Adopting A Utility Approach

To keep costs low and usage rates high, more businesses are deploying a utility-computing infrastructure or buying utility services
Johnson Controls has worked with companies such as EMC Corp. for its storage requirements and with Hewlett-Packard for its computing infrastructure. The costs of desktops and laptops are tied directly to the applications on those systems. The company is working with HP to create a utility framework for its servers.

Valanju believes that virtually all businesses will increasingly take advantage of utility computing. In such a world, IT differentiation will be difficult to achieve. "It will be like sports cars," he says. "How you drive is going to determine who wins the race. We may both have the same car, but that doesn't mean we drive the same way."

A number of obstacles remain to creating a complete utility model for most large businesses, Valanju says. Some hardware, software, and service vendors have been slow to move away from transaction-based sales and compensation models and to create uniform offerings on a worldwide basis. "The ability for our suppliers to be able to provide the same levels of skill, coordination, and collaboration on a global basis is still a few years to come," he says.

Utility computing is still pretty new and evolving, Gartner analyst Bruce Caldwell says. The research firm describes five stages that most companies go through to build a utility infrastructure: concentration, consolidation, virtualization, automation, and extension. Companies creating utility platforms need to firmly establish the processes and tools needed for one level before moving to the next, he says. Most businesses are at the second or third stage, where they're consolidating IT resources and beginning to look at virtualized frameworks.

Virtualization can be achieved in a variety of forms, including the creation of computer clusters or grids. "But in the end, you have to be able to access resources as you need them and provision the capacity and associated storage directly," Caldwell says.

Welch's, which makes a variety of grape products, created a virtualized pool of server resources to reduce the cost of acquiring and maintaining servers, increase usage rates, and improve flexibility and disaster recovery, says Carmine Iannace, manager of IT architecture. Using products from VMware Inc. over the past two years, Welch's has cut its servers from about 175 to around 100.

"We had a lot of servers taking up a large amount of data-center space, a lot of rack space, and a lot of electricity for cooling," Iannace says. "We also had to spend a lot of money to monitor and manage those many discrete pieces of hardware."

By virtualizing servers, Welch's boosted usage rates on each server from 5% to 10% to around 50% to 60%, Iannace says. "We had a lot of servers doing next to nothing," he says. "Typically, when you buy a piece of software, the [vendor] is going to say it can't coexist with any other application. So you'd have to buy another server that for the most part didn't do a heck of a lot of work. Now we can put 15 to 20 applications on a single piece of hardware."

Innovest Systems LLC, a provider of financial-information services, turned to communications and hosting services provider Savvis Communications Corp. to create a virtualized platform that Innovest uses to provide its services to clients around the country. Innovest president and CEO William Thomas says that by moving from a standard data-center environment to services provided by Savvis, his company was able to cut IT costs in half because server and storage resources vary with usage.

By using services from Savvis, Innovest cut IT costs in half, says Innovest president and CEO William Thoma.

By using services from Savvis, Innovest cut IT costs in half, CEO Thomas says.
"We've really been able to create a just-in-time inventory," Thomas says. "Information is really our inventory, and for the first time we have an opportunity to scale up and down as needed."

Using the best pieces of a utility framework and slowly building out a platform will continue to be the best path for most companies, Gartner's Caldwell says. "We're really talking about multiyear projects, and nobody wants to hear that," he says. "So companies are biting off pieces where they can achieve their goals over a short period of time, incrementally."

It's a move that appeals to many types of companies. Large businesses like the idea of paying only for the computing resources they use, eliminating the need to build an IT infrastructure large enough to meet peak demands. And smaller companies appreciate having an economical alternative to buying and managing IT systems, especially if they don't have a large IT staff. As long as utility computing provides reliable services at a good price, it should continue to grow.

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