Utility computing and private IT generators

Deal Architect Vinnie Mirchandani notes that Nick Carr has posted the slides from his talk at the Open Source Business Conference about the coming age of utility computing. Like electricity, organizations will inevitably be powered by automated, centralized grids of metered computing power, Nick predicted.

"EDS has over 100,000 employees. The average Fortune 500 CIO has 500 IT employees. Infosys has delivered over 18,000 projects using its GDM. The average CIO has done fewer than 10. Microsoft spent $ 6 billion in R&D last year. The average Fortune  500 CIO's total IT budget (not just on software) is less than $ 50 m. Yet vendors cannot price their products or deliver performance on a utility scale model? How much more scale do they need?"

While SaaS models are being priced reasonably, and showing signs of reliability as utilities, overall private IT "generators" have a long life left yet. IT Utilities are still not priced right and need to dramatically improve delivery reliability. If each of us had to negotiate that hard and spend that much time monitoring our electric, water, gas, lawn service - our utilities -  we would have little budget or time left for anything else.

Redmonk analyst Stephen O’Grady, Steve Gillmor and I debated the when, what and ifs of utility computing after Nick's talk on a Gillmor Daily podcast here. Stephen blogs his take at tecosystems:

I happen to agree with Matt Asay who described Carr's blog as a must read, and Carr himself as very bright, but I nonetheless did not find much to internalize within his talk today. As I told Dan Farber and Steve Gillmor on the Gillmor Daily this afternoon, I thought - as I have before - that Carr's argument lacks meat. For those that haven't heard it before, it's much like the pitch that Schwartz has given in the past, namely that IT staffs are set for an overhaul much as electricty was in the last century. Where the personal power plants and the staffs that run them - once so common with rich individuals and large corporations - are now pretty much history, Carr sees the IT industry going. This transition, which I do not fully disagree with given my strong belief in the future of SaaS, is fueled by a simple macro-economic argument of the tendency of markets to become more efficient - a trait which hardly describes IT today. I'm with him that far. Where we part company is in the almost 1:1 comparison of IT to electricity - to me they are very, very different things. There are, to be sure, things that can and will be outsourced: general offerings like CPU cycles or storage, or specific offerings such as email, CRM, and perhaps ERP. But will this spell the end of the individual IT staff in the foreseeable future, much like we don't keep folks on staff to build our own power plants? Maybe it's just my ex-systems integration bias, but I can't see it. I've been hearing about how we were factoring people out of the equation for years now, and guess what: people are still a fundamental part of the equation.