Cloud Computing is not Utility Computing

In our previous article “Can the Vendors Eat Their Own Dog Food on Cloud Billing?” we offered a provoking insight on what it is that Cloud Computing is and how it should be billed to you. It was suggested that Cloud Computing was fundamentally about “making IT a utility”.

However is  “Cloud computing” a utility computing? And if it isn’t, what is it?

Tom’s concupiscent article asserted that “Cloud must bill like a utility company, small standing charge and then a charge per unit used“. You may, like Tom, like this model.

I do not.

I do not because my experience of utility companies is not good, and never has been once I was in charge of paying the bill. “Use X amount of time get charged XX amount of *dollars*”? When has that happened consistently? To be fair, do you know in advance what your winter fuel consumption is? What your air conditioning charges will be in the summer? When your kids LEAVE THE LIGHTS ON IN A ROOM THEY ARE NO LONGER IN? What your cell phone use may be when you go on a trip? What the fuel price for your car may be? You can estimate, sure and then pay a set amount per month (on a contract) or you can leave it as pay-as-you-go and end up going to your dad when your phone runs out.  I tell my children “tough”.  This may work for teenagers, but how does “tough” work for your business?

I’m going to let “dollars” off for a moment – we’ll focus on “utility company”.

My gas, oil, electricity, telecoms prices fluctuate. I have a fixed charges sure linked to a contract, but depending on my location and demand I can be charged more or less. Often, it fluctuates in a way I have no control over: at all. I can move my supplier sure, but I don’t have an infinite choice of suppliers and for some of those services (phone for instance) changing supplier impacts the service I have in time and effort to move the service: I may experience a loss of service. This would be  frustrating for me and my customers.

Importantly, “billed based on time“? How does a CEO know how much time an organisation is to use in terms of compute-time? Its a fair point to say that 9 women can’t produce a baby in 1 month – but that’s not to say that all projects have a strict definable timeline with a readily understood demand. Sometimes compute time will be more, sometimes less. It is this equation that taxes organisations in terms of “utility computing”.

To be fair, “utility computing’ is a young market and as a young market its adopted pricing models that offer easy access to consumers and readily useful cash to suppliers. But a utility pricing model will struggle to be widely sustainable in the manner described and offers little incentive for some suppliers to change their current models.

Moreover, “cloud computing” and “utility computing” are different things in my opinion. “Utility computing” incorporates “cloud” technology, but “cloud computing” is a far broader concept. Ultimately, both (re)develop and maintain a variety of price models but a “utility model” will not be the only one. Telecoms providers for instance, realised this for mobile and home use (where they moved from a pay-per-use to a contract model ). Indeed, given data centres operate on  electricity themselves, “utility computing” will have to re-evaluate their own models should electricity supply services and prices fluctuate more.

Nearly forgot “dollars”. I give you Exchange Rates. Enough said. You want a “choose your supplier” model? Anticipate that supplier might not bill in your local currency and will pass on the current exchange rate. It is no longer X for y it is x for Y*fluctuating-rate.

Ultimately, it is not the utility model I have a problem with, despite my venting. But there is a difference between Utility Computing and Cloud Computing that is  crucial. Utility Computing is focused on a business model in which IT — hardware and/or software — are delivered with minimal capital expenditure in an relatively linear demand pattern. Cloud Computing more generally relates to the way you design, build, deploy and applications that operate in an a virtualized environment, allowing you to share resources and boasting the ability to dynamically grow or shrink as needed. You can deliver Cloud Services without a utility billing model.


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