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In Business Operations Last updated: September 28, 2023
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Utility computing is a popular business service model that uses a pay-as-you-use approach.

If you belong to a company that has low resource requirements, you may not find cloud computing services befitting for your business. But worry no more, as we introduce you to a more convenient provisioning model named utility computing.

It can provide various IT services, including applications, storage, and computing devices. Companies that offer this service advise you about the deployment in your environment and organization.

Here, we will discuss utility computing inside-out and share all the crucial aspects of this IT model.

What Is Utility Computing?

Utility computing is a service provisioning model that offers resources to the customer based on their demands of particular arenas. There is a flat rate involved here, as costumes only have to pay the service providers for what they have used. 

The fundamental theory behind this is businesses use different amenities from the providers, such as computing, data storage space, and applications. Hence, customers get rid of hardware maintenance and management responsibility in exchange for a minimal fee. 

You can find the same concept behind cloud computing, grid computing, and managed IT services. It is one of the most popular IT service models due to its package flexibility and cost-effectiveness.

Also, it comes with a simple principle. Customers or businesses get access to unlimited computing solutions to supply that they can use whenever necessary. 

The utility can be received through a virtual private network or the internet from any location. Utility computing services include data backup, virtual servers and storage, software applications, and most IT solutions. 

No matter what, the provider governs the complete management and delivery of back-end infrastructure and computing resources. Moreover, this solution eliminates data redundancy issues by distributing the data across multiple servers or systems. 

Why is it Called Utility Computing?

To understand why utility computing is called so, let’s look into our day-to-day life. All of us need to use utilities such as water and electricity to run a regular life.

In both cases, we have unlimited water and power, though we only use as much as we need. Also, we pay for electricity and water depending on their usage.

Similarly, utility computing offers access to internet service, file sharing, website access, and other applications without any limit or mandatory payment. Depending on the number of services companies use, they must pay the service providers. 

Due to the significant similarity between the IT computing model and utility usage of our life, it is called utility computing. In fact, it has become a common model in enterprise computing as it offers several useful features and benefits. 

How Does a Typical Utility Computing Package Look Like?


There can be various types of utility computing packages for different companies. However, a typical or standard package of utility computing will include the following components:

  • The hardware includes CPUs, monitors, input devices, network cables, and servers.
  • Web browsers and servers for internet access.
  • Applications, popularly known as software-as-a-service (SaaS), for performing mandatory tasks such as emailing, communication, CRM, report generation, project management, process management, and everything else needed for the company, clients, and end-users.
  • Additionally, this IT model lets you get confidential access to certain processes of a supercomputer. Enterprises like banks and financial companies have substantial computational requirements, which keep changing rapidly. Regular computers take the maximum time to process or retrieve data, while supercomputers can execute and process the information quickly. For this reason, it also gets included in a utility computing package.
  • Middleware is another component that is a part of the package. It refers to the grid computing system running on a unique application. It divides the larger computational system into smaller chunks to make daily usage effortless.
  • Cloud storage to store the company data in offsite storage. With it, companies do not need manpower to store and manage the data. The package also saves them from purchasing onsite data storage devices.
  • An off-site backup for protecting valuable data during any catastrophe or natural calamities, such as fire, flood, or earthquake.

How to implement Utility Computing?

Utility computing is a model that has potential cost benefits as well as flexibility in scaling storage, management, and access of data to not just large businesses but also small ones. To achieve successful implementation in this process while keeping disruptions at a minimum, one must aim to start small; that is, choose one or two workloads at one time for migration, allowing the business to acclimate itself to learn from experience before scaling up.


Furthermore, using hybrid clouds further lessens the cost because you can migrate certain parts onto a cloud and have more control over your IT infrastructure, as well as give an extra layer of security should any disaster occur. Now, having all that said, in these kinds of events, if we ever need to recover from them, a planned solution will enable swift recovery from these events if ever needed.

The steps for implementing utility computing are:

  • Assess requirements: You need to assess what type of organizational workload is required by your organization. This means describing which types of computing resources, how much, and when will they be necessary.
  • Service provider: Now that you know what you require, the next step is selecting a suitable service provider who can take care of all your requirements. There are a number of different providers in the market. Therefore, one has to compare their services to select the most fitting one.
  • Stepwise Migration: After choosing a service provider, it becomes necessary that you migrate your workloads to their platform. This may entail migrating data and applications into the provider’s infrastructure or using the provider’s platform for developing and deploying new applications.
  • Managing and monitoring the environment: With the migration of one’s workloads to the cloud complete, it becomes vital to manage the cloud environment. Here, one observes usage, scales resources when the need arises, and resolves troubleshooting issues as they occur.

Next, we will look into the benefits of the Utility computing concept.

Benefits of Utility Computing

#1. No More Complex IT Management

In traditional IT systems, companies must involve a huge amount of manpower for management. For SMBs, such governance becomes highly challenging. In such situations, using utility computing could work as a savior for them.

Companies do not need to get involved in the complexity of managing IT architectures if they opt for this solution. Once they subscribe to a utility service provider, they are not responsible for maintaining hardware or software resources.

#2. Saves Resources and Time

Since networking has become highly complicated, it consumes massive resources and time for management. Utility computing can spare organizations from this complex task. 

As you submit the responsibility of IT architecture management into the hands of the service provider, your employees will get more free time to invest in other pressing business matters. Moreover, it supports integration between IT resources and enterprises to save resources and facilitate agility.

#3. Unlimited Flexibility

Organizations and enterprises have been looking for an IT model with maximum flexibility. Their search ends with utility computing. Whether it is about resource availability, on-demand usage, data access, or billing methods, this model lets you access these anytime and anywhere.

It can even simplify the process of handling a high volume of requirements. Since companies do not own the resources, reducing or expanding the services they use becomes a lot easier.

#4. Cost-Effective Plan for Maximum Savings


The reason behind the popularity of utility computing is its cost-effective nature. Its pay-as-you-use bolling method allows companies to pay only for the required computing resources. As a result, they save maximum money. 

Regardless of the business verticals, this model offers a complete package that businesses can use for saving on both capital expenses and operational costs.

#5. Supports Quick Output

In this computing model, enterprises get their necessary resources in small and incremental portions. For this reason, organizations can deliver fast and visible output. Moreover, they do not have to wait for complete implementation to get a substantial ROI

#6. Easy Deployment of New Services

With this computing solution, companies do not need to perform a lot of research before purchasing applications or subscribing to a cloud server. They can deploy a service immediately or introduce new applications to the team.

Examples of Utility Computing

Utility computing is a form of cloud computing, but with differences in the levels of abstraction and services delivered. Utility computing focuses more on delivering computing facilities as utilities, just like water or electricity, and suggests that customers only pay for what they use, using an equivalent metering capability.


Some examples of utility computing can be given as follows:

  • Infrastructure as a service (IaaS): These provide clients with infrastructures such as servers, storage devices, and networking components, among others. Clients can increase or decrease their resources depending on demand and are charged based on usage.
  • Platform as a service (PaaS): PaaS offers customers platforms to build, host, and manage applications. It has all the infrastructure required – storage, servers, and network, combined with middleware and development tools. Customers are billed on what they use in terms of the platform.
  • Software as a service (SaaS): SaaS gives customers access to software applications through an internet connection. The software is usually hosted by the provider and accessed from there via a web browser. Customers pay for the amount of usage obtained from the application.


While the pricing structure of utility computing is indeed lucrative, it is not free from risks. Here are some major pitfalls of this model:

  • During events like a data breach, customer data privacy will get hampered.
  • Any kind of accident will negatively affect customer operations.
  • Vendors often refuse to comply with audit requests.
  • For companies, accessing the resources through the vendors become limited.
  • Without the necessary precautions and security, vendor employees might steal customer data or damage customer systems and software.
  • Sometimes, vendors do not reveal how they handle customer needs.
  • Certain vendors fail to manage necessary IT equipment and systems.
  • Storing data of multiple customers in one place without proper categorization or segmentation might lead to irreversible issues.
  • Vendors may refuse to conduct disaster recovery tests of the resources for better safety.

Best Practices of Utility Computing

The best utility computing is that customers can access services and resources anytime when needed, without the costs attached to owning their own infrastructure of hardware and software equipment.

Application of this best practice would allow business owners to scale up or down by demand levels easily while not worrying about their cost or personnel.


Some Best Practices in Utility Computing

  • Taking time to choose a utility computing solution provider is core for one to be able to use cloud services effectively. Utility computing hosting providers offer customizable services and resources to meet organizational needs. Accurately assessing internal objectives is crucial for leveraging these offerings effectively.
  • Make smart decisions regarding utility computing solutions, evaluate providers based on objectives, supported tasks, resources, and services. Ask crucial questions about maximizing benefits, customization, automation, and goal accomplishment. This careful evaluation helps find the right provider to meet business needs while ensuring quality assurance at competitive prices.
  • Hybrid Cloud solutions are best for people who require more control of their data or cannot move all workloads at a time. Starting small helps you identify any possible problems earlier before migrating the whole workload, and scaling up gives you more experience in using public cloud technology.
  • Determine a service provider’s capacity to customize and configure resources as they are needed to satisfy their customers. It focuses on resource command-line interfaces, APIs, scripts, and load-balancing strategies so as not to over-provision or under-provisioned used resources. This approach helps find potential failures and track system changes.
  • You should also track how your cloud is being utilized, and track resource usage, costs, and performance since this allows you to know where savings can be made.
  • It is important that you put measures into place to ensure that your environment within the cloud is secure. These include securing passwords as well as encrypting data, among other security practices.
  • It is important to have a disaster recovery plan for any organization, since anything can go wrong with your environment. This should outline the steps and activities required in recovering data and applications from a business-impacting event or disaster itself.
  • Finally, scheduling and allocating resources on an as-needed basis needs to be done to optimize resource utilization and cost reduction, which is key when architecting a utility computing solution.

Next, we will examine the differences between Utility Computing and Cloud Computing.

Utility Computing vs. Cloud Computing

Utility computing is a subset of cloud computing; hence, being confused about these service models is normal. Check out the differences between utility and cloud computing so you can always set these apart.

  • Utility computing is a business model for computing service provider companies. On the contrary, cloud computing refers to an IT architecture.
  • According to the utility computing model, service providers can charge for the exact usage of the offered services. Cloud computing follows the same pay-what-you-use model but is generally cheaper than utility computing.
  • Small and medium business companies with less demand for resources and infrastructure usually opt for utility computing. Contrarily, cloud computing is the favorite choice for large companies and enterprises with high resource demand.
  • The control of geographical location and infrastructure of utility computing belongs to the users. But, in cloud computing, the service providers have control of the infrastructure and services they offer.
  • Businesses that put performance and selection infrastructure on priority usually choose utility computing. However, cloud computing is the better choice if your company does not find these attributes critical to business. 

Final Words

If you belong to a small, medium, or budding business and do not have enough manpower or money to manage backend IT solutions, utility computing could be your best resort. With its help, you can not only get hold of all the applications, servers, and computing systems you need but also have to pay based on your usage.

However, this provisioning model does not only have benefits — but it also has some disadvantages. You must consider both before deciding whether your organization should opt for this solution.

Next, you can check out various cloud service models.

  • Bipasha Nath
    I am a technical and creative content writer with 10+ years of experience in the relevant industry. My degrees in English and Sociology, coupled with working experience in software development companies, help me understand how technology… read more
  • Satish Shethi
    I have been in the IT industry for more than 20 years. I have served Fortune 100 company in a senior role looking after projects related to US Banking, BFS, Mortgage, Insurance, and FMCG. Apart from IT, I like to read books, especially spirituality… read more
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