IT guru extols utility computing use

ST. PAUL, MINN. - IT thought leader Nicholas Carr headlined an event here last week that brought together local IT executives who debated the merits and hitches of utility computing .

Carr introduced his ideas about how corporate computing is destined to evolve. He compared it with 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 the idea that 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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ST. PAUL, MINN. - IT thought leader Nicholas Carr headlined an event here last week that brought together local IT executives who debated the merits and hitches of utility computing .

Carr introduced his ideas about how corporate computing is destined to evolve. He compared it with 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 the idea that 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, director of business development for computer operations.

However, while the city extensively uses outsourcing, the arrangements are based on fixed capacity and don't yet incorporate the usage-based, variable pricing and delivery models that characterize the utility computing ideal. One area Beck would like to see more flexible options emerge is in application outsourcing.

"There's a gross lack of true application service providers [ASP] today," he said. It's not hard to find an ASP that will host an application, but finding one that will host, maintain and dole out access on an on-demand basis is difficult, Beck said.

For example, if there are 250 different PeopleSoft modules, Beck would like to give staff access to any of those modules whenever they need it. If it's a seasonal need, he doesn't want to pay for a license year-round. That's the kind of service the city is looking for now - and has been for a couple of years, Beck said.