Success in Utility Computing Requires Building Customer Road Maps and Extending Into the World of non-IT, IDC Finds

FRAMINGHAM, MA – July 12, 2005 – According to an IDC survey of mid- and large-sized enterprises with average revenues of $10.8 billion, outsourced utility computing will have a dramatic impact on a broad range of services industries, ranging from the IT and business process services markets to the communications market. While this study provides insight into patterns of customer usage in leveraging utility computing across applications and business processes, the study also emphasizes the need for players in this market to extend their opportunities in providing this service beyond the traditional IT and business processes markets to non-IT environments.

"Players looking to compete successfully in the market for utility computing services will need to develop very robust road maps of how customers will adopt utility-based services that cut across entire organization service requirements," said David Tapper, program director for IT Outsourcing, Utility and Offshore Services at IDC. "Many players will need to make radical adjustments to their delivery capabilities, partnership ecosystems, business models, and service offerings in order to ensure success."

IDC recommends the following as just a few of the key actions that service providers will need to take to compete in the market for providing outsourcing utility computing services:

– Develop road maps of adoption and transformational models for not only customers but also service providers themselves

– Offer unique types of services including "franchised" offerings and "free" services to both large enterprises and small- and medium-sized businesses (SMBs)

– Build market strategies for the SMB space, emerging markets and "non-IT" technology environments

"While developing comprehensive road maps of customer adoption and entering new markets is required to build market opportunities, success will also demand that players take some unique risks," Tapper added. "These risks will involve establishing atypical partnerships, such as between outsourcers and online providers; pursuing emerging markets as 'first adopters', and making radical changes to investment models."

This IDC demand-side study, Utility Computing: Demand-Side Needs and Customer Adoption Road Maps (IDC #33508), provides potential players ranging from service providers to technology vendors, with a view of customer road maps in adopting outsourced utility-based services. These findings provide detailed views of customer adoption across private and public utilities, applications and business processes, and front and back-office environments. The report also presents in-depth information on the profiles of providers preferred by customers, as well as the type of packaging, pricing and contract structure that would be required to meet customer needs. Finally, the report provides guidance on key factors that will help players succeed this "disruptive" market.

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