Utility solutions and the IT Hierarchy

Again a lively debate follows from a publication by Carr implying that there will be no need for low level corporate IT; IT functions will be available as a utility service. While APSs, outsourcing, shared data centers etc., are all a reality today, can all IT eventually be served in this way?
I think the hierarchy approach is a useful construct to help answer this question. It causes us to look at the computing needs of an organization in an ordered fashion. Recent details of IT spending discussed in The End of Corporate IT? Not Quite - Computerworld allude to a the need for some separation, in Carr's argument; a move from the 'one size fits all' approach:

In many ways, basic IT infrastructure has indeed become a commodity that should be treated as a utility where cost reductions reign. However, lumping all IT investments into the commodity category is the critical oversight in Carr's argument.

The un-lumping model is then described:

Much like Maslow's Hierarchy of Needs in human development, the IT Hierarchy of Needs segments IT spending into four progressive levels.

The first level is basic IT infrastructure—the core foundation for corporate computing including servers, networking, storage, desktops, mobility and telecommunications.

The second level includes the tools to automate manual tasks and processes, streamline transactions and foster creativity and collaboration.

The third level includes all applications to support the collection, visualization and application of information to measure the business and drive improved performance.

The fourth and highest level is how a company uses its information to change the playing field by creating different relationships with suppliers, partners and customers, as well as applying competitive insight.

Looking through this IT Hierarchy lense, I think the limits of utility computing will be tied to the lower layers of the hierarchy and then coupled with the evolution of standardised application specific solutions. The space occupied by ASPs today (web hosting, payroll, CRM), will grow to encompass the tools/services that are of utility along and across industry sectors as best practice becomes apparent.
However the middle and higher order functions will remain allusive because of their specificity and their value.

Looking for cost reductions for the middle order functions may require a pooling of resource, an openness to sharing best practice and a resistance to technology churn. The use of information is the key, how it is obtained, maintained and shared can become common practice, a standard or an open solution for that particular community. The open innovation model, coupled with an open source approach at the solution level could provide a framework here.

The highest order functions will remain out of the realm of community and utility because they will be the main stay of competitive advantage and are too valuable to an individual organisation to share.