With its strange hybrid of marketing mumbo-jumbo, technology changes, and pricing strategy innovations, utility computing is still an emerging, maybe transient, IT category. It is being defined by a whole raft of fad tech terms like Web services, data center, hosted applications, grid computing, outsourcing, and application service provider. Also being bandied are marketing buzzwords, like on-demand, organic, and adaptive computing. In this most recent incarnation termed utility computing, the software and computing power behind it are usually available to customers on a pay-as-you-go basis. The software addresses a whole range of needs, from server and storage virtualization, vulnerability assessment, and middleware integration, to business process modeling and automated management. Several established software providers have jumped into the fray, offering improved software for facilitating utility computing as well as their own increasingly complex hosted software capabilities. Among the small, private companies – several of whom have been snapped up by IBM, Sun, and Veritas over the last few years – the task largely remains to fundamentally improve the processes involved in utility computing.

Public companiesComputer AssociatesThe Herring Take: A provider of solutions and services for the management of IT infrastructure, business information, and application development, Computer Associates was an innovator for pay-as-you-go pricing as early as 2001. A white paper by research firm Aberdeen Group offers a brief history of what it deems “revolutionary” changes in software pricing strategies. Rather than long-term software licenses, “CA switched to contracts of three years or less with a variety of installment plans ranging from monthly to annually….CA also offers a month-to-month subscription.” To capitalize on this, Computer Associates launched an ad campaign in the business press last fall to position itself as the leader in the management of on-demand computing. Returning to profitability and growing revenue by 12 percent in the fourth quarter of last year over the same period one year earlier, this strategy seems to be working for Computer Associates.

MicrosoftThe Herring Take: While not offering utility computing services itself, Microsoft is recognizing the trend's potential by trying to ensure that its own applications, operating systems, and server software are compatible with the demands of utility computing and that they will be able to reap its associated advantages. Its utility computing program, titled the Dynamic Systems Initiative (DSI), is focused on developing applications that will help make utility computing function more smoothly. Ideally, heterogeneous software programs and platforms would be more easily, and cheaply, inter-operational. The first result from DSI was an add-on for Windows Server 2003 that was released early last year. Microsoft continues to busily enlist hardware and software partners to make easy interoperability a reality across the industry, but of course its real muscle is aimed at making its own products the ready for utility computing. To do so, it is turning to its new software architecture based on the System Definition Model, an XML-based schema intended to streamline the workings of systems, applications, and other infrastructure components.

OracleThe Herring Take: “Get on the Grid,” chides Oracle’s marketing campaign. The company is targeting customers who want to establish grid computing within their own organization and who need to outsource the management and hosting of some business applications. Partnered with Dell, who provided Oracle’s 500 servers housed at a data center in Austin, Texas which are the basis of its utility computing strategy, the company offers outsourced management of databases, collaborative software, and business applications. The company so far seems to be focused on the 6-year-old technology's advantages: flexible computing, rather than flexible pricing, seems to be Oracle’s mantra. So it remains to be seen if enabling grid computing will translate into a new way of selling software and services for the company.

Private companiesBladeLogicFounded: 2001Employees: 70Funding (millions): $16Number of rounds: 2Key investors: Globespan Capital Partners (formerly JAFCO Ventures), Battery Ventures, Bessemer Venture PartnersThe Herring Take: BladeLogic provides data center automation software, which allows for the provision, configuration, and monitoring of multiple servers across various platforms. Touting an impressive customer list including AT&T Wireless, Sprint, and General Electric, BladeLogic also supplies its software to utility computing service providers like Verisign and IBM. The company is a good bet since its software is not only the basis for utility computing, but it allows corporations to internally establish grid-computing that functions across a multi-vendor infrastructure. BladeLogic, then, doesn’t have to count on the pay-for-play model panning out. With its tiny funding and impressive customer base, the company seems to be in the lead right out of the gate.

CentrataFounded: 2000Employees: 50+Funding (millions): N/ANumber of rounds: 2Key investors: WCapital, Kleiner Perkins, Invesco, Presidio SumitomoThe Herring Take: Playing both sides of the fence, Centrata’s enterprise IT management solutions are compatible with the two major utility computing language standards: Microsoft’s SDI and the industry-based DCML, both of which are based on XML. The company focuses largely on enabling large corporations to better manage their own internal data centers. Centrata makes grand claims for its software’s performance, saying it has reduced operational expenses and improved service levels each by about one-third for some of its customers. The company is pretty reserved about trumpeting client wins, but with investors like Kleiner Perkins and Silicon Valley icon Vinod Khosla as its chairman, Centrata is sure to be a favorite among investors. Last fall, the company was selected as “Investor’s Choice” at a data center investing conference sponsored by Technologic Partners, the publisher of VC industry newsletter VentureWire.

RelicoreFounded: 2000Employees: 50Funding (millions): $25Number of rounds: 2Key investors: Matrix Partners, Highland Capital PartnersThe Herring Take: Relicore’s main product, Clarity, automatically discovers, documents, and later maps, the interdependence of software elements and servers. The goal is to speed up problem isolation and diagnosis across complex infrastructures. Relicore was founded in 2000, around the same time as several other utility computing software startups. It generated a lot of attention in 2002, when it won back-to-back funding, one round in the spring and another in the fall. The company has several major marketing partners that either roll-up Clarity with their implementations or sell their systems to Relicore products, these include Sun, BEA, IBM, Oracle, RSA Security, and Veritas. Understanding and diagnosing system problems is currently a more urgent need than the ideal goal of complete virtualization, so it seems that Relicore has found itself a nice niche.