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Utility Computing: What Does it Mean?

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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.

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


#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.


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.

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.

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