Utility Computing Models Are Flawed, Says Yankee Group Report; Enterprise IT Departments Seek a Full-Service, Pay-as-You-Go Model

Business Wire, Sept 25, 2001

Business/Technology Editors

BOSTON--(BUSINESS WIRE)--Sept. 25, 2001

According to a new Yankee Group Report, "New Utility Service Models: What Works and What Doesn't", the new utility computing models announced by Hewlett-Packard (HP) and Compaq Computer only offer IT departments part of a solution that they are seeking. Computing and storage solutions available on a monthly, pay-as-you-go basis leave IT departments to grapple with rationalizing platforms and processes that can be outsourced to a service provider. Additionally, to drive costs down, vendors that provide computing on demand typically do so on shared servers. "Enterprise IT departments are reluctant to outsource applications onto shared servers due to their concern over security," said Larry Buchsbaum, director of the Yankee Group's E-Sourcing Strategies research and consulting practice.

The pay-as-you-go plans are attractive to a limited number of computing customers. Only those with moderate computing needs that spike during a month will find savings from these offerings. HP estimates that customers with more than 50% usage of a calculated average daily maximum would pay more for the utility computing program than under a typical lease. "The pay-as-you-go model is only beneficial for certain IT users; but more importantly, it leaves the provisioning of platforms, applications, application management, and processes up to IT departments," adds Buchsbaum. The ideal offering that is currently being developed includes a bundle featuring hardware, platforms, applications and application management, and processes all available on demand either on premises or remotely priced on a monthly usage payment program.

NOTE TO EDITORS: For more information or to schedule an interview, please contact Larry Buchsbaum, lbuchsbaum@yankeegroup.com.

The Yankee Group (www.yankeegroup.com)

As a global leader in technology research and strategic consulting, the Yankee Group provides accurate, reliable, and trusted research; custom consulting; and personalized one-to-one client interaction encompassing all areas essential to business success: Internet, electronic commerce, communications, wireless, computing, and enterprise applications. Now in its fourth decade, the company is headquartered in Boston and maintains offices throughout North America, Europe, Latin America, and the Pacific Rim.