IBM helps to get Exxon Mobil moving

One of the world's simplest " outsourced services " is electricity. When users need it, they simply plug a device into a wall jack and pull as much as they need. At the end of the month, the customer pays the provider for the service on a simple, usage-based basis.

IBM is trying to develop IT outsourcing services that operate much the same way. Under IBM's " utility computing " approach, a third-party provider will offer a single service that will include all the servers and software required to enable an enterprise to run a business process. The enterprise will pay a single monthly bill for the service, which will vary according to the amount of computing resources used.

It may sound far-fetched, but IBM already has taken a few steps toward delivering on its utility computing idea. Earlier this month, Big Blue signed a five-year, multimillion-dollar deal to provide " virtual services " to Exxon Mobil Travel Guide, which will use outsourced IBM facilities to run its new Web site, Mobil Companion, which lets customers pay monthly fees to plan trips online.

Under the deal, the Exxon Mobil unit will use IBM's Linux Virtual Services - an infrastructure of Linux-based IBM zSeries mainframes - to develop and deliver its trip-planning services to Web customers. The service will enable Exxon Mobil Travel Guide to start up its offering quickly, without an initial server investment, company officials said. And, since Exxon Mobil will pay only for the capacity it uses, it will save money during off-peak travel periods, when fewer customers use the service.

Utility computing is a new outsourcing model that combines elements of hosting - in which a third party provides server and network capacity for the enterprise - and application service providing, in which a third party builds and maintains software as a service. IBM officials say that utility computing is more comprehensive than either of those two predecessors, and paves the way for enterprises to gain access to computing in the same way that they gain access to electricity.

IBM is not the only service provider to embrace the utility computing idea. Hewlett-Packard, Sun and EDS are developing utility computing services, and already have signed some customers to use them.

Some of the early utility computing offerings are not much more than usage-based server leasing services, in which the enterprise pays a single bill for the capacity used in a given month. This type of " on-demand computing " is not a new idea - many providers offered timesharing services back in the 1970s.

But vendors such as IBM, Sun and HP now are taking the next step, which includes development and maintenance of software as well as hardware and storage. In some cases, the vendors are using next-generation technologies such as Web services to link applications and grid computing to ensure available server capacity.

Utility computing providers still have much work to do before their services will be widely embraced. One of the toughest nuts to crack will be application integration, which remains a major project for both in-house developers and outsourcers alike. It is not likely that enterprises will broadly implement utility computing until providers can solve the application integration problem.

Still, for companies such as Exxon Mobil Travel Guide - which needed computing resources for a single, limited business process - utility computing already is an option. It's not as simple as electricity yet, but it's certainly simpler - and less expensive - than buying servers and doing software maintenance in-house.

Senior Analyst Tim Wilson is with Enterprise Management Associates in Boulder, Colo., an analyst and market research firm focusing exclusively on all aspects of enterprise management. Wilson has over 10 years of experience in covering e-business and enterprise management issues, most recently with InternetWeek, where he was chief of reporters. He can be reached by clicking here.

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