Can IT Power Down?
By Don Durfee
As IT costs continue to spiral out of control, CIOs will soon be held accountable.
Just as business has begun to reap the cost benefits of cheaper computers, better performance and smaller server rooms, the overall cost of IT is rising sharply. The culprit is not costly new equipment. Instead, it is energy cost. The unit cost of electricity is rising and companies are using a whole lot more of it to run their IT infrastructure.
A recent study of IT costs by the Uptime Institute, a consulting firm that tracks data-center energy consumption, illustrates the change: while the cost of a server is projected to fall from about $138,000 today to just $103,000 by 2012, the wattage required to power and cool a server cabinet will soar from 15,000 watts to anywhere between 22,000 and 170,000. That could make the power costs over the three-year life of a server cabinet as high as $2.3 million.
Such extravagant power consumption isn’t just expensive, of course—it also expands a company’s carbon footprint. Companies are increasingly sensitive to the environmental and social effects of their operations, so it won’t be long before the disapproving gaze of both CFO and CEO falls upon the IT department.
Power Hungry
 | Unfortunately, not many companies today have a clear picture of their energy use. |  | | Rob Bernard
Chief Environmental Strategist
Microsoft | |
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How did IT get in this situation? It’s partly due to forces outside of the CIO’s control. The surging demand for processing power has meant that IT has had to buy and operate more computers. Further, the trend in server design is towards high-density rack servers—machines that pack a great number of chips into a small space. Even though the processors themselves are becoming more energy efficient, using more of them means more power usage overall, and putting them closer together makes it hard to keep them cool. (Air conditioning costs account for a big chunk of IT-related energy costs.)
IT departments share some of the blame, though. First of all, says Rob Bernard, the chief environmental officer of Microsoft, few IT executives ever see their energy bill. Even fewer are held accountable for their energy usage—by accounting for electricity costs in their budgets, for example. And hardly any take steps to understand how much energy their computers use and in what areas. “Unfortunately, not many companies today have a clear picture of their energy use,” says Bernard.
In this respect, US companies are in worse shape than those located elsewhere, according to a survey IBM recently conducted. US businesses are less likely than others to know how much IT systems contribute to the company’s overall energy costs. And they are less likely to consider energy efficiency when buying IT: only 26% do, compared with 48% for non-US companies.
Meter Madness
As servers proliferate, so does electrical consumption.
Better Budgets
| Companies have more scope to use budgets to help improve energy efficiency by making IT responsible for energy usage. There’s a need for more measuring and tracking of what companies are using. | | | Rob Bernard
Chief Environmental Strategist
Microsoft | |
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This situation is prompting some commentators to call for a rethink of the way that IT budgets are structured. One group, the Green Grid, a consortium of big technology companies, advocates shifting IT budgets toward a total-cost-of-ownership approach, whereby energy costs are considered along with the purchase and maintenance cost of IT equipment. It’s a transition that company procurement offices made years ago, when they stopped concentrating solely on unit price and began considering other items such as transportation costs and likely repair expenses. A similar shift for IT is overdue.
IT will also have to devise better ways of measuring its energy usage. Many of the current metrics don’t provide good numbers on power consumption. Both of these areas-redesigned budgets and new metrics-are areas where IT departments can look across the hall for help from their colleagues in finance.
The good news is that once IT chooses to focus on cost reduction, there are plenty of steps to take. “Green IT” is a growth business-hardware and software vendors alike are developing products that do more with less power. Technologies such as virtualisation allow CIOs to squeeze more performance out of existing hardware. The opportunity here is considerable: central processing unit (CPU) utilisation in servers averages just 15%. Use virtualisation to boost that number and a company can put off the date when it has to add additional hardware.
Companies can also buy more efficient cooling systems and redesign the layout of their server rooms so that they cool faster. Microsoft has gone so far as to locate some of its server facilities at sites in Ireland and Chicago where breezes can cool machines naturally.
Many managers will need the right incentives before they take such steps, however. Those may come soon: as the size of the IT line item on the corporate budget gets ever larger, it won’t be long before companies start holding IT departments accountable.
Don Durfee is editor-in-chief at CFO Asia.
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