UC: Rhys, could you explain something of SAIC's aggregator model for us?

Torrington: The aggregator model is really an attempt by SAIC to go beyond the traditional outsourcing model. We started by saying that there is a limit to how many times costs can be squeezed. Constantly reducing cost - which is the popular approach at present - is ultimately a downward spiral and clearly has a finite value.

Outsourcing in the past has typically been a response to the client's aim of having someone else do what he already does, cheaper that he presently does it. Essentially, that's no more than supplier management.

The other question, more rarely asked, concerns demand management - when the client does not say "what can I have someone else do,?" but re-examines the fundamentals and asks"what should I be doing?" The aggregator model is fundamentally about that question - defining the correct demand to be satisfied.

UC: So, is it a partnership model?

Torrington: Well, once the demand has been defined, there needs to be a function which then examines the most cost-effective way of satisfying that demand. The client can either perform that function themselves or they can pass it out. Whoever plays that lead role, the function is then to look at all the suppliers and decide how they can be best pulled together. That may very well include internal processes and suppliers.

UC: How do customers react to the aggregator concept?

Torrington: This is very rarely a short conversation with customers, partly because of the heavy emphasis placed upon them to work out their demands. For example, the conversation about this with BP is 3 years old. There is normally such a variety of agendas at work - some people willing to give up control of certain areas; others reluctant to do so.

Once customers do understand the model and all it's ramifications, there is always a strong tendency for them to take on the aggregator function themselves. This is a very difficult thing to do, however, as it does require a lot of contract and supplier management - not something the traditional IT Director could do. It's always such an ongoing process. For example, if a supplier is about to go bust, the aggregator model has an alternative lined up and switches the customer to that supplier at the last minute - before they were even aware of the problem.

Of course, the fact that is possible ties-in with the whole commoditization of IT that enables Utility Computing.

UC: Do you see clients as being ready for Utility Computing?

Torrington: Yes - almost. It is a very mature model of outsourcing, so it does require the client to have a very good understanding of the skills required in outsourcing.

UC: Let's touch upon the pricing model of utility computing. What are your views on that?

Torrington: From our point of view, utility computing offers an evolution of the way in which SAIC have always tried to price our contracts, which is on a basis of shared risk and reward. When you think about what we are calling aggregator and you are calling utility computing, there is a need for that shared risk and reward simply because the client has to go deeper in thinking about what really need. With traditional outsourcing, the RFP simply lists what the client requires, the suppliers bidding for the deal begin their parade and the cheapest price often wins. However, with the utility computing model, there is tie-in between pricing and a close analysis of what is really needed. It's then that the client gets better results.

UC: Gartner are just one analyst of many who have predicted a major shift towards utility computing. Do you agree with them?

Torrington: I'm sure the detail of the numbers will be different when the time comes. However, I certainly agree with their logic that utility computing is the way we are going.

The future is not without challenges though. Some of the providers need to become more comfortable with partnering and working with the aggregator model. There is clearly an awful lot of learning to be done on both sides for people to feel comfortable in this increasingly flexible environment.