Utility computing

Peter Brudenall, writing in TheLawyer.com, introduces what, according to Forrester Research, "could be the third major computing revolution after mainframes and the Internet". Instead of paying for a licence to use software on a per server or per user basis, the customer will pay by the hour, day or month, depending on the computing resources used. After all, why should firms run systems to handle peaks on demand, and yet leave those systems idle for the rest of the time?

The implications of what could be the next big thing in IT still have to be teased out. But the following issues will have to be considered.

What is being provided?
There is a lack of clarity at the moment which means that customers need to be specific in contractual terms about what it is they are procuring; have sufficient detail about the service levels set out in the contract; and undertake appropriate due diligence to ensure the vendor is capable of delivering on their marketing promises.

Supplier lock-in
Because of a potential long-term commitment to a vendor, the customer may be restricted from selecting another vendor with superior products or services. Since customers will be renting or borrowing resources instead of owning them, there is the possibility that either the utility computing vendor or the relationship itself will end up influencing the development of a customer's network.

Contract management
The customer must manage the strategic planning process, the implementation of the solution and ongoing operations. If the customer fails to achieve the stated business goals, legal disputes about compliance with the contract could arise.

Security
Customers will need to be quite clear and specific about the security levels required, and sufficient security warranties and indemnities will need to be provided for in the agreement. They should consider the use of third parties, such as specialist security organisations, to provide an independent assessment of remotely accessed systems.

Pricing
Given that the central marketing idea behind IT as a utility is that the data, applications and technology are available whenever needed, it will be essential that vendors can ensure that costs are more or less predictable.
Yet is this a concept that is only going to work for those businesses with high-volume data transactions flowing through their systems, such as American Express? For companies that do not experience seasonal variations in how they use IT infrastructure, the need for a utility computing-type model is arguably quite low.

Payment for software licences is another interesting area where software is sold on a pers server or per user basis. In a utility computing model, flexibility is going to be vital. Utility computing requires that software licences be made available quickly, and that consumers incur the licence fee only while the software is actually in use - a major difference from the standard approach.

Viable solution or market hype?
Customers need to separate the hype from the reality and both good business sense and good lawyers will be needed to avoid trouble. This is a trend that is worth following as it could turn the use of IT in the legal profession upside down.

Article on TheLawyer.com