Utility computing: Take it easy

Alluring as it may sound, the benefits of utility computing should be considered carefully.
Written by Dennis Mark, Contributor

Considering the pace at which technology becomes obsolete today, who wouldn't be interested in utility computing where you pay for what you use? This article considers the benefits and offers suggestions for SMBs.

It’s easy to be seduced by the potential benefits of utility computing. The word “utility” conjures up analogies about how we don’t need to build, own and run a water treatment plant or electrical power plant in order to have running water and electricity in our offices and factories.

In the idealized utility computing state, companies pay only for the quantity of computing units... What company would not value the flexibility afforded by such an arrangement?

In the idealized utility computing state, companies pay only for the quantity of “computing units” that they consume. Wherever or whenever it’s needed, in whatever quantities the computing power is available. No large capital outlays for hardware and software. No appropriately skilled headcount to keep the computing systems and the pipes through which the data flows operating smoothly. What company would not value the flexibility afforded by such an arrangement?

The question is whether this model of business computing makes sense for small and medium-size businesses with more modest IT needs. Does utility computing, as it is available today, have benefits and pricing that scale downwards in the right proportion? Will getting into utility computing prove instead to be a futile exercise?

Let's consider three of the key benefits that corporations seek when considering utility computing:

Benefit 1: Reduce Unused Capacity

Imagine a large company with 1,000 servers. If each server is utilized at 65 percent, the savings of consolidating and virtualizing these servers is massive. On the other hand, the savings for a small business with three file-and-print servers and two application servers will not be anywhere as large. Nor would it be cost justifiable to have the vendor provide a full-time IT technician to oversee these four systems. There will be savings from consolidation, but will these be worth the effort?

Benefit 2: Employ the latest technologies

Adding new capabilities, like security, data backup and wireless support for a mobile workforce, or securing and load balancing the servers hosting a new ecommerce portal, are not trivial. In order to meet the business requirements, achieve the necessary cost savings, and profitably provide the utility computing services, vendors are likely to optimize the IT infrastructure design and employ the latest technologies and design methodologies. The customer is spared the costs, effort and risks in selecting and implementing these technologies. The vendor, tied to specific service level targets, is responsible evaluate, think and work through the new technology issues.

Benefit 3: Reduce operating and management cost

It is important to have an idea of the costs of delivering IT services to end users. Vendors will probably be able to help identify hidden costs that can help boost the case for moving to utility computing. Many IT departments, understaffed and overworked, often do not have the bandwidth to quantify and measure the costs of providing IT services – there are always urgent issues to resolve, projects already behind deadline to push through. Extend the management truism “If you can’t measure it, you can’t manage it” to include “…and you can’t safely outsource it”.

Most SMBs will not have a complete picture of how many PCs and printers they have, how old these are, how many pages are being printed, the cost of the storage of supplies and the desk space taken up by desktops and office automation devices.

For SMBs with modest IT needs, it would seem that all three benefits are applicable, but they will apply differently. Benefit 1 is a partial benefit as it depends on scale. Benefit 2 applies strongly, and Benefit 3 may only be partially realized as the groundwork on understanding total cost of operations is not likely to have been done. If the benefits of a full scale utility model are not fully realizable, is it worth putting in the resources to explore and negotiate a utility contract?

Perhaps the best path is to take up a phased approach, with a full scale utility computing model as the desired end point. Begin with small, manageable steps. For example, start with an exercise that will not be excessively disruptive and yet demonstrates visible cost savings, efficiency benefits and encounters low levels of end user resistance.

One of several good places to start would be in your printing infrastructure. HP has a PPU (pay-per-use) offering which does not require a large initial capital outlay. This “pay-for-what-you-print” model is an affordable way to eliminate old, expensive or low print quality technologies with the latest printing and imaging technologies such as laser printers and multi-function printers.

If you are considering replacing an aging PC fleet, purchased four years ago to beat the Y2K bug, you may want to explore HP’s Access on Demand program, where instead of large up-front capital outlays for the new systems, manage one single monthly business expense covering the entire desktop infrastructure.

A phased approach provides easy first steps towards the nirvana of utility computing; SMBs can gradually move to a full utility model only when their business IT environment is ready to fully benefit from it.

Dennis Mark is vice president and general manager for commercial accounts and the SMB Customer Solutions Organization for Hewlett-Packard Asia Pacific and Japan. He is also a member of the CNETAsia SMB Advisory Board.

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