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UTILITY COMPUTING

Abstract

Mindmaps have been around since the 1960's in handwritten form but with Web 2.0 there is now software that allows others to collaborate on mindmaps simultaneously. Whether you use software or draw it yourself, it's a valuable tool for collaborative thinking and problem solving. I think the topic deserves a refresher course on why it works, how to create a mindmap and how are they are being used today.

Definition of Utility Computing

Utility computing is a service model where a service provider makes computing resources and infrastructure management available on an as needed basis and only charges the customer for specific usage. It's not an entirely new concept. It's similar to “time sharing” in the 1950's where companies would buy processing time on shared mainframes. In the 1980's businesses were outsourcing or transferring processes or manufacturing to a third party company in an effort to lower costs. In the 1990's service providers offered outsourced data storage, Web hosting, help desk service and security.

Outsourcers and service providers still exist today but the costs of transition and implementation and contracts that can last years make it a less desirable option. With out-sourcing you may pay for availability of storage or applications that may not be used.

Utility computing is a hybrid of outsourcing and service provider arrangements in that you don't have to sign a long-term contract and you pay as you go. Utility computing is becoming popular for it's potential to cut costs and it provides flexibility and scalability. The benefits of utility computing include no hardware or software investment and you pay only for consumption.

Nicholas Carr in his new book “The Big Switch” compares the emergence of utility computing to when people switched from private waterwheels and steam engines to the electric utility. In the days when electricity became a utility and businesses had to trust an outside supplier is much like how people feel in IT when they rely on third parties for resources. He describes electricity and information technologies as general-purpose technologies meaning they can be used for many different purposes. The comparison

works at an economic level in that you only pay for what you use, but he acknowledges the differences technologically:

The main difference is that IT is extremely modular in a way that electricity

wasn't. With the electric utility, they produced the power, transmitted the power,

and then everything on your side of the electric socket was your response-

bility. With IT, all of the functions can be considered as individual modules.

Raw processing can be done either locally or over the net; data storage,

same thing; and all the applications - unlike electricity - can also be supplied

either locally or over the grid (Carpenter, 2008).

Carr goes on to say that the components of computing being data processing, data storage and data transmission make it a general-purpose technology. “Similar to the electric grid, you can build all sorts of applications or appliances on top of it to do all sorts of things” (Carpenter, 2008).

Successful online businesses use utility computing

Many companies are using utility computing to create successful businesses with hardly any employees. When Google purchased YouTube for $1.65 billion in 2006, You Tube had 60 employees and they worked in a small office above a pizza joint in San Mateo California. The company's servers were maintained in utility data centers off-site. “Every day, people all over the world watched more than 100 million YouTube video clips and uploaded some 65,000 new videos to the site” (Carr, 2008 p. 129). YouTube was only ten months old when it was purchased by Google.

The Internet telephone company Skype was purchased by eBay for $2.1 billion in 2005. With just 200 employees Skype had 53 million customers and signing up 150,000 new subscribers each day (Carr, 2008 p. 130).

Craigslist, the online classified ad site was incorporated by software designer Craig Newmark in 1999. By 2006, it had bulletin boards for 300 cities and more than

ten million visitors a month. The company had just twenty-two employees (Carr, 2008 p.131).

PlentyOfFish became one of the largest online dating services in Canada, the United States and the United Kingdom and had only one employee, it's founder Markus Frind. Frind wrote his own code and reportedly made as much as $10,000 a day from AdSense advertisements (Carr, 2008 p. 131).

According to Nicolas Carr the cost of providing their products is virtually nothing because their business is built on software code. They don't have the overhead of purchasing and maintaining equipment or facilities like traditional companies do.

All of these businesses demonstrate an unusual sort of economic behavior that economists call “increasing returns to scale.” What it means, simply, is that the more products they sell, the more profitable they become (Carr,2008 p. 132). For these reasons and the fact that most of their profit is from advertising, these companies can offer their services free of charge, something not heard of before utility computing.

Companies that produce physical products will eventually pay more for the materials to make and sell its products and this will eventually decrease their profits.

Carr maintains that the success of online companies is having an impact on traditional companies, for example, loss of advertising and readership is having an adverse affect on the newspaper industry which is showing a trend in layoffs of reporters and newsroom staff.

What is the difference between utility and cloud computing?

Utility computing is sometimes referred to as cloud computing but they are not the same thing.

Cloud computing relates to the architecture in which the utility services are designed. “The idea that applications run somewhere on the “cloud” (whether an internal corporate network or the public Internet)” (Perry, 2008). As users we don't know or care where the applications run but for application developers and IT operations it means that they can develop, deploy and run applications that are fast, can grow and rarely fail without concern for the location of the infrastructure.

According to Geva Perry, chief marketing officer at GigaSpace Technologies, cloud computing infrastructures should have these characteristics:

  • Self-healing: Have a backup application ready to take over in case of failure.
  • SLA-driven: Define service-level agreements that specify policies regarding time-frames for responding to requests.
  • Multi-tenancy: Build the system to allow several customers to share infrastructure without them being aware and without compromising the privacy and security of their data.
  • Service-oriented: Independent services can be reused to compose other applications.
  • Virtualized: Multiple applications can run on one computer or multiple computers can run one application (grid computing).
  • Linearly Scalable: The system will be conducive to growth.
  • Data, Data, Data: The distribution, partitioning, security and synchronization of data is key.

Utility computing is the business model in which hardware and software are delivered and cloud computing is the way applications are designed, built and deployed

to operate in a virtual environment, sharing resources and having the ability to grow and self-heal.

Easing into Utility Computing

A majority of the research shows that moving to a utility model will be gradual as the technology matures. The data center of the future will have features that will reduce the manual configurations and troubleshooting chores required today. “Building a true utility computing infrastructure is at least a seven to ten year effort, analysts say”. (Bednarz & Dubie, 2003). There are steps that can be taken to consolidate, standardize and reduce complexity today:

  • Take an inventory of current hardware, software and applications and map their relationships.
  • Look to consolidate management data in one place. Managers need to have all data in one place to effectively manage. There are management systems that tie together networking, computing, and storage resource pools.
  • As projects require hardware purchases, IT managers should invest in equipment that provides features like self-diagnosis, self-healing and self-managing to reduce problem identification.
  • Decrease the number of physical servers by combining applications into larger multiprocessor servers. Virtualization of storage.
  • Implement standards for database management systems, application interfaces, development languages and middleware to improve system management and reduce complexity.
  • IT and business need to collaborate. IT must be able to map business objectives to the technology architecture to ensure the business that they are protecting their interests.
  • Consider service providers for storage or server solutions. Research the leading utility computing and technology vendors to determine what technologies will work with the current environment and then create an incremental plan of deployment to minimize risk, keep track of the progress and realize the benefit

(Bednarz & Dubie, 2003).

Network World, Inc. http://www.networkworld.com

Data centers are complex and may require more than one vendor to realize utility benefits. According to Carr, “most larger companies will need to carefully balance their past investments in in-house computing with the benefits provided by utilities” (Carr, 2008 p. 118). Customers must require vendors products to communicate so they can interoperate with each other. In the case of Blue Cross Blue Shield of Michigan, a contract to lease PC's from Compaq was secured only after Compaq agreed to hire someone with Peregrine expertise. Peregrine is the software BCBSM uses to track assets (Greenemeier, 2002).

Who is using utility computing?

In 2002, American Express signed a seven-year, $4 billion computing contract with IBM Global Services. American Express will pay for Web hosting, storage and help-desk services.

EDS signed a similar seven-year, $175 million contract with convenience-store chain 7-Eleven. Keith Morrow, 7-Eleven CIO chose the usage-based model in order to free resources needed for new IT initiatives. The agreement with EDS covers storage, hosting and maintenance of Oracle Financials, project management, and other tasks. Morrow also says “If you have an outage that costs your company money, you have to make sure it also costs your outsourcer money.” He also advises building in price breaks if the cost of the technology decreases. 7-Eleven receives price breaks if they use more storage and that gives the company incentive to grow (Greenemeier, 2002).

In 2004, Nokia extended a contract reached with HP in 2001 to five more years. Under the new agreement, valued at $100 million dollars per year, Nokia will move to a service based model and will be billed based on actual service consumption.

Utility Solutions

Derrick Harris, Editor of GridToday says that if there was any doubt whether users would stick with utility computing, utility computing is still here and has evolved into different forms than when it first surfaced.

Sun Microsystems' Network.com

Allows users to run applications on the Sun Grid for $1/CPU/hour. Sun offers a catalog of applications for many industries. The customer just submits their data, there is no need to write code to fit the infrastructure.

Sun is hoping to attract more users by supplying third party customers with software services without having to host applications on their internal hardware.

Amazon's Elastic Compute Cloud (EC2)

Amazon's Elastic Compute Cloud, EC2, is a virtual computing environment designed for developers and uses Web services. Applications can be loaded and security and network access can be configured on the Web. EC2 works with Amazon Simple Storage Service (S3) for a combined computing and storage service. Like Network.com, EC2 is popular with software vendors who want to offer software as a service.

Cassatt Collage

Collage allows utility computing within an enterprise data center by managing physical, virtual, application server, and network resources. The Network Virtualization Service (NVS) software configures network switches to shift and share resources where needed in a virtual local area network (VLAN). The metering function is unique in that it monitors capacity across the data center to track utilization and forecast capacity and can be used for chargeback.

3Tera AppLogic

AppLogic is another in-house utility solution that is compatible with existing operating systems, middleware and web applications. The system allows existing software to be packaged into self-contained portable applications that can be easily deployed and scaled to servers on any AppLogic grid anywhere in the world (Harris,2007).

IT skills in utility computing

IT professionals with the following skills will be desirable in a utility computing

environment:

  • Knowledge of software-as-a-service applications and the ability to integrate these components to meet the needs of business.
  • Knowledge of open source technologies like Linux, Apache and MySQL.
  • Project managers that can assemble teams of in-house developers and service providers to deliver solutions in much shorter timeframes than in the past.
  • IT professionals that can deliver solutions to business cases using the appropriate technology.
  • IT professionals that recognize the value of outsourced services and integrating these services when appropriate to keep costs low.
  • IT professionals that have skills to deploy applications to a variety of devices including mobile and thin-client devices.
  • IT professionals with security expertise will be needed to manage network security (Innovations, 2008).

Future of Utility Computing

A major concern with allowing another company to provide service is security and reliability. As the utility model grows the company providing the service must provide

adequate security or they won't survive. I think security and reliability will improve over time especially if provisions are built into the utility computing contract.

There are so many benefits of utility computing that it is sure to grow in the coming years. With storage, applications and databases being available to access on demand over a network reduces cost and management overhead and frees up resources to work on other projects. I think the great advantage of the utility model is that it makes technology available to small business that they could never afford to build and puts them on a level playing field with larger companies.

What is coming? Nicholas Carr has reported in his blog that he is hearing rumors that Microsoft is going to build two dozen data centers each about 500,000 square feet all over the world. Rich Miller at Data Center Knowledge equates this with “filling 65 Wal-Mart Supercenters with servers…a computing footprint more than twice the size of the Vatican” (Farber, 2008).

In February, Yahoo announced it was switching from a usage based price for small business services to a flat rate of $11.95 per month for unlimited web site storage, data transfers and email storage. Many of the stores on eBay and Amazon.com receive small business support from Yahoo and this will definitely increase usage (Reuters, 2008).

I believe Carr may be right when he said in twenty years PC's could be replaced with thin clients and storing files and running applications will be supplied over the Internet (Carr, 2008 p.81).

References

Bednarz, A. & Dubie, D. (2003). How to: How to get to utility computing.

NETWORKWORLD. Retrieved February 27, 2008 from

http://www.networkworld.com/research/2003/1201howtouc.html

Carpenter, J. (2008). Q&A: Nicholas Carr on the big switch to utility computing.

Computerworld Development. Retrieved February 20, 2008 from

http://www.computerworld.com/action/article.do?command=printArticleBasic&articleId=9057379

Carr, N. (2008). The Big Switch: Rewiring the World, from Edison to Google. New York:

W. W. Norton

Farber, D. (2008). Outside the Line Blog. Retrieved March 3, 2008 from

http://www.news.com/8301-13953_3-9883972-80.html?tag=newsmap

Greenemeier, L. (2002). Pay As You Go. InformationWeek. Retrieved February 20,

2008 from

http://www.informationweek.com/story/showArticle.jhtml?articleID=6501783

Harris, D. (2007). On the Origin of Utility Computing. GRID today. Retrieved February

20, 2008 from http://www.gridtoday.com/grid/1792394.html

Innovations (2008). Skills in the age of utility computing. Retrieved March 3, 2008 from

http://innovations.ziffdavisenterprise.com/2008/02/skills_in_the_age_of_utility_c.html

Perry, G. (2008). How Cloud & Utility Computing are Different. GigaOM. Retrieved

February 27, 2008 from

http://gigaom.com/2008/02/28/how-cloud-utility-computing-are-different/

Reuters (2008). Yahoo ends usage charges on small business sites. c/net NEWS.com.

Retrieved from http://www.news.com/Yahoo-ends-usage-charges-on-small-business-sites/2100-1032_3-6229530.html?tag=topicIndex

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