UC: Our recent survey of users suggested a couple of key themes, one of which was that, although people feel they understand the value proposition of Utility Computing, they still perceive the readiness of this as being far behind - that a utility computing solution is 24 months away. What your thoughts on that?

Dev Mukherjee: I would actually place the focus less on the technology and say it is more about a company's attitude to how they get the business value from something. Really that fundamental focus leads you to a different way of both managing and ultimately paying for that technology.

Really, this trend towards Utility Computing is more to do with ways in which a company can access the business result quickly - without the risk of having to build up a project team. All CIOs can tell you a war story about projects that have really not worked, that have, over time, just dragged on without success. If a company is able to access, for example, a fully working procurement system then they have managed to achieve the business result by buying it in a utility-like manner.

UC: Interesting you should say that, as the second theme that emerged in our survey was that people perceive this to be simply outsourcing with a marketing spin...

Dev Mukherjee: Outsourcing has had an unfair rap in many ways. It's benefit is to enable a company to leverage the expertise and scale of the partner. The main concern is a loss of flexibility but what we're seeing with utility computing is a new set of tools and techniques that inject outsourcing with greater flexibility and affordability.

For example, the Amex deal, which was a very large contract for us, came out of an outsourcing background. I view this as an evolution of things that we're doing already.

UC: So, there are ways in which this is more than just leasing?

Dev Mukherjee: Well, when something new comes along, we often use existing vocabulary to describe it. The car, for example, was first called a "horseless carriage." People do tend to describe things in terms of what they already know.

My view is that we must take a step back and ask again, 'what is the business objective here?' If it's to allow people to focus upon the core of their business and free people from a dependency on an IT arrangement that isn't working. This is a business transformation not a technological one.

For the technology executives at a company it should be about them knitting together the blocks which make up their IT strategy - the technology and service blocks that make it work.

UC: With that in mind, are you finding that technology staff, especially those who work on the more technical aspects of their company, are feeling threatened by the focus IBM is placing on Utility Computing?

Dev Mukherjee: Well often as not, the CIO is facing multiple demands from users for certain functionality whilst the CFO is simultaneously asking him or her to reduce head-count. He does not have enough resources and so this is often a way for him to cope with those conflicting demands.

Further down the organisation, people are seeing this as an opportunity to adapt and expand their skill base.

UC: Are there particular markets that you see Utility Computing as particularly suited for?

Dev Mukherjee: Well, this is tightly coupled with the particular business strategy of a company but in general terms, I look to industries that are either 'information rich' or where processes are defined by legislation or common practise.

Information rich industries, like financial services are an obvious one as they are driven to constantly provide new products and levels of service by their competition. Industries such as healthcare or insurance are a ripe target for an expert to operate their processes because of those having to be done in a standardised way.

UC: One term that is often used is that of grid computing derived from the national electricity grid. In the future do you see users simply plugging into a monolithic provider to access the applications they require - or do you envisage a network of service providers, that are specialized in different niches?

Dev Mukherjee: I believe that, at one level, there will be small number of large players.

This will be driven by economies of power and scale. The economics of innovation will also be at work in this - the bigger you are, the greater the number of questions and challenges clients bring to you.

So there will be consolidation in the upper tier of the industry - but the sheer complexity of the computing industry will drive huge fragmentation amongst the smaller scale providers.

Speaking specifically to IBM's competitive positioning, our acquisition of PricewaterhouseCoopers Consulting has strengthened us tremendously. If we were (as some of our competitors are) focused chiefly on the hardware aspects of the solution, it would be challenging to show the customer how that particular piece of hardware will help them with the business transformation they seek. We do not have that issue.