Sun Signs ACS As Utility-Computing CustomerSun Signs ACS As Utility-Computing Customer

Sun Microsystems on Wednesday signed Affiliated Computer Services Inc. as a customer of its N1 utility-computing technology. ACS, a provider of outsourcing and systems-integration services, will pay for Sun hardware and software based upon usage, an arrangement that will let ACS offer its own customers IT services on a pay-per-use basis.

ACS's move to a utility-computing model will help the service provider purchase IT resources more efficiently and guarantee cost reductions to ACS's customers over time, says Bill Mooz, Sun's senior director for utility computing. Although ACS's recent customer wins include the Texas Health and Human Services Commission and Royal & SunAlliance USA, the company didn't make clear which customers, if any, would be switching to a utility-computing model. Neither Sun nor ACS disclosed how much ACS is paying for Sun's hardware, software, and services.

ACS, which had fiscal 2003 revenue of $3.79 billion, is also notable for the fierce competition it gave rival EDS a year ago for a more than $7 billion outsourcing contract from Procter & Gamble Co. ACS pulled out of the bidding, saying at the time that the contract wasn't worth the financial and operational risks.

In June, ACS and Sun teamed to deliver human-resources software as part of ACS's Global HR Solutions business. One of the business' most prominent clients is Motorola Inc., which signed a 10-year outsourcing contract with ACS for HR systems, software, and services. Global HR Solutions uses a Web-based application called Employee Self-Service Network that's based on the Sun One Application Server.

Although Sun trails Hewlett-Packard and IBM in terms of offering utility-computing products and services, the relationship with ACS will help Sun learn not just about the technology required to deliver IT as a utility, but also how to make the model attractive to customers, says Meta Group VP Corey Ferengul. Sun's N1 utility-computing strategy has been missing certain elements until now, including the ability to virtualize server resources and tightly integrate systems management and monitoring. ACS and its customers will offer a learning experience for Sun.

Sun's deal with ACS is typical of most utility-computing contracts over the next year or so, Ferengul says. "It will be 2005 before you see an enterprise actually take the dive into utility computing."