How can the CEO help us in adopting a utility computng model?

If utility is to take hold, cultural change will be a key challenge. By its very nature, utility requires centralization and the sharing of resources in a manner that many companies won't recognize. Senior management's job will be to smooth ruffled feathers as departmental servers evaporate into a pool of resources that are controlled by the IT department or outsourced to service providers.

And the reverse can also be true, with IT managers getting peeved when line-of-business leaders request utility services instead of IT assistance, says Mike West, senior program director at Saugatuck. "In general, the person who is most enthusiastic about [pay as you go] is the line-of-business person who has control of his P&L but not his IT," West says. "On the other hand, CIOs are highly sceptical of [the model]." The reasons, West says, are that CIOs are often averse to the additional risk that new technologies can introduce and because they see themselves as technology gatekeepers.

Given that, the CEO and other C-level executives must step in to act as mediators between IT and the line-of-business managers. "If you're going to do things to get shared resources [such as utility], you've got to bring those resources together," says Jonathan Eunice, an analyst at Illuminata. "That's why the CEO or COO or CFO at a minimum have to have a say."

What is the ROI for utility computing?

The bottom line, of course, is money. Utility computing promises lower licensing costs by consolidating multiple instances of applications into fewer licences, and - once pricing models are in place - allowing companies to pay only for the active hours, transactions, megabytes or bits (the exact unit remains to be determined and will probably vary by application). It also promises reduced maintenance costs, with outsourced UC services handling some operations and internal IT groups freed from laborious tasks such as upgrading countless remote servers one by one. And, as in Royal Caribbean's case, smaller hardware budgets are possible, thanks to fewer servers and fewer people required to manage them. The ultimate goal will be to create a technology framework for a truly agile enterprise, allowing business processes to be rebuilt on the fly to meet new opportunities.

But that may not matter so much at companies that already run a tight IT group. "If you've got an organization that has a good centralized policy base, that has strong governance on change management and how they grow their IT infrastructure, if there's communication between business units and IT, then the utility model is probably not going to be as attractive to them," says Gartner principal analyst Eric Goodness. Loosely regulated IT organizations, however, could probably benefit from utility's simplification and control. Unfortunately, however, those organizations are going to be the least prepared for a move to utility. "If you've got anarchy, you don't know what your unit costs are now," Goodness says. "It is going to take some up-front elbow grease to get [these companies] where they want to be." Without such preparation, he notes, utility computing may actually cost more than current operations.

Still, certain niche utility markets, such as telecom management services, are also proving cost-efficient for their users. "I'm talking with customers that are saving as much as 30 percent off their corporate telecom spending [using such services]," says Goodness.

"It does work, and it's available right now," says Burlington's Prince. "It just takes more engineering than it ought to."