While the utility computing model would seem to make the most sense for large companies, a recent report by IDC indicates that small to midsize enterprises will define how vendors such as HP, IBM and Sun deliver utility computing services in the coming months.

According to the report, those customers interested in adopting a utility computing model remain large, leading-edge enterprise companies but the value proposition of “pay as you go and for what you use” appeals also to smaller organisations. Having the technology delivered as a service would also benefit small to midsize IT departments. IDC predicts that the vendor - whether it be IBM, HP, Microsoft or Sun - that captures the SMB market will come out on top in terms of utility computing services.

"If the midmarket ultimately determines standards… then players looking to establish themselves as leading providers of utility computing need to win the SMB, one way or another," the report states.

IDC states the midmarket will represent the "killer app" for utility computing services providers, but the mystery remains in how the services will be delivered and which companies will take the lead. The report suggests companies such as Dell and Microsoft will have to find new approaches to building relationships with midsize companies and to experiment more with selling to a lower-level IT manager.

Among the issues to be addressed is bundled functionality. According to IDC, some SMBs will buy services as a set of bundled offerings and not in the traditional standalone process. Another issue is selectivity. SMBs are accustomed to having a larger selection of options and providers will need to offer a broader variety of IT and business services.

SMBs also prefer end-to-end support across the entire infrastructure, including access from devices - such as PCs, laptops and PDAs - to applications. Simplicity is another important criterion, IDC says, because most SMBs will take the standard service at the lower cost.

Bigger vendors will also need to learn how to master a "low-touch relationship" or a customer relationship that doesn't require a lot of work from the customer. "They just want their phone to work. This applies to IT as well," IDC says.