Management update: the utility computing debate
01 March 2005
In November 2003 CITEC published "Utility computing: hype or reality" which presented our opinion and forecast on the main barriers to the widespread commercialisation of utility computing, and the resulting impact on both customer and vendor uptake of this service delivery model.
Just over a year later, we are seeing some of our predictions unfold, as well as emerging issues that were not previously identified. Following is a summary of our position last year, along with some observations and findings.
2003 prediction: There will be an initial lack of user acceptance of utility computing until tangible cost benefits can be proven.
CITEC surveyed a number of Australian C-level executives on their awareness and perceptions of utility computing in 2004. The research found there were key questions and concerns about the cost, reliability and proven applications suited to the utility computing model.
Our research also revealed customer resistance to adopting a utility computing model was more closely related to anxiety about outsourcing generally, rather than user acceptance of utility computing.
We also discovered a perception in the ICT community that the only way an organisation could access utility computing was to have an outsourcing arrangement with an external service provider. And, there was also the old adage that outsourcing brings "lack of control" to the in-house IT department.
Many organisations believe the only way they can afford to outsource their utility computing is to have the critical mass ("not big enough") to warrant such a move.
2003 prediction: To take advantage of utility computing an enterprise will require some degree of standardisation to realise cost savings.
We have learned that the standardisation or commoditisation of computing is not so much of an issue for utility computing to come to fruition. In fact, business executives have long realised the benefits of creating economies of scale through standardisation.
We now identify the challenges surrounding delivery of standardised processes, applications and infrastructure over the network (as a service) as the migration, integration and vendor management of services designed to run on shared infrastructure.
This will possibly open up opportunities in the software market for middleware or some other kind of systems integration solution which can bring disparate applications onto a seamless, compatible platform.
2003 prediction: Is the technology ready to deliver a utility computing solution?
In 2003 we asked the question about whether UNIX operating systems were ready to deliver on their promise of providing segregation and security of data, as well as the ability to isolate processing load variations for each organisation sharing the system.
Today, the three major UNIX platform providers in the market (IBM, SUN and HP) have significantly upgraded their wares and brought products to market that deliver on this functionality.
2003 prediction: One large customer with the critical mass and the desire to extensively standardise their systems will most likely be the first-to-market utility computing customer.
Today, CITEC has its first utility computing customer who "fits the profile" as predicted in 2003. We predicted that the customer most likely to take the first step to pilot the model would have the critical mass required to create the economies of scale, and the desire to extensively standardise their systems. Importantly, we also teamed with a vendor that had the right tools and a flexible approach to how the utility computing model would be implemented.
In our 2003 article we took a retrospective look at the evolution of utility computing (which in 2003 we described as a new name for our former 1960's IBM mainframe bureau service) and we acknowledged that our utility computing model had in effect come "full circle" in the ICT lifecycle.
We reflected on how on-demand and pay-as-you-go services were offered back then in the guise of time share and service bureau businesses. Nowadays, the service delivery methodology is similar, with the main difference being more advanced metrics and billing systems.
Interestingly, this same customer who has moved to a utility computing model was also a pioneer back in the 1960s on the time-share mainframe system.
2005 and beyond
CITEC has now released a whitepaper titled "What goes around comes around - lessons learned from ICT outsourcing and the shift to the new utility". The whitepaper identifies and explores the relationship between ICT outsourcing and the availability of new technology in the form of a metered "pay as you go" service that delivers benefits to both the client and vendor.
In 2005 we are ready to present the framework of our own utility computing model and provide recommendations to early adopters on the advantages and challenges of transitioning to utility computing.
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