HP pushes utility computing paradigm

Utility computing is being touted as the next technology panacea. Currently, Sun, HP and IBM are all promoting a vision of the flexible IT infrastructure that enables businesses to purchase capacity as and when they need it.

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By  Matthew Southwell Published  July 23, 2003

|~||~||~|Utility computing is being touted as the next technology panacea. Currently, Sun, HP and IBM are all promoting a vision of the flexible IT infrastructure that enables businesses to purchase capacity — either CPUs, storage or software licenses — as and when they need it.

In theory, this utopian world will enable companies to reduce their fixed IT asset costs and vastly improve management control over their IT infrastructure. However, several technology, management and business process issues have to be addressed before end user organisations pay vendors via usage-based model.

According to analysts at Meta Group, few businesses will embrace the utility computing paradigm until 2006, due to low market awareness and the fact that few end user organisations are aware of the fundamental shift in the management and purchasing of IT demanded by the utility computing models.

“Companies are just learning about these computing models, they are not moving there,” says Corey Ferungul, vice president of operations strategies at Meta Group. “This is a year of education, this is not a year of implementation,” he adds.

Until recently, Middle East organisations have appeared apathetic to capacity-based pricing models. For instance, although most of the hardware players have been pushing CPU pay on demand schemes for the last 18 months, organisations have been hesitant to embrace the model. Computing on demand “has not really picked up in the Middle East,” says Abdulaziz Mohammed, marketing manager, enterprise solutions, HP Middle East.

“There is an educational curve for customers to understand these programmes and technologies,” he adds.

According to Mohamed Fouz, chief executive officer, Mindscape, the IT service company born of MashreqBank’s internal IT department, pay on demand models have yet to mature. “We are still looking at it, these models are still evolving... What is available now in the market isn’t that cost effective,” he says.

To rectify the situation, HP intends to start vocalising its Adaptive Enterprise strategy with the Middle East end user community. “We have to invest in a local presence and engage in a local dialogue,” says Kasper Rorsted, managing director & senior vice president of HP’s enterprise systems group.

The other significant hurdle prohibiting widespread migration utility computing is legacy systems. As rip out & replace isn’t an option, organisations will have to gradually embrace capacity-based computing as and when they expand their IT infrastructures.

“This is a component by component strategy,” says Rorsted. “But over time companies will change their infrastructure and every time companies [buy] computing power they will buy this way,” he adds.

This piecemeal approach to utility computing will give vendors an opportunity to deliver missing elements of the capacity computing paradigm. In particular, hardware players have to work with software vendors to develop flexible licensing models. And, while HP is already working with the likes of Microsoft, Oracle and SAP to produce a variable software licensing structure, its primary efforts are currently focused on their own internal software business units.

“We are seeing a great deal of interest, but there [will be] no 100% solution available tomorrow,” adds Rorsted.

A utility computing model will force companies to make significant changes to the IT budget cycle, how they manage existing resources and how they develop more effective capacity planning capabilities. According to Meta Group, 80% of global organisations with sophisticated accounting tools will struggle to move from an annual IT budget to a cost apportionment in a utility computing environment.

“Organisations evaluating such offerings must combine their IT, procurement and accounting groups to evaluate financial return on new contracts and how the costs of internal processes will need to change to manage them,” states a Meta Group report.

However, the organisational changes required to benefit from utility computing should be worth the pain if it allows organisations to reduce their fixed cost burden, improve IT resource management and focus on value add deliverables. “This model is going to help address the fixed cost issue,” says Rorsted.||**||

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