Does your company have a director of electricity? Perhaps a CSO - Chief Sewage Officer? A Natural Gas Manager? I would doubt it. Such services represent managed public utilities that can be accomplished in vast economies of scale offering low unit, agency, and transaction costs to masses of consumers. Low costs of production are passed on to consumers as affordable structural operating expenses. For many firms, to consider a business plan that capitalizes on generating their own electrical, sewage, or, natural gas systems would seem ridiculously variable, cost prohibitive, and redundant.

Now, what if I were to suggest this is the future of IT? Isn’t IT infrastructure?

Imagine IT as a mass utility and not an internal cost center reinventing the wheel at higher costs than what could be provided as a public infrastructure. Small to mid-range businesses would likely find that the costs of managing an in-house IT function would far exceed its value. Thus, a firm without tremendous competitive interest in technical capability – a core competency in technology, disaster recovery, innovation, or legacy support – establishing and maintaining an IT function could be a competitive distraction.

That’s right: IT as a utility could offer less risk, more structured expenditures, and all of the competitive advantages necessary to stay relevant in the market.

Consider the trends:

Centralized Network Storage and Hosting. Why not allow a 2nd party to manage all secondary and tertiary storage constraints? If the data is needed everywhere and the risk of confidentiality, integrity, and availability so high, why not outsource the entire data center to an expert party doing it for others?

WiFi Max. A wireless, 30-mile, 75 mbps solution that could provide a relatively mediocre onramp to the information superhighway (as compared to 802.11n), yet, regardless, a decent onramp offered on the cheap by municipalities or corporate sponsors.

Maintenance Outsourcing. Cost containment strategy through Service Level Agreements (SLA’s) and competitive bidding, allowing a small to midrange firm to take advantage of comparable advantages found outside their domestic boundaries.

Subscription-based Licensing/Open Source. The distinctions between licensed and open software are beginning to blur. Historical problems of usability, functions, the ease of data integration between applications, and ubiquity boils software down to a utility, too. Salesforce.com, Netsuite.com, or eBay.com are as much utilities as the air conditioning: no barrier to entry, immediate use, scaled licensing, and contained risk – BANG! IT as a utility provides an instant ERP and CRM. Just add water.

Today, the small to mid-range business is confronted with a myriad of options that attempt to in-source the IT function. Today, more progressive IT strategists have blended in-sourcing and outsourcing where it made both competitive and financial sense. This approach balances risk, lowers barriers to entry, gains immediate competitive capability, and contains cost.

However, tomorrow, we could be looking at a rapidly imploding IT market in the small to midrange business category where competitive IT services, support, and capability are a part of the public commons. On the one hand, this is going to be a transformative competitive experience in an information-based economy. Yet, on the other hand, skill-set diversification for the IT professional may even be more important. What will happen if the skill-based value you provide today is tomorrow’s white noise? Whether or not you manage an internal IT shop or you are concerned about your own competitive relevance, you should start thinking about how the services you provide exceeds the value of a common utility.

Russell P. Mickler