Sidebar: Vendors Answer Concerns About On-Demand

Computerworld - To identify the issues that users are contemplating with regard to on-demand computing, Computerworld talked with three CIOs who are examining the computing model. Their top concerns were then posed to three leading on-demand vendors. Here's what representatives from IBM, Hewlett-Packard Co. and Sun Microsystems Inc. had to say:

CUSTOMER CONCERN: Vendors have varying definitions of on-demand.
IBM responds: Customer definitions of on-demand vary widely as well, points out John Lutz, vice president of on-demand sales. "When I do customer briefings, I ask customers, 'What is on-demand?'" he says. "Some say it's a code word for outsourcing, or it's all about utility computing, or it's leasing on steroids. I can never predict which one it's going to be."
That's why Lutz thinks a good on-demand partner should offer hardware, software, hosting and services that can be mixed and matched into a variety of on-demand options to match these various needs and expectations.
IBM approaches customers with a three-stage strategy, he says. First, find out where the customer needs more flexibility with its business processes. Next, determine which infrastructure pieces are needed. Third, how does the customer want to acquire and manage the technology -- whether IBM hosts the application or the customer runs it in-house or a mix of the two. "Customers might opt to run it themselves and switch to our center when demand goes up," Lutz says.
Sun responds: Bill Mooz, senior director of utility computing, contends that most vendors agree on the definitions of two out of three aspects of on-demand computing. The first component is financial -- whether you choose pay-per-use, institute a chargeback policy or otherwise determine what price you're paying for each consumed unit of computing. The second piece is determining whether your architecture will enable you to create a common pool of resources that can be allocated to different services. "Where things get fuzzier is the level of services that sit on top of that," Mooz says. This includes how optimized individual products -- the servers, storage and software -- are and the available management technologies to run them.
"If you're a large outsourcer, the on-demand world tends to be an outsourcing-related solution," Mooz says. "If you are a software management company, you'll focus on the management piece. We like to think we bring all the components together in an open fashion."

CUSTOMER CONCERN: To benefit from on-demand models, you need to buy the newest equipment.
HP responds: HP offers customers lease conversions, as well as a buyback program for older equipment, according to Nick van der Zweep, director of virtualization and utility computing. New equipment can be bought, leased or purchased with usage-based pricing. So far HP has sold 10,000 usage-based pricing units.
But van der Zweep points out that customers can also opt not to purchase the server at all. These customers choose a hosting strategy, where they pay on a usage basis that's linked to a business metric. As business increases, they pay more, and as business decreases, they pay less. An example is Amadeus Global Travel Distribution SA in Madrid, which provides the airline reservation system used in Europe. HP provides and manages the technology infrastructure for Amadeus, which pays for the use not just of CPUs but also for storage and networking. "It's up to us to add more equipment as the business requires it, and when it scales down, we take infrastructure out," van der Zweep says.