Consider it a power struggle of sorts: In the late 1980s and early 1990s, IBM decided to let business units buy their own network service and procure their own communications lines. In the end, IBM struggled to know its own strength. "We ended up with a large segmented network with white space all over the place," said IBM manager of enterprise systems management strategy David Burns, referring to IBM's then large swaths of unused network power.

Ten years ago, IBM's IT executives decided to alter that strategy: They consolidated its disparate networks, aggregated the cost of the network architecture, and spread the cost between each of the business units. But while this strategy made the IBM structure more efficient, there was a flaw. Because heads of business units were being charged equally across the board, there was little incentive for them to optimize resources. And while IBM saved a great deal of money, said Burns, it didn't have a process in place to manage the demand.

The solution: utility computing. It allowed IBM to retain its consolidation strategy while analyzing each business unit's consumption and charge accordingly.

It looked to Evident Software, a Bloomfield, N.J.-based middleware company, to provide the bridge between IBM's IT and business unit structures. "From a strategic view, you have to think about putting the demand for IT services and the consumption into equilibrium," said Roger Boyce, chief executive officer and president of Evident. "If you put IT into the same frame of reference as any business model, our software enables a great partnership between the financial side and the IT side."

It was this philosophy that got IBM's attention and captured the business for Evident. "What really sold us on Evident is that they had done very large-scale projects in the past, and they came in and did a very successful pilot program for us," said IBM's Burns. And IT executives at IBM knew that it simply wasn't going to be a matter of consolidating hardware, but by re-thinking and optimizing its overall architecture -- including its software and network. Enter Evident Software's middleware solution and its ability to analyze network consumption.

With large customers like Fidelity and British Telecom, analysts agree that Evident has the know-how to move a company to a utility computing structure. "I believe Evident has a good understanding of the utility computing problem and has the tools to be valuable in a large organization," said Barbara Gomolski, an analyst at Gartner Group, Stamford, Conn.

IBM plans to be in full production with its restructured network architecture in North America by end of year. In January, it will embark on a two-year project to integrate the plethora of IBM's international offices. The total number of affected IBM users? One and a half million, scattered across 300 data centers. Add that to Burns's estimate of 6 percent cost savings for IBM's total IT cost structure and you have an excellent reason for any company to move to utility computing.

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By Katherine Bull