Pricing utility computing services

Utility computing is the emerging term for the delivery of information technology in a "pay-as-you-go" model. It has attracted considerable attention as a means of delivering lower total cost of ownership (TCO) and more predictable service levels for in-house IT At its heart, utility transformation allows IT consumers to switch from capital-based procurement of IT assets to operational cost procurement of IT services. Unsurprisingly, the change is closely linked with the adoption of service oriented architectures (SOA) and service oriented infrastructures (SOI). In fact, utility transformation often provides the overarching business and financial framework for driving a move to SOA. It defines the IT chargeback environment and the resulting compelling business context. Key to the success of utility transformation is the implementation of appropriate service pricing models. A variety of innovative pricing models can be used to improve service predictability, to create incentives for certain behaviors, and to manage the flow of notional revenue to the IT organization (ITO). They are invaluable to the SOA business case. This article examines several such models.