Adopting A Utility Approach

When Annika Sorenstam was preparing to make history in May 2003 as the first woman in 50 years to compete in a PGA Tour tournament, officials saw the tremendous amount of publicity being generated as an opportunity to promote their Web site's newest technology, TourCast.

Launched earlier in the year, TourCast provides golf fans with a a live 2-D virtual representation of PGA Tour events. The $9.95-per-month subscription service lets users see a shot-by-shot representation on a virtualized golf course of individuals participating in a tour event, as well as statistical analysis and a variety of features to enhance the viewing experience.

For TourCast, as well as other features on PGATour.com, to be financially viable, the association needed to find a new kind of IT model, says Steve Evans, VP of information systems for the PGA Tour. He turned to a utility-computing framework that ties operational costs directly to the number of users on the site, as well as the bandwidth used.

PGATour.com was already using a utility-computing-based platform for its ShotLink system, which supplies a live, real-time score card for Internet users and tour personnel, when it outsourced the system two years ago to IBM. Evans envisioned TourCast as a major step beyond ShotLink and knew he needed additional resources and technical capabilities.

"As part of the business model, we needed to tie the cost of operation to the revenue produced by subscriptions," Evans says.TourCast traffic demand varies significantly based on a number of factors. In general, professional golf tournaments are played 12 hours a day, four days a week--peak demand time for TourCast usage. And certain events--major tournaments such as the Masters or the U.S. Open--generate more traffic than lesser tour events.

At the Bank of America Colonial 2003 tournament in Fort Worth, Texas, PGATour.com offered a promotion for free access to TourCast for the tournament's first two days, which also happened to be the days that Sorenstam played in the event. The interest in her groundbreaking participation, along with the promotion, increased TourCast usage on those days tenfold, Evans says. As a result, PGATour.com saw a spike in subsequent subscriptions.

Having a utility-based platform for the service made the promotion possible and has helped the Web site push its subscriptions into the tens of thousands. "This was a marketing promotion that we wouldn't have been able to do if it had required us to go out and buy additional servers just to handle that two days of peak demand," Evans says. "We're paying for the resources we're using, rather than having to make a big capital investment to build out an infrastructure as large as any predicted peak demand and then depreciate that often-underutilized resource over a period of time."

The PGA is one of a number of businesses and organizations to turn to utility computing in order to lower IT infrastructure and operating costs and improve time to market. But there are many approaches to the goal of utility computing, which is to make computing, storage, and bandwidth instantly available on a pay-per-usage basis straight from a plug in the wall. Some turn to outsourcers or service providers for those resources, while others are building a utility-computing infrastructure in-house so they can provide on-demand computing resources from a pool of systems throughout a company. So many approaches to utility computing are available that research firms have a hard time estimating the size of the market.

"Utility computing is the next biggest thing that will happen across the communications industry, the IT industry, and the consumer electronics industry," says David Tapper, an analyst with research firm IDC. "This may be the biggest disruptive technology in a century. This is real, and everybody better figure out how they are gong to play in it because there will be winners and losers."Johnson Controls Inc., a provider of automotive equipment and accessories, has been rebuilding its IT infrastructure for the past eight years as its annual revenue grew from $8 billion to more than $22 billion, CIO Sam Valanju says. "Our strategy has been to convert the entire infrastructure into a utility component, paying only by use, and to see that our capital investment, if not eliminated, is minimized," he says.

Telecommunications was the first asset Johnson Controls shifted to a utility basis, followed by video- and audioconferencing, then multifunctional devices such as printers and storage. Computing networks and services are now being shifted. "We wanted to get down to the just-in-time process in the computing world that we have been using in the automotive world," Valanju says. "We now look to hold our partners fully responsible for making sure utilization levels are increased because that's how they get paid. They can't dump capacity on us and leave us to figure out how to use it."

With IT capacity planning now a combined effort between the company and its service providers, Johnson Controls no longer has to make capital investments in areas such PBXs, corporate cell phones, or disk storage. All those costs are variable, with billing fixed to actual usage.