IT execs weigh utility computing potential

IT thought leader Nicholas Carr headlined an event in St. Paul, Minn., this week that brought together local IT executives who debated the merits and hitches of utility computing.

Carr kicked things off by introducing his ideas about how corporate computing is destined to evolve. He compared it to the emergence of public utilities a century ago. Manufacturers used to run their own power plants, but got out of the electricity supply business once more affordable, reliable and efficient services became available from public utilities.

In a similar way, Carr expects IT to go from being an asset that companies build and own, to a service that they purchase from utility providers. He acknowledged that the idea of utility computing has been touted for a long time, but has yet to fulfill expectations.

“Skepticism is in many ways justifiable and a smart approach at this early stage,” he said. Nonetheless, Carr thinks it’s time for IT executives to begin challenging their skepticism.

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IT thought leader Nicholas Carr headlined an event in St. Paul, Minn., this week that brought together local IT executives who debated the merits and hitches of utility computing.

Carr kicked things off by introducing his ideas about how corporate computing is destined to evolve. He compared it to the emergence of public utilities a century ago. Manufacturers used to run their own power plants, but got out of the electricity supply business once more affordable, reliable and efficient services became available from public utilities.

In a similar way, Carr expects IT to go from being an asset that companies build and own, to a service that they purchase from utility providers. He acknowledged that the idea of utility computing has been touted for a long time, but has yet to fulfill expectations.

“Skepticism is in many ways justifiable and a smart approach at this early stage,” he said. Nonetheless, Carr thinks it’s time for IT executives to begin challenging their skepticism.

Underutilization of existing IT assets will help drive the migration to the utility world.

“When you look at any study of IT capacity utilization in companies today, the numbers are astoundingly low,” Carr said. Analyst firms put typical server capacity in the 15% to 30% range, PC usage at about 5% and storage capacity at about 25% to 50%.

“If you can centralize this stuff, you get much higher capacity utilization, much more efficient use of labor and a much more efficient model for distributing software,” Carr said.

Another driver will be CIOs’ desire to stem the tide of money and resources dedicated to basic IT maintenance, which consumes about 70% to 90% of typical IT budgets, according to Carr. “The only way to escape that squeeze is to get rid of that infrastructure, get rid of those assets that you’re forced to maintain,” he said.

One outfit that knows this firsthand is the City of Minneapolis. The city outsourced its network, systems, data center administration, desktops and disaster recovery services to Unisys in 2003 in a move expected to save the city between $25 million and $30 million over the life of the seven-year contract. Going with an outsourcer has allowed the IT organization to focus less on maintenance and more on business process reengineering and improving business outcomes, said Bill Beck, who is the city’s director of business development for computer operations.