How Utility Computing works

Weren't computers supposed to simplify our professional lives? Early advertising for personal computers claimed that customers could finish a day's work in a couple of hours using a single device. Some people hoped that computer filing systems and e-mail would create a paperless work environment and eliminate issues of miscommunication.
For many companies, the truth about computers is more complicated. It's difficult to predict accurately where problems might occur. On top of that, computer hardware and software evolve rapidly, partly because the computer industry is filled with competitive companies striving to offer the best products and services. Committing to a particular computer platform, operating system and suite of software isn't always an easy decision, particularly when setting up a network of machines.
While individual tasks might be easier to complete thanks to computers, the machines themselves can be challenging to maintain and repair. Many companies spend millions of dollars on IT support to keep computers and applications running properly. Even something as simple as adding a new application to a computer network can cause unexpected problems.
Some corporate executives are looking outside their companies for solutions. One potential approach is to use utility computing. Basically, utility computing is a business model in which one company outsources part or all of its computer support to another company. Support in this case doesn't just mean technical advice -- it includes everything from computer processing power to data storage.

Utility Computing Definition

Utility computing refers to the ability of companies to access computing services, business processes,
and applications from a utility-like service over a network. The idea being that if a company has to pay only for what it is using then it will be able to save money. While the company offering utility computing services can benefit from economies of scale by using the same infrastructure to service multiple clients.
The alternative is to buy hardware that can handle peak loads, but is often using something along the lines of 15% of available resources. Utility computing is the evolutionary step up from Application Service Providers.
The underlying technology for utility computing is grid computing — the network of connected storage and CPUs from multiple systems into a centrally managed, but flexible computing environment.