Utility Computing: Back to the Future

To download a PDF of the Utility Computing Factsheet, click here.

To download a table outlining the path to Utility Computing, click here.


The ROI for the utility computing model is a no-brainer. But not even the vendors pushing the concept think it’s ready for prime time.

IBM Corp. calls it “on demand computing.” Hewlett-Packard Co. says that it goes hand in glove with its vision of the “adaptive enterprise.” Computer Associates International Inc. has launched a fleet of systems that do nothing but map it, track it and bill for services rendered.

Whatever the label, the concept is compelling: the idea that companies could get rid of rows of back-room servers, legions of IT staffers, and all those expensive software upgrades in favor of a system that seems to require little more than plugging into an electric wall socket.

It’s called utility computing, and although, in concept, it has something in common with electricity, the reality is still a ways from catching up to the hype. What’s driving interest in the model is sheer economics: If enterprise applications—along with all the necessary hardware and people needed to make them work—could be paid for as needed, then corporations would stand to save untold millions of dollars they now spend each year to buy and maintain their underutilized equipment. And given the budgetary scrutiny every CIO faces these days, it’s no wonder the pay-only-for-what-you-use plan is looking so attractive.

Unfortunately, most experts say it may take as much as a decade before most computing chores become as easy to access as current from the local power plant. It may be unreasonable to expect that companies will ever be able to tap into every last piece of business functionality, perform every number-crunching computer task, track every customer shipment, and process every invoice using someone else’s system— not to mention someone else’s IT staff.

Even now, when you peek under the hood, what most IT vendors are labeling “utility computing” is really a warmed-over version of old ideas such as outsourcing, hosted applications, Web hosting and the like. Says Lance Travis, vice president of research on outsourcing strategies at AMR Research Inc. in Boston: “No vendor has a customer that is taking advantage of the whole spectrum of things—hardware and software, service and outsourcing, and pay-per-use—that makes up utility computing.”

As an example, he points to IBM’s taking over Sprint Corp.’s call centers and providing business-process improvements and new technologies to support those processes. “The net result is improved business processes and technologies at lower cost.” But the deal, he points out, is primarily outsourcing plus consulting services.

Even IBM admits that its customers tend to be trying bits and pieces of the whole. “Customers are moving parts of their computing infrastructure toward the utility-computing goal line,” says Eric Stouffer, program director of on demand management solutions for IBM Tivoli Software.

Still, it’s best to consider true utility computing as an endgame that you should be preparing for now, because even if you aren’t, your competitors may be. And the big reductions in IT costs the model promises will be sure to give the overachievers a huge competitive advantage.

Ask Your IT Staff:

  • Where do we stand in the pay-as-you-go provisioning of our IT resources?

    Ask Your Line-Of-Business Managers:

  • Would you be willing to accept IT resources provided on a utility model?

    Tell Your CFO:

  • We need to determine the financial benefit of utility computing.

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