Verizon Business has been building for eighteen months and will roll out in the first quarter of 2009 a new “on-demand” computing service that will let its large enterprise customers pay-as-they-go for core computing resources, Verizon executives detailed at the NXTComm08 show on Monday.

So-called on-demand or cloud computing is a hot topic today, but often centers around how Web-age players like Google, Microsoft and Amazon.com are building mega data centers to support their search, advertising, e-commerce and Web productivity applications. But such players lack the network infrastructure clear focus on enterprise requirements that Verizon brings to the game.

Verizon and other global IT services companies like AT&T, BT and HP/EDS already deliver managed services, co-location and hosting via data centers around the world. The twist with an on-demand computing infrastructure is that those enterprise users would be able to purchase core metered computing services like processing, database queries and online storage as they need it, said Christopher Gesell, director of global product marketing, Verizon Business.

The challenge for service providers in cloud computing will be “do they understand the applications,” that will run over these networked environments, not a historical carrier strength, said Zeus Kerravala, Senior Vice President - Enterprise Research, Yankee Group, which hosted the event at which Gesell spoke. “It will be a leap of faith” for many enterprises to move to this style of computing, Kerravala said.

Verizon believes it can capture “first mover advantage” in delivering enterprise-class cloud services by investing early and heavily in on-demand computing and by embedding these new capabilities in existing data centers, initially in five completely secure “smart” centers around the world: two U.S. locations (east and west coast) and at facilities in London, Frankfurt and Tokyo, Gesell said.

The “secret sauce” of this effort is AWARE, or Advanced Workflow and Automated Resource Engine, a software layer that allows customers to manage physical and virtual computing resources. At the top of the AWARE stack is a customer provisioning and management portal interface that ultimately will include a “visual palette” that will let customers add or more capacity in drag-and-drop fashion. The system will let users manage physical, dedicated virtual or completely virtual IT resources, depending on their requirements.

Below that is the AWARE core, including a workflow engine, asset manager, virtualization engine and orchestration engine. Below that is a standard IT infrastructure, including network, server, storage and data center resources. The Verizon on-demand service will initially target two enterprise computing environments: Red Hat Linux and Microsoft Windows, Gesell said.

Beyond offering on-demand computing resources, Verizon believes it can leverage its network capabilities to gain for itself – and sell to its users – end-to-end visibility into their computing infrastructure and near real-time management of network capacity and application performance, Gesell said.

“What you don’t want to do is compete on the performance of the platform,” Gesell said. “Where you want to be competing on these platforms ultimately are the services you build on top of them. That’s where the sustainable advantage comes from.”

Verizon will charge for on-demand computing resources in two ways: one, production level featuring a basic subscription with comprehensive SLAs and compute powered metered and billed daily; and two, standby/idle capabilities to help meet compute peaks, billed on a monthly basis. Verizon will also offer enterprise IT departments “charge-back” mechanisms they can use to make individual business units pay for the computing resources they consume.

On demand or cloud computing is working its way through the entire IT stack, said Gesell. Network resources have been consumed in a virtual or on-demand way for some time. Applications – best exemplified by Salesforce.com – are increasingly delivered on an on demand basis as well.

The delivery of computing platform resources as a service is “on a collision course” with those two trends, said Gesell.

“There’s no way that [computing] infrastructure is not going to be consumed that way.” He said. “It’s just going to happen.”