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Study: Utility hype is out of sync

Companies are more interested in putting utility computing technologies to work in their own data centers than in renting services from an outside provider, according to new Forrester research.

Despite the hype surrounding utility computing, corporations are not eager to shift to a purchasing model in which computing power is piped in via the Internet, according to a new study.

In survey of 88 IT executives, Forrester Research found that most businesses would rather use utility computing technologies in their internal data centers, than rent computing services from an external provider. As a result, companies that sell hardware and software systems are better positioned to ride the utility computing wave than outsourcing providers and systems integrators, according to the Forrester report.

The vision for utility computing is that computing power can be delivered to companies like electricity or water. Businesses can reduce their costs by purchasing computing capacity as and when they need it, meaning they can make more efficient use of the resources they have in-house.


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Industry giants Hewlett-Packard, IBM and Sun Microsystems have each introduced utility computing, or "on-demand" computing, initiatives. These efforts provide management software that can pool resources and automatically provision servers, storage and software based on shifts in demand, so that customers can make better use of their data center gear.

But Forrester, which refers to utility computing as "organic IT," said the industry vision of utilitylike outsourcing is out of sync with what businesses are looking for.

The research firm found that only 16 percent of businesses want to invest in outsourcing services--where an outside company takes over IT operations--when overhauling their IT infrastructure. Instead, 84 percent of respondents said they would rather make over their systems themselves, either with help from outside service providers or with internal staff.

At the same time, companies are looking for pay-per-use options for systems that they run internally, according to the report released last week. Sixty-six percent of respondents said they prefer per-use purchasing or leasing options when paying for IT infrastructure, while only 34 percent said they would rather stick with the traditional model of up-front capital investment.

Coming up with simple-to-understand usage-based pricing options remains a major challenge for the IT industry, Forrester analyst Frank Gillett said.

"Systems vendors must support pay-per-use without outsourcing--which means creating simple metrics, processor hours, that give a firm glimpse of usage-based metrics," he said in a research note.

HP, IBM and Sun have all introduced such payment options for servers, in which customers pay for processing power depending on how much they use. Next year, HP plans to propose a single usage measurement, called the "computon," as the computing industry equivalent to the kilowatt hour.