So this recent article on how Outsourcing is changing got me thinking about how different utility computing is from outsourcing - though many try to place them in the same buckets.

Financial Differences:

1. Transparent usage based pricing (come on Sam P.)
2. $0 commit contracts - Incurred business/financial liabilities
3. Shortened cash conversion cycles if expense can be directly tied to produced revenue in same period...
4. No pre-provisioned assets which whether in-house or outsourced drives some expense back to business
5. EA Sports launches new game, typically ramps up infrastructure 6mo ahead to ensure that it run's at scale, they then incur the expense no matter the revenue. With Sun Grid, they incur some cost to test at scale, develop performance policies, and then as load ramps up = expense, so does revenue.
6. Economic advantages can be re-invested for application re-factoring/tuning for improved out term (based upon term of ROI) advantage.
7. The same is true for outsourcing, but change fees and potential for penalties typically make this model substantially less attractive
8. Fine grained financial control (over time to the transaction level); which allows better accounting - is this business worth doing based upon cost vs. margin? most IT departments and Outsourced contracts are too coarse grained to provide this information back to BU.
9. (scary) futures markets, hedging/speculation

Business Models Enabled:

1. New business opportunities emerge around “intermediation” - disinterested 3rd parties that clear transactions = “market makers” in areas of healthcare txn clearing, intelligence sharing, transaction aggregators
2. Subscription based software (software as a services - saas) - digital business processes monetization e.g. Salesforce.com and Salesforce.com.next where the process owners may not own the data, but the processes (see ILM below). This, by the way, is estimated to be an $8B business by '07 per IDC.
3. ILM, leverage shared global namespaces and meta-tagging to evolve a HSM strategy inclusive with archival partners (best in class) - potentially allow users to “own” their own data... e.g. I want to have control of my own financial, healthcare records, and don't trust my doctor/healthcare payor to do it on my behalf. And what about “personal archival storage” - identities, licenses, photo's, videos, music, critical digital documents.
4. Make money from contributed IC... component ecosystem
5. Make MORE money from invested capital (power production) or invested intellectual capital (harnessing produced power with know how) due to multi-tenancy = volume/scale

Operational Efficiencies:

1. Multi-source, contingency/DR planned across multiple sites
2. Servicable within an existing data center - take our Sun Grid patterns, become certified, offer excess to community for profit (improved cost profile)
3. access to IC/best practices and core facilities around both the standard offers, and through CSO for custom implementations
4. customer has ability to build a site/pod to our specification and “sell” unused cycles back to the grid once “certified”
5. increased ability to apply policies to workload management
6. customer can scale internal workloads to the grid (peaking capacity)
7. Choice with control - can engage on grid at multiple levels depending on appetite for management and standards, can furthermore extend telemetry and control differentially to feed back management information to end customer for management purposes.
8. Can be used by CFO/CIO as drivers to a consistent enterprise architecture w/in a company
9. Fine grained metering can help BU's better control costs... if I know the cost of a txn, can I better judge whether this transaction is worth tuning or even doing?

Developmental Improvements:

1. Perfect platform for open source development and support of developer communities (keep each developer's environment consistent) = lower complexity, inc. productivity.
2. Collaboration network to allow for shared code development (e.g. outsourced development) using a “dis-interested 3rd party” to host the environment
3. Have platform for systemic test at scale (ability to leverage deployment plans vs. pulling cable to re-factor core infrastructure)
4. Multi-tenant basis of Sun Grid is equivalent to isolation being looked for within Corporate BU's for next step in consolidation
5. Secure platform for SOA provided by Sun Grid Federated Identity, and Entitlements systems - choice with control
6. Access to tools such as SALSA for improved architectural control in development projects (SALSA is a pattern recognition and enforcement tool that helps to ensure consistent enterprise architecture pretenses are maintained, but it takes substantial resources to run) - yet another development service on Sun Grid.
7. Component ecosystem - free/fee componentry from base services, to service aggregates - creates “market” for components and business processes that are orchestration models through a component “vending machine”.
8. Tooling for business developers including “wiring” tools to orchestrate business processes across an Adaptive SOA
9. Tooling for workload analysis to allow for “best” provisioned resource(s) - splitting job flow across pods of different types e.g.Niagra(tm), Opteron(tm), SPARC based upon “best executor” and interconnected by high-speed mesh (NUMA backplane). Check outAndy Ingram's work on workload analysis

IMO, we just cannot get away from the fact that outsourcing contracts & providers will typically invest in the lowest cost of service to enable an SLA (whether it's well written by the customer or not because tradeoffs cannot be made accurately a priori (see JPMC and my response - “yeah right”)). Benefits to outsourcing, typically financial contribution in year 1 with downstream being less lucrative for the business - after all, someone does have to pay. Benefits for Sun Grid, typically start in out months/year due to start up/Non-Recurring Engineering costs, but downstream can be substantial -> small depending on customer choice to re-invest dividends and cost of their IT today. Outsourcing seems to be a CAPEX/OPEX driver, but Sun Grid can also drive revenue opportunities because of open-market & community nature of ecosystem that we need to construct. Will there be a market for highly tuned financial instruments that an individual/company can use to offset development/support costs? can you do that with outsourcing? Here's for cheap, with choice, and control!

In short:

Outsourcing.isVeryDifferent(new SunGrid()) == true;

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