Bacon's Rebellion

IT as a Utility?

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by

James A. Bacon
in

Stephen Pearlstein’s Washington Post column on IT services as
a utility, analagous to the electric company, is good background for perhaps better understanding the mega-forces driving the Virginia-Northrop Grumman IT outsourcing project. His subsequent online chat is useful, too.

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One response to “IT as a Utility?”

  1. Anonymous Avatar
    Anonymous

    I’m not so sure I can agree with the comparison of IT to an electric company. Everyone uses electricity pretty much the same. The power comes to your home, business, etc. and you plug in things. Electric appliances are for the most part standardized in the U.S. Everthing comes with a plug that works almost anywhere. The amount of electriciy can be measured in real numbers and consumers can be charged accordingly. On the other hand, IT hardware and software is not the same for everyone. While it may start out the same when it is purchased from Peoplesoft, Dell or Gateway it becomes very different when changes are made to provide the desired performance/security for each user. In addition, I would think it would be much more difficult to determine each consumer’s “usage”.

    I agree that companies are moving toward the decentralization of IT to save money but I’m not so sure that’s the best choice. Saying that a company no longer has to “worry about” their IT is so untrue. There is a huge amount of overhead in making sure you are receiving the services you need as your company evolves.

    I think the same could be said for many other functions. Why not outsource your accounting functions? Many companies use accounting firms. Why not just create mega-accounting-firms to create financial statements, why not create mega-education and have it all televised out to the students all over the country?

    The bottom line is performance. Sure, you can pay someone else to do any function but can you monitor it properly to make sure you are getting what you need? And what happens when the mega-company decides they want a price-hike like the current cable companies, phone companies, electric companies,etc? Can state government afford a sudden hike? And what about security? Is someone in India going to be able to keep your data secure?

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