IT Buzz or New Beginning?

Yankee Group report addresses "utility computing"

Yankee Group report addresses "utility computing"

Boston  September 15, 2003  Utility computing has become the latest buzzword from vendors to describe their next-generation strategies for hardware, software and services. Most vendors conjure up visions of IT managers investing in IT systems and services that they manage like utilities, paying only for what they consume.

The Yankee Group report, "Utility Computing in Next-Gen IT Architectures," co-authored by Andy Efstathiou and Jamie Gruener, looks at utility computing's market drivers and key technologies and services and concludes that utility computing does not make sense if it only addresses the challenges of the existing IT market.

The authors said that although it lowers the investment hurdles for a business to try new things, this requires a huge investment in restructuring the application, management and virtualization layers needed to run such an environment. In short, utility computing is restructuring the cost underpinnings of computing.

Efstathiou, Yankee Group Technology Management Strategies program manager, said, "[Chief information officers] need to understand this change in cost structure to drive business benefits out of a changing set of sourcing options. Utility computing has the opportunity to address many of the key challenges IT managers face and lower the cost of individual computing transactions. To reach that goal, vendors must make a massive investment in enabling technology over a 10-year period."

Gruener, Yankee Group Enterprise Computing & Networking senior analyst, added, "While hardware vendors are making the investment, as are some ISVs, most other firms are waiting for the products to develop before they identify preferred product strategies. Nonetheless, enterprises can start to take measured steps to implement the utility model. Partial implementation can yield handsome benefits and prepare an enterprise for future informed adoption of this model."