Utility computing going mainstream
Summary
Topics
While it is easy to dismiss utility computing as an intriguing but nascent phenomenon, it is already catching on in a variety of IT contexts. Principal avenues to commercial realization for utility computing concepts include the following scenarios:
Internal utility models. Utility computing solutions and models are already making an impact on how companies purchase and employ computing resources. For example, it is a relatively straightforward shift for customers to move from a conventional, pay-up-front infrastructure acquisition model to a utility based pricing model in which infrastructure is paid for only when it is used. Compaq and Hewlett-Packard, for example, have established utility pricing programs in which server and storage infrastructure sits idle on customer premises until it is required and paid for only when used (subject to certain constraints including minimum commitments and a time limit before all of the infrastructure must be paid for).
Taking the utility concept one step further are software-based dynamic resource allocation and provisioning solutions like those of Terraspring--which allow IT executives to manage the data center as a logical whole. Not only could such solutions help large users manage their typically large numbers of servers much more economically, and rapidly deploy capacity for new applications and peak periods, but they also could allow them to set up test and development environments much more easily than otherwise possible. Terraspring and others in its category are now working with their first customers. Meanwhile, demand for grid computing tools is already well established in scientific and technical computing, including the life sciences industry, where processing power is at a premium for compute-intensive tasks.
Utility-based outsourcing models. Utility concepts and pricing are making their way into IT outsourcing relationships as a way to add new flexibility in purchasing IT infrastructure and services externally. One primary example is the recent transaction between IBM Global Services and American Express. Much of the seven-year, $4 billion transaction appears to be conventional outsourcing--including the transfer of 2,000 American Express employees to IBM. However, utility-based pricing and the ability for American Express to access IBM infrastructure capacity in case of unanticipated demand represent significant innovations in IT outsourcing. Utility elements can enhance the potential for outsourcing transactions to transform fixed IT costs into variable costs, which has long been a goal of sophisticated outsourcing customers such as American Express, which expects to save hundreds of millions of dollars with its new IBM relationship.
Cooperative utility models. Leading CIOs and emerging enterprises are investigating how utility concepts can lead to new cooperative and joint venture models in which companies located in close geographic proximity can enjoy enhanced flexibility in pricing and greater purchasing power for a variety of IT products and services.
THE HURWITZ TAKE: Although many view utility computing primarily through the lens of advanced computing architectures such as computational grids, utility computing viewed more broadly is already influencing how IT customers acquire, manage, and source their IT infrastructure. In this sense, the commercial advent of utility computing is much closer than would otherwise appear.
Emerging avenues for commercial application of utility computing
By Bill Martorelli, The Hurwitz Group
First published on March 18, 2001
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