We have grown so used to utilities like water and power being delivered to our homes, that we forget that this was not always the case. In the early part of the twentieth century, many manufacturing companies generated their own power with steam engines and dynamos. However, this soon changed as electric companies began setting up large electric grids, and the cheap power supplied by the utilities brought about economic and social transformation, and powered an industrial boom.
I believe today a similar revolution is underway, in Information Technology.
For IT to become even more valuable, enterprises need to change the way IT is looked at. There is a need for a paradigm shift from back office processes to a more front-end approach. Hence, along with the attributes of flexibility, agility and dependency, enterprises now expect IT to deliver more direct and tangible business value. This shift can be achieved by turning IT into a utility, making it more accessible and integrated into business solutions. Enterprises will then have the option of paying for IT services as a utility, on a pay-per-use basis, like they would for accessing electricity, gas, water and other utilities.
Transformation of IT into utility services will be largely guided by enterprises wanting to variabilize their infrastructure costs, and extending the power of IT into the hands of its users. Variabilization will help enterprises ride out a business downturn without being weighed down by too many fixed costs, whereas in a buoyant market, they will obtain much higher profit margins compared to firms that have high fixed costs. By metamorphosing the fixed costs into operating expenses, variabilization increases a firm's competitiveness, cost efficiency and business agility.
Are we there yet?
Standardization will greatly determine the transformation of IT into a utility that can be uniformly accessed by diverse enterprises. To turn technology into a 'utility' within the company, enterprises need to test the robustness of the model and the processes of managing the particular technology. Privacy and data sensitivity are other crucial concerns to be addressed. When technology turns into a utility, and information is stored and transmitted trans-border, the physical location of the data and its security becomes an issue. Another critical aspect of this change that enterprises cannot afford to overlook is that an organizational move to adoption of IT as a utility needs a comprehensive change management program, encompassing technology, legal, talent, and behavioral aspects.
IT as a utility is not a mere pipe dream. Recently, the University of Southampton announced that it would establish a research network of universities to develop IT as a Utility (ITaaU) as part of its Digital Economy Programme. This is just the beginning. The years ahead will see this revolution gather further momentum.