Translation:That is useful.
It's not a question of what "That is useful" means, it's a question of what "C'est utile" means. And there are other valid interpretations than "useful", including "necessary". http://www.larousse.fr/dictionnaires/francais-anglais/utile/79866 http://www.wordreference.com/fren/utile
Utile as an adjective can mean: necessary, useful, required, helpful. http://www.wordreference.com/fren/utile English speakers like to zoom in on "useful" (and why not) because it LOOKS like it would be "useful". But the French is not a single word to single word translation. So if by thinking "It is useful" you have excluded the other interpretations, you may be thinking too narrowly. You will have better luck by understanding the broader meaning of "utile" before attempting to say it only be translated with one English word.
"outil" and "utile" do not have the same pronunciation. The biggest difference is that you do not pronounce the "l" at the end of the word "outil", but you do pronounce the "l" at the of "utile".
outil (tool) = [uti]
utile (useful) = [ytil]
the audio is available on the Larousse website