INDUSTRY

FRAMINGHAM, Mass., According to the results of an IDC study examining the services perspective of utility computing, nearly 65% of 34 potential customers interviewed indicated that they are interested in leveraging this type of service. While the market for utility computing, on- demand services is in its early stages, responses from these potential customers provided a look under the covers at what customer expectations are in buying these services as well as in working with companies that want to sell these offerings. IDC views utility computing as the "next generation" of provisioning IT services that extends from its roots in outsourcing and managed services. Essentially, IT is moving from being managed by a third party (service provider) as a dedicated set of IT services for "one" customer's infrastructure to being managed like a true "public" utility. In the former model of a dedicated infrastructure, providers usually take control and ownership of assets and staff as part of an outsourced agreement, or just take control with no transfer of staff or assets as part of a managed services agreement. In a "public" utility model, "unrelated" customers leverage a common, shared infrastructure that is owned by the service provider and in which there is no transfer of staff. "Although the utility computing market is in its nascent stage, there is tremendous customer interest in leveraging this type of service offering," said David Tapper, program manager for IT Outsourcing and Utility Services at IDC. "Given the potential impact this type of service could have on the ecosystem of IT and communications services providers as well as technology vendors, IDC believes it is critical that players wanting to succeed in this market seize the first-mover opportunity to build their strategies, offerings, and market position to improve the likelihood of establishing a leading position." IDC believes that for service providers to compete in this market successfully, they must consider the following: -- Thoroughly educating customers on utility computing and its benefits -- Establishing an internal champion within customer organizations -- Overcoming a considerable range of customer concerns, least of which is proving that utility computing services work -- More clearly defining their market position and utility computing strategy -- Providing a compelling, robust value proposition to gain customer trust -- Developing a strong channel strategy to ensure gaining access to the "point of sale" -- Focusing on early adoption points This demand-side IDC study, Utility Computing: A Look at Demand-Side Needs for On-Demand Computing Services (IDC #28864), provides an in-depth look at the perspectives of potential customers in leveraging utility computing, on- demand services. In addition to customer perspectives, this study provides a broad set of findings that includes customer expectations for pricing, type of service offerings, and preference for suppliers. The purpose of this document is to help players that want to compete in this emerging market begin building a utility computing strategy, understand what first steps need to be taken to identify potential customers and what are some specific customer requirements that have to be met and concerns that have to be overcome.