with their customers through the device and method of choice extending a superior customer experience. 

Orbyte Solutions: Orbyte Solutions provide a Trading Application portfolio that works in-house or on public clouds such as Amazon EC2 and is powered by GigaSpaces Cloud Tools.  The applications include Foreign Exchange Trading, Spread-betting and encompass charting and widget features using their own innovative rich clients. You can see my prior blog posts on this here and here.

Hyper Rig:  Hyper Rig is a technical framework for Risk Management that can be added to your existing set up, complement it and enhance it. As such, the architecture has been designed to include features such as orchestration, exceptions management and audit, messaging, integrated security, automatic failover, monitoring, load-balancing, virtual computation-grid and data quality management. 

SmartStream: GigaSpaces XAP is embedded within SmartStream’s next generation Transaction Lifecycle Management technology suite. Using GigaSpaces’s proven technology, SmartStream can deliver on demand and predictable scalability to support clients’ high-performance processing requirements. You can read more about the integration from SmartStream’s site.

Online Gaming: I recently blogged about an online gaming application that is available on Facebook but whose engine is a commercial engine. It is the first totally enabled online Cloud gaming network and is powered by GigaSpaces Cloud Tools.

These are just a selection of application that use /embed GigaSpaces that I have touched. There are many  thousands more that are used in all different parts of the world, either on premise or on the cloud.