Is utility computing a mere pipe dream?

It is inconceivable that any company could seriously contemplate operating without essential utilities such as electricity or water. Yet, despite the obvious need for such core services, practically no enterprise would contemplate incurring the capital expense of, for example, building a power station to provide electricity or constructing its own reservoir to keep the corporate water coolers topped up.

And, according to the fast-growing number of proponents of so-called utility computing, IT should be considered in the same way as these other essential services and purchased from a third-party specialist provider, rather than being managed in-house. One of the fastest-growing areas of utility computing for enterprises is the strategy of buying hosted applications, dubbed software-as-a-service (SaaS). This model of delivering software over the internet eliminates the need for companies to buy, build, manage and maintain key enterprise applications such as accounting, human resources, CRM and ERP.

One of the chief advocates of SaaS strategy is Nicholas Carr, former executive editor of the Harvard Business Review and acclaimed business writer. According to Carr, the advantages of buying in IT services from third-party utility providers are compelling. He believes they include reduction of capital and operational costs, lowering of maintenance expenses, enabling of rapid implementation and, ultimately, increasing profits.

“Since the industrial revolution, we have seen numerous examples of infrastructure technology, such as steam engines, electricity, telegraph, telephone systems and highway systems, and it is my argument that IT falls into that category. It is fundamentally an infrastructure technology,” Carr argued at a recent Microsoft-organised debate in London.

Causing a stir
Carr originally came to prominence when he sparked a storm of controversy three years ago with his article, IT Doesn’t Matter. While the piece was widely praised at the time as being the IT article that had been read by more business leaders than any other, the ensuing debate saw Carr come under withering attack from members of the technology industry. He was variously described as “brain dead” and “from another planet”, while at the same time his commentary was vilified as “a gross cancer creeping across society”.