Utility computing refers to a service provisioning model wherein a service provider ensures that the computing resources and infrastructure management are available to the client as required and at the same time charges them for a definite usage rather than a flat rate. Like other types, such as on-demand computing or grid computing, the utility model strives to optimize the effective use of resources and/or minimize associated costs. The word utility is used for making an analogy to other services, such as electrical power, that seeks to meet the varied customer requirements, and charge for the resources based on usage rather than on a flat-rate basis. This approach is usually referred to as pay-per-use or metered services. It is becoming progressively common in enterprise computing and is sometimes used for consumer market, Internet service, Web site access, file sharing, and other related applications.
An additional version of utility computing is done inside the organization. Under a shared pool utility model, an organization centralizes its computing resources to provide to a large number of users without unnecessary redundancy.