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Article by Mohan Babu


Utility-based computing: Future of Indian IT?

Focusing on the implementation of utility-based computing, MOHAN BABU writes that the lack of basic infrastructure and low rate of IT utilisation (outside the core software industry), may be a big advantage in India, for starting with a clean slate

In my column recently, I had talked about the various predictions and trends shaping up in the tech world. In the column, we also looked at some of the recent predictions made by Gartner. Of all the recent trends, perhaps the most notable, and the one receiving most focus, is the shift towards utility-based computing. Interestingly, the IT giants including Microsoft and IBM, are also betting their future strategies on this paradigm.

Before we get into further details, we will first try to answer the question: what is utility-based computing? Last year, Bill Gates set a new agenda for Microsoft around “trustworthy computing”. He defined it as: “Computing that is as available, reliable and secure as electricity, water services and telephony.”

He went on to draw an analogy between utility companies and how they provide ubiquitous services to individuals and companies. He was evangelising a similar ubiquitous service for software systems too and it does sound attractive. As defined by a recent Computerworld article: “Utility-based computing is an attractive concept, both from an operational and a financial standpoint. Com-panies pay only for the CPU, storage, servers or other equipment and services they need; costs are fairly predictable; and IT organisations can ramp up quickly with new applications without having to build out additional infrastructure, buy equipment or add personnel to maintain those systems.” In a sense, utility computing will resemble a grid of inter-linked resources than a single outsourced data centre.

The trend towards utility-based computing, although currently at a very nascent stage, may be helped by another major paradigm shift: movement towards large-scale IT outsourcing. Most Fortune 500 CEOs do not need a hard sell on IT outsourcing as the cost benefits are already very well documented. This is especially true of IT systems and software that are not the core competence of organisations. For instance, in most organisations, HR and payroll management systems are not the core competency, but just an additional functional area that needs to be taken care of.

Organisations are increasingly outsourcing such systems to big integrators—the likes of IBM, EDS, Accenture, et al. These integrators, in turn are looking for ways to cut costs further by either subcontracting the work or utilising economies of scale, where utility-based computing comes into play. Many of these big players have started offering utility-based computing, especially industrial grade solutions, as a suite of solutions to complement their outsourcing models. In the past few years, IBM, HP and Sun have invested in developing technologies for utility computing infrastructure, and with the big players marketing the solutions, others are beginning to take the bite.

Let us now shift gears and see what utility-based computing can do for a country like India. There are two key arguments one could make for the adoption of utility-based computing model in India:

* Lack of basic infrastructure may be an advantage: Firstly, a look at the lack of basic infrastructure and low rate of IT utilisation (outside the core software industry), which may be a big advantage. This lack of infrastructure is almost similar to the giant leap we have taken in the adoption of wireless technologies where we basically started with a clean slate. With no “legacy” technology to fall back on, Indian entrepreneurs and telecom companies were able to directly leapfrog into the adoption of latest technologies with very little resistance, done at a very low cost. This same argument can be made for the adoption of utility-based computing.

Indian IT is divided into two disparate groups: the haves, i.e. the big software giants and IT companies; and the have-nots, i.e. the rest of the industry—traditional companies which have been slow to adopt software technologies. This presents an enormous opportunity to push the use of utility-based computing, whereby the companies which want access to the latest payroll, HR or CRM systems only pay for the transactions they have, instead of investing large sums of money in laying the groundwork.

* Bottom of the Pile (BOP) mentality in India. In a recent article on “Serving the World’s Poor, Profitably,” Professor C K Prahlad, the renowned management guru and thinker, talked about the various strategies for serving the BOP markets in India. Although the article talked mainly about the consumer goods industry and how Multinational Companies (MNCs) could fine-tune their strategies to serve the bottom of the pile, this notion holds great promise for Indian IT companies too. Indians are generally loath to invest large amounts on infrastructure and utilities unless a definite ROI can be assured. If a large software vendor can provide pay-as-you-go utility based computing assuring the latest systems at a per-transaction cost, it is sure to capture the imagination of the large traditional companies and multinationals in India.

With these two arguments in mind, perhaps it is time for some of the big players in Indian IT, or even some of the multinational software giants to start thinking of ways to not only set up a base but to try and exploit the domestic market.





About the Author

  • A Bio and profile of the author, Mohan Babu, can be found at his homepage
  • Mohan has authored a book on Offshoring and Outsourcing (Publisher McGraw Hill, India), a link to which can be found here
  • Mohan has also authored an Online book on "Life in the US," available for free download.
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    ©Mohan Babu: All Rights Reserved 2005

    Mohan Babu is an international consultant trying to find the ‘sweet spot’ where IT meets business. E-mail: mohan He is also the author of a recent book on "Offshoring IT Services"

    All rights are reserved. Mohan Babu ("Author") hereby grants permission to use, copy and distribute this document for any NON-PROFIT purpose, provided that the article is used in its complete, UNMODIFIED form including both the above Copyright notice and this permission notice. Reproducing this article by any means, including (but not limited to) printing, copying existing prints, or publishing by electronic or other means, implies full agreement to the above non-profit-use clause. Exceptions to the above, such as including the article in a compendium to be sold for profit, are permitted only by EXPLICIT PRIOR WRITTEN CONSENT of Mohan Babu. 

    Disclaimer: This document represents the personal opinions of the Author, and does not necessarily represent the opinion of the Author's employer, nor anyone other than the Author. This Article was originally published in Express Computers


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