Untying the Gordian Knot: utility computing is a great concept but is still largely in the planning stages. Current software licensing models are proving to be a prime barrier to adoption

Telecom Asia, Nov, 2004 by Stefan Hammond

"The software licensing models in particular are currently the barrier to utility pricing models," says Corey Ferengul, senior vice president at Meta Group Inc. Software vendors are still predominantly selling their products on a per-seat or per-CPU basis, regardless of how much or how little an individual seat or CPU is utilized.

Vendors are reluctant to move to utility pricing for several reasons, with fear being the biggest factor. A large migration to utility pricing would likely change the valuation of software companies dramatically--almost certainly on the downside as vendors would no longer be able to book projected future revenue, but instead could claim only what they collect each month. UC also promises to make it easier for companies to switch software vendors, encouraging healthy competition and reducing margins.

But Ferengul notes that smart software vendors could eventually take advantage of what may look like a bad situation, moving to a utility pricing model and locking in customers despite utility's touted flexibility and ease of vendor switching. "[With utility computing] my goal would be to deploy quickly, in hours or days, not weeks, months or years," Ferengul says. "You're not going to stop and evaluate vendors every time."

And like it of not, utility will arrive, he adds, with hardware vendors pushing it as the new model for delivery, and users pushing for software models that match their hardware.

How UC works

In today's typical non-utility scenario, a user places a request with an application on a departmental server. The server takes the request and returns the answer, then goes on to other requests. If no other requests are in the queue, the machine sits quietly and acts as an expensive space heater.

With utility computing (at least in its end-game form) that departmental server may go away entirely, usurped by a collection of machines centrally controlled by the IT department. This could be accomplished either by physically replacing remote servers with a centralized larger server, cluster of smaller servers or rack of blade servers, of by binding the remote systems into a "grid." When the user makes a request, a series of questions must he answered by the utility infrastructure, determining what resources the user gets from the pool while tracking usage for billing purposes.

Alastair McAulay from PA Consulting says: "Although there is not yet consensus on what exactly utility computing is, an acceptable definition is emerging: a collection of technologies that allows IT resources to be pooled into a seamless whole, either from inside the organization or provided by a third party. The impact for business is that IT resources, such as storage, transaction processing, network capacity and applications, need not be constrained by an organization's physical infrastructure."