The utility business model and the future of computing services by M. A. Rappa The utility business model is shaped by a number of characteristics that are typical in public services: users consider the service a necessity, high reliability of service is critical, the ability to fully utilize capacity is limited, and services are scalable and benefit from economies of scale. This paper examines the utility business model and its future role in the provision of computing services. The idea of utility computing has received attention recently and for good reason. The use of computers continues to be a rapidly expanding feature of mod- ern society, and industry has come to rely on com- puters to perform a multitude of tasks beyond sim- ple data processing and storage. Computer networks have extended the reach of computing to connect businesses across the supply chain and, in many in- stances, directly to the consumer. With the growth of the Internet, the computer has come to play an even greater role in commerce. Computing has also become a larger and more in- timate part of daily life for many people. Individ- uals now use computers to accomplish a wide array of tasks, from the complex to the mundane. 1���3 Whether it is used for communicating by e-mail and instant messaging, paying bills and managing per- sonal finances, or the pursuit of hobbies and enter- tainment,thecomputerhasbecomeanessentialtool. Indeed, the variety of tasks performed with comput- ers today would have been difficult to foresee as lit- tle as two decades ago. With all this progress has come a greater degree of reliance on computers and their connectivity to net- works, and this reliance has bred high expectations for the availability and performance of computing and networking services. This expectation is not un- like that seen in other areas of technology to which modern society has grown accustomed for example, the dependence on a ready availability of affordably priced electricity. Long ago a curiosity and a luxury, over the last century we have seen electricity grow beyond a modern everyday convenience to become a necessity in the lives of most people. The prominence of computers in society and our growing reliance on them raises an interesting ques- tion: Is computing the next utility? The answer to this question has broad implications for the future of computing. Already, the idea of utility comput- ing has begun to influence the development of com- puter technology in such areas as the auto-provision- ing of computing resources and resource sharing across a computing grid. 4���6 Its potential role in the evolution of business models for computing services is of equal importance, and that role is addressed in this paper. Common characteristics of utilities In many parts of the world, although by no means everywhere,servicessuchaswater,power,heat,light, common carrier transportation (airlines, buses, and railroads), and telephone access are typically pro- vided by a public utility. What makes any particular Copyright 2004 by International Business Machines Corpora- tion. Copying in printed form for private use is permitted with- outpaymentofroyaltyprovidedthat(1)eachreproductionisdone without alteration and (2) the Journal reference and IBM copy- right notice are included on the first page. The title and abstract, but no other portions, of this paper may be copied or distributed royalty free without further permission by computer-based and other information-service systems. Permission to republish any other portion of this paper must be obtained from the Editor. RAPPA 0018-8670/04/$5.00 �� 2004 IBM IBM SYSTEMS JOURNAL, VOL 43, NO 1, 2004 32