Is the Tap Dry?
By Tahirih Gaur
Mumbai, Aug 10, 2007

People don't want a water tank. They want a certain amount of water that's in that tank. Similarly, most enterprises don't want a PC; they want services that the machine offers. Utility computing, also known as cloud computing, works toward providing computing services on a pay per use model. Most PC users face problems such as spam, virus, spyware, etc. on a daily basis, and have accepted these problems complacently. Imagine owning a car that would fall apart about twice in a week. Surely, few would be content with such a car. It's quite mystical why people put up with PC problems. In a nutshell, utility computing offers computing services just like telecommunication services are offered. Sign up for the service, pay a monthly usage bill, and let the supplier take care of any hitches along the way.

Surprisingly, this isn't a new trend. The ASP model has been around for a long time. However, utility computing is the ASP model, but on a much larger scale. Instead of merely outsourcing singular applications, utility computing allows enterprises to receive shared infrastructure resources, from storage to databases to Web servers. In 1961, John Mccarthy of MIT Centennial described this packaging, "If computers of the kind I have advocated become computers of the future, then computing may someday be organized as a public utility just as the telephone system is a public utility. The computer utility could become the basis of a new and important industry."

Even though utility computing has been around for several years, vendors are now avariciously marketing this technology. Last year, Bill Gates announced the new agenda for Microsoft around "trustworthy computing". He defined it as: "Computing that's as available, reliable, and secure as electricity, water services, and telephony." Sun has recently provided wider international availability of its "Sun Grid" service to 24 countries. The offering is now available in Australia, Austria, Belgium, Canada, China, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, India, Ireland, Italy, Japan, New Zealand, Poland, Portugal, Singapore, Spain, Sweden, and United Kingdom.

In India, utility computing can have an immediate advantage in the education segment. The country's progress depends on the education of the millions of youth. Schools and colleges that can't adopt PC-centric solutions due to affordability issues can take advantage of utility computing. A recent report from Gartner states that by 2010, large companies typically will fulfill 25% of application demands from shared, rather than dedicated sources, and 30% of their software will be delivered by external pay-as-you-go providers.

However, from the storage panorama, India doesn't seem confidant enough to accept computing as a utility. The chief concern is the security of critical data. For example, 2 different banks might not be comfortable with their data being on the same hard disk. However practical and cost efficient an option, Indian enterprises are still hesitating to share storage space.

Additionally, enterprises still choose to "build" instead of "buy" because they're not very efficient in measuring and managing outsourced IT performance. According to Gartner, 80% of outsourcing deals are re-negotiated over their typical 3-year term. Monitoring IT performance requires more time and attention than people are willing to provide to utilities. Meta Group predicted that over 80% of global organizations, with their sophisticated accounting tools, will find a utility-driven environment with its irregular cash flow, granular payment schedules, and complex internal cross-charging, hard to swallow.

Small and Medium Businesses (SMBs) can use utility computing efficiently, but for large enterprises this decision isn't as easy. It depends on many factors including network and cost efficiency. But even with all the uncertainties that surround utility computing, its blatant advantages can't be ignored. A recent Hewlett-Packard study found that most corporate servers use just 10-35% of their processing power. IBM estimates average desktop-capacity-utilization rates of just 5%. Gartner estimates that 50-60% of a typical company's network storage capacity is wasted. The cost benefits of utility computing can sufficiently compensate for the underlying discrepancies. CIOs might be hesitating to adopt utility computing today, but these results can only provide a glimpse into the future potential of utility computing.