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Power On: IT Services as a Utility

On a recent MSPTV Webcast, IT expert and managed service provider Joe Nardone of Expert Data Labs explained that the time is slowly approaching when IT services will become commoditized.

This means that storage solutions, network support, helpdesk framework and other staples of managed services will be more dime and more dozen than they currently are.

Nardone imagines a world where SMBs and even some enterprise-level groups will start paying outsourced IT shops not by the hour, not based on contract invoices, but like they would pay any other monthly or periodic bill for services: based on use.

This will lessen the dependence on the type of IT spending where organizations buy lots of processing power for servers or buy pre-packaged applications with tools they may never use.

In the case of processing power, many business are already purchasing more processing power and memory space than they actually needed. In a lot of cases server rooms can become like dreary sellers with utilization below 50 percent. Likewise SaaS applications, customized to suit a need would supplant an out-of-the-box solution or package that warrants a costly and lengthy installation.

The driving force of this change will be Managed Services Back Office solutions, which enable companies to use and pay for only the computing power they need, helping to manage the customized software that does exactly what they need when they need it.

What makes a proposition like this so appealing is scalability, as businesses can increase per-user subscriptions to accommodate growing computing requirements just as one would increase power usage to run an air conditioner in the hot summer months. The other side of that is that SMBs adopting the pay-as-you go structure can simply turn off a service or reduce a subscription according to usability.

Nardone says that's what utility is all about.

"When IT services become like utility bills, the ability to respond to customer concerns will also be easier for service providers too," said Nardone. "Based on the subscription or pay-as-you-go service level agreement if you will both the service provider and client are aware of what the service portfolio entails. It's like turn up the power, turn down the power, either way this increases profitability through scalability."

Posted by Jabulani Leffall on July 19, 2010