HP Ups Flexibility For 'On Demand'

"It's like the power company," said Irv Rothman, president and CEO of HP Financial Services. "The power is there, but you don't have to pay for it unless you flip the switch."

In HP's case, the switch is a ProLiant server with a software application that measures processor utilization in the vendor's Superdome, rp8400 and rp7410 Unix servers, Rothman said.

Under the On Demand model, when customers increase processor utilization, they pay more, Rothman said. "If the customer's IT needs peak in December, they will pay the maximum charge," he said. "On the other hand, if they only use 50 percent of their peak in July, they pay for only 50 percent."

Pete Ebeling, senior account representative at Net Direct Systems, a Cedar Rapids, Iowa-based HP solution provider, said his company has implemented the vendor's previous pay-per-use programs for manufacturing enterprises running Oracle on the back end and in SAP environments.

He said the ability to pay for the percentage of processing power used gives customers more options from a financial standpoint. As a way of controlling expenses, they can increase or limit the amount of processing power they use, he said.

"The reality is, HP is definitely differentiating themselves from IBM and Sun [Microsystems]," Ebeling said. "Their program works. It's tangible."

Currently, about 40 percent of servers with pay-per-use capabilities go through indirect sales channels, Rothman said. The technology ultimately allows solution providers to present a different total-cost-of-ownership strategy to their customers.

"For enterprise customers, you can't hardly walk in the door without talking on-demand," Rothman said. "Not everyone will buy it, but they want to talk about it."