Cutting Through the "On Demand" Hype

With ongoing economic uncertainty putting a premium on business agility, technology companies are offering up visions for new computing and business process models. Here's a primer on the new models and their potential implications for the supply and...


With ongoing economic uncertainty putting a premium on business agility, technology companies are offering up visions for new computing and business process models. Here's a primer on the new models and their potential implications for the supply and demand chain.

[From Supply & Demand Chain Executive, December2003/January 2004] Grid computing. Utility computing. Organic IT. e-Business on demand. Adaptive enterprise. Seems like with every passing week some new catchphrase pops up to seize the attention and imagination of the information technology (IT) marketplace.

It would be easy particularly for those outside the IT function to write off these buzz phrases as so much marketing noise. But the concepts behind all the sloganeering are forming the foundation for new supply and demand chain models that some analysts believe could give early adopters a significant competitive advantage in the years ahead.

A Matter of Definitions

Of course, given the proliferation of these catchphrases, it's hardly surprising that not even all IT specialists have a clear understanding of what the terms mean. For example, a study by Westport, Conn.-based consultancy Saugatuck Technology found that just 19 percent of IT managers in a survey understood what "grid computing" meant. And while 48 percent of the managers in the survey were familiar with the phrase "utility computing," just 2 percent said they had a firm understanding of this model.

With that in mind, let's start with some definitions.

In its recent report "How to Differentiate Grid Computing and Utility Computing," technology research firm Clabby Analytics described grid computing as "a network architecture that finds and exploits computing resources and storage." A grid, Clabby writes, is all about sharing unused computing power within a set pool of available resources. Using this model, companies potentially can ensure that their computing resources are more optimally utilized, and they can also attack large computational problems without necessarily having to invest in new, high-power computers. This is because a grid system could break one huge number-crunching assignment into smaller sub-assignments that low-power desktop machines could solve and send back to a central computer for aggregation.

In contrast to a grid, Clabby continues, "utility computing" refers not to a specific IT architecture but rather to an approach to computing that "is predicated on the idea that computing power and resources should be available like electricity" thus the name "utility." The idea is for a computer, or a company, to acquire computing power or storage space on an "as-needed" and "pay-as-you-go" basis, just as a consumer would "acquire" water on those same bases by turning on the tap. The advantages for a company adopting this model are fairly straightforward: utility computing shifts the requirement to invest in capital equipment from the user company to the service provider, and the user company pays only for the computing resources it actually uses. Fixed costs become variable costs, and the user company avoids the expense of maintaining and upgrading the equipment.

Moving beyond grid and utility computing, we encounter a host of trademarks and catchphrases that analyst firms and technology providers have created to describe their own visions for the future of IT. These include Forrester Research's Organic IT and what has become known as on-demand computing models, including IBM's e-Business on Demand, HP's Adaptive Enterprise and others. But while these models may draw on the elements of grid and utility computing, they go beyond a focus purely on IT to incorporate aspects of business transformation and process re-engineering.

From Organic to On Demand

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