Green Power

Data centres used to be the sole responsibility of IT managers, but with finance directors under pressure to cut costs in a worsening economy, along with new regulations encouraging environmentally friendly IT practices, data centres are becoming boardroom concerns. Green IT is more than just a corporate fad. Soaring energy costs have encouraged businesses to review all their running costs, bringing data centres – sprawling warehouses crammed with energy-hungry IT kit – under the spotlight.

To ensure an uninterrupted power supply, data centres often rely on standby generators fuelled by diesel, while the IT industry on the whole contributes around 2% of global carbon emissions, according to research company Gartner.

For some companies, a data centre can account for more than 20% of its energy consumption, according to Phil Case, a sustainability and climate change expert at PricewaterhouseCoopers. In response, some companies are overhauling their data centres as part of a wider project to cut costs and boost the bottom line.

But these goals are tough to achieve, involving new technology, a reduction in the number of data centres and a change in employee behaviour. With IT suppliers keen to appeal to green sensibilities, finding the right technology that meets all these requirements can be frustrating and time consuming.

‘Corporate IT departmental costs, both capital and revenue, are becoming more visible to FDs as computing becomes increasingly complex but at the same time more fundamental to a company’s operation,’ says Case. ‘An increase in data centre computing power requires an increase in energy, creating more heat that needs to be cooled. It’s a vicious circle.’

Finance directors can play a central role in modernising a data centre, setting a policy for capital investment and a payback period. Bear in mind that while modern IT equipment can last longer than standard products, and may be better for the environment, depending on its energy consumption, it may be more expensive than older kit.

Going virtual

BSkyB is one of the corporate pioneers of greener data centres. Over the four years to the end of June 2008, the satellite television broadcaster cut its carbon emissions by 16%. This was achieved by making a number of changes to its energy consumption, including the consolidation of its data centres.

BSkyB consolidated 13 data centres into just two: one in the south of England, and the other in Amsterdam, although the broadcaster declined to reveal how much money it has saved from its data centre consolidation. Andrew Griffith, chief financial officer at BSkyB, has played a key role in the data centre revamp.

‘I strive to make colleagues aware of the importance of our environmental impact and the need to take action,’ he says.

‘I also ensure that our internal processes capture the full cost of decisions, including the environment, and that we place a sufficiently high value on measures which deliver an environmental return. These are our long-term goals.’

BSkyB has used energy saving systems within its data centres, including hot and cold aisles, which efficiently channel air conditioning to only where it is needed. It has also used ‘virtualisation technology’. This increasingly popular technology divides a physical server into multiple ‘virtual’ machines, each with its own operating environment and applications. The result is less hardware, reduced power and cooling costs, and less space needed for IT kit.

For Peter Williams, an analyst at Bloor Research, server virtualisation is one of the most valuable technologies for squeezing costs from data centres and making them greener. ‘Virtualisation of servers and storage [technology] can dramatically boost existing equipment utilisation, from 20%-30% up to over 70%,’ he says. ‘This should then render some equipment superfluous to requirements.’

Telecommunications group BT is another big company that has used virtualisation technology to save money, by reducing the number of servers in its 77 data centres worldwide. As part of a broader IT project, the streamlining of its data centres could help the company save about £60 million a year.

Green regulation

With green IT regulations becoming more common, finance directors are going to find it harder to ignore the environmental impact of their data centres. In November 2008, the European Commission published a draft voluntary code of conduct on the energy efficiency of data centres, setting energy targets for centres in the corporate and public sectors.

Companies and public sector bodies that sign up to the code will be expected to adhere to a set of ‘best practice’ guidelines for increasing energy efficiency along with annual reporting on their energy consumption.

‘The issue of energy consumption at the individual data centre level is becoming increasingly important as operational energy expenditures and the ecological impact of the energy consumed begins to play an ever important role in overall cost of ownership of data centres,’ says the European Commission Joint Research Centre, Renewable Energies Unit in its code of conduct.

Due to the voluntary nature of the EC code, some critics have dismissed it as toothless, but many experts predict that mandatory regulations are set to follow as governments and regulators place pressure on companies and public bodies to clean up their IT.

For example, the UK Government is planning a mandatory trading scheme for carbon emissions, due to start in 2010, that will cover large businesses and public-sector organisations. Efficient and cost-effective IT will play a key role in helping companies and public bodies meet this target.

Clean and green

The market for green IT services is growing and, according to Forrester Research, could be worth $4.8 billion by 2013. As a consequence, IT suppliers and management consultants are jostling for a slice of the market, with the more disreputable exploiting clients through dubious claims about their environmental credentials.

This tactic, called ‘greenwash’, means it is vital that financial directors grill suppliers about their green IT claims.

‘Every vendor wants to make it sound as if his equipment is greener than the competition’s, but clearly that is not possible,’ says Peter Williams. ‘Each client need is unique. No one size fits all.’

However, some suppliers are trying to set a good example. For instance, in 2007 IBM announced a $1 billion plan to significantly reduce its data centre energy consumption. The company says it has saved more than $310 million in energy costs so far and adds that it can cut energy costs at its customers’ data centres by using green technology to manage power requirements more effectively.

‘In the future, companies may decide that it is easier to hand over the running of their data centres to suppliers,’ says Euan Davis, principal analyst at Forrester Research. ‘Data centres are becoming fatter and a real problem for companies.’

For those companies that do not outsource their data centres, attempts to make them greener and leaner will need support from finance directors and other members of the board.

As Andrew Griffith says: ‘Clear leadership from the top is critical to ensuring the environmental efficiency of any project is considered alongside other key objectives in any business project.’

Green IT action plan

Phase one: assessment

Green IT initiatives start with an assessment of the company’s current situation. This phase typically involves creating an overall green IT plan. Sometimes the plan is confined to data centre operations, although it can also cover buildings, commuting, and travel. The company will set goals for green IT, including an early assessment of the capital, operating expenses and potential cost savings.

With a typical timeframe of between two to ten weeks, the rough cost can be from $30,000 to over $100,000.

Phase two: planning

Consultants will help clients develop ‘road maps’ for specific projects. This might include recommending policies to make IT procurement ‘greener’ along with improving data centre efficiency. One option at this stage is to outsource data center operations.

IT expertise and infrastructure is crucial in initiatives for building automation, optimising the supply chain or logistics, or setting up flexible work environments that reduce employee commuting.

With a typical timeframe between six to 20 weeks, the rough cost can be between $50,000 to $400,000.

Phase three: make it happen

Buy and install appropriate technology and set policies. Change employee behaviour and practices if necessary.

With a typical timeframe of between 30 to more than 100 weeks, the rough cost can range from $300,000 to $2 million or more.

Source: Forrester Research