Utility Model Gains Favor

The outsourcing model envisioned by customers and service providers has infrastructure resources such as CPUs and storage shared among users, with services and applications turned on or off based on user demand, analysts said.

"I had one CEO tell me he'd be amazed if [the utility computing model] took off in 10 years. But it's going to happen sooner, I think," said Corey Ferengul, vice president at research firm Meta Group.

Customers most likely would turn to potential utility providers such as IBM, EDS, Hewlett-Packard, Microsoft, Accenture and CDW Computer Centers, according to a survey by research firm IDC. But when asked what the utility model might portend for traditional VARs and systems integrators, IDC analyst David Tapper said solution providers could become obsolete.

"Server capacity would no longer be a box [in the utility model]. It would be somewhere else," Tapper said. "Solution providers will have to move upstream. I see solution providers and telecoms being linked in this [model] because the big service providers with these big engines, delivering something via a big pipe, don't understand IT like solution providers do."

If the utility computing concept advances, solution providers likely would be absorbed into the model, Tapper said. "Morphing is going to have to go on," he said. "But how many [solution providers] are going to be there in the end? I don't want to scare anyone, but 10 to 20 years from now, probably none. Remember, industries do go away."

But at least one solution provider disputed that theory. "I don't feel that [solution providers] are going to become obsolete if the utility model takes off because they are the ones closest to the customer," said Ed Agar, principal at PrimeSourcing Advisors, a Thornhill, Ontario-based IT consulting firm, and a former IBM channel executive. "When customers have headaches, systems integrators are the ones that meet their day-to-day needs."

Some utility computing providers are coming to that realization. David Fournier, CEO of SeventhWave Technology, an Alpharetta, Ga.-based solution provider, said his firm has developed software that tracks IT contractor billing, and a major vendor in the utility space has licensed the application.

"It's a proving point that companies value the solutions we develop for the utility model," Fournier said.