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If you don't know the answer, drop in on one of your data centres.
Eila Rana, CFO Europe Magazine
June 2, 2008
For Andrew Griffith, CFO of British Sky Broadcasting, the £4.5 billion (€5.7 billion) FTSE 100 media company 39% owned by Rupert Murdoch's News Corporation, giving the green light to a new data centre wasn't as straightforward at it once was. Although the need for additional data storage capacity was a strong indication of Sky's promising growth trajectory, building a high-end, electricity-greedy data centre would ramp up its carbon emissions — something Griffith couldn't countenance. As part of the Bigger Picture — Sky's corporate social responsibility programme — the company had committed itself to reducing CO2 emissions by 10% from 2003 levels to 51,032 tonnes by 2010. "We've been reducing our environmental impact since 2002," says Griffith. "In fact, we've cut our carbon emissions by 27% in the last three years alone. We do this because it's the right thing to do — we share our customers' concerns about the urgent need to address climate change."
The programme puts the idea of green IT centre stage. In aiming to slash its energy consumption, Sky sees its IT operations as playing an important role in the effort. Given that the IT industry as a whole is responsible for 2% of global CO2 emissions — the same amount as the aviation industry — that makes a lot of sense.
Sky is not alone. A growing number of companies are drawing up green initiatives for procuring, operating and disposing of IT assets and processes, say tech experts at Forrester Research, which predicts that corporate spending on green IT services will increase to €3 billion in 2013 from €320m today.
This is all good news for CFOs. With environmental awareness at an all-time high, Phill Everson, a partner with Deloitte, says, "the green agenda is another lever that the CFO can use to get the efficiency he or she demands." It's also a way of getting the subject of IT infrastructure onto the boardroom agenda.
Centre of Attention
Companies are addressing green IT in a number of ways. Some have an arsenal of initiatives to roll out new environmentally friendly desktop tools (see "The Eco Itinerary" at the end of this article), often enlisting the services of third parties for help with specific office equipment, such as printers and photo copiers. (See "Effort of Duplication.") But the area where companies like Sky reckon green IT initiatives can make the greatest impact — and where most vendors are focusing their efforts (see "What's on the Market?") — is in their data centres.
This is an obvious choice given how data centres have mushroomed. Business growth demands more IT equipment, and with hardware prices falling over recent years companies have been cramming more servers into their data centres. Now they are running out of space, and building new centres demands huge capital expenditure. What's more, the annual cost of running a server is now higher than the server itself. Adding to the problem, servers running a single application often sit on standby for much of the time, consuming electricity while doing nothing. Amid rising energy costs, that's costing companies too much. "Nothing hurts a company more than when it feels its cost base going up," says Clive Longbottom, an analyst with Quocirca, an IT research firm and consultancy.
As a result, writes Christopher Mines of Forrester in a report published in March, "When we say green IT, most [of our] clients hear 'data-centre efficiency.' It's top of mind for most clients because problems like growth or power capacity limits, and returns like energy cost savings, are highly tangible."
As Sky's Griffith puts it, "If IT infrastructure changes are well planned and well managed, you can cut CO2 and your overheads." Good planning and management, in fact, led Sky to decide that it didn't need to build a new, high-end data centre after all. Rather, its 14 centres are being consolidated into two, one in Chilworth, England and one in Schiphol, the Netherlands.
Matthew McDonald, head of Sky's centralised technology services, says the convergence of three factors enabled the consolidation: server virtualisation, which allows several applications to run on a single server simultaneously; blade architecture, whereby several stripped-down servers are housed in a single cooling, storage and connectivity system; and right-sizing, ensuring that IT equipment is only as big and powerful as it needs to be.
So far, the consolidation under Sky's programme has delivered an annual reduction of 563.5 carbon tonnes. A key to that success, says McDonald, has been the close work between the facilities and IT teams to ensure the technology changes designed to reduce energy consumption were properly implemented. Executive-level sponsorship of the project has also been important. "Sky's Bigger Picture agenda, which is sponsored by [chairman] James Murdoch and the CEO, Jeremy Darroch, means we have got sponsorship right the way from the top of the organisation," McDonald emphasises.
Less Is More
Consolidating data centres is a smart green solution. Using existing data centres more effectively is another, according to Steve Ault, a former data-centre manager at an online bank in the UK. As he sees it, spending £1m on new hardware for an existing data centre makes more sense than spending between £5m and £10m for an entirely new facility, the typical price range.
It was a conclusion he reached after it became clear that the bank's two data centres were full of hardware that was driving electricity consumption — and energy bills — to record levels. If the hardware was being used to full capacity, Ault might have been able to justify the energy consumption — but it wasn't. He estimates that of the 2,500 servers in the data centres, half were under-used. "The company grew so very fast that every new project that came along brought its own new hardware and new platforms with it. There was no real thought to how much of the hardware we were actually using," he recalls. "We had servers that were doing a job maybe once or twice a day, so they would sit there ticking over but were still consuming power."
Ault conducted an audit of how much energy each piece of hardware was consuming, both when fully operational and when on standby. It turned out that the company could save up to £150,000 a year in energy bills by replacing existing equipment with more energy-efficient hardware. Ault came up with a hit list of around a dozen changes the group could make. At the top of the list was scrapping two Sun Fire E10k servers, which held the company's customer database. In their place would be two Sun Fire T2000 servers, touted by manufacturer Sun Microsystems as "the world's first eco-responsible server." Ault says the T2000s consume just 4% of the energy used by the old servers.
Other hardware was replaced, including eight web servers. But while the T2000 was powerful enough to handle the work of four to five of the existing web servers, Ault didn't want to take the risk of rationalising eight machines down to just two. The maths is simple. If one went down, half the company's web capacity would be lost. So he installed four T2000s. The entire rationalisation programme delivered the promised £150,000 annual reduction in energy bills and a 400-tonne reduction in carbon emissions.
Beware of Greenwash
Yet as many IT managers are discovering, a project like Ault's faces plenty of obstacles. Part of the problem is the sheer complexity of some data centres. A recent survey of 300 data-centre managers by Quocirca, in association with software firm Global DataCenter Management, found that more than a quarter of the respondents admitted to not knowing how many servers were under their control. More than 40%, meanwhile, said they sometimes found a server they didn't know they had, or had looked for one only to discover that it had been retired.
And there are other factors holding back the greening of data centres. Cultural attitudes towards the urgency of reducing power consumption in IT vary. While Germany is a strong advocate of green IT, partly due to its high dependence on fossil fuels, it is a low priority in France where almost 80% of fuel is generated from carbon-free nuclear energy.
At a corporate level, while most companies have a CSR policy in place, not many give their IT managers the responsibility to address the situation. Less than a fifth of respondents to the survey said their data-centre managers have financial responsibility for their power consumption. While 44% said their companies have a formal carbon-footprint reduction policy, few pass the responsibility on to IT, often a firm's major CO2 emitter. That's either a major oversight or a case of "merely paying lip service to environmental issues," concludes Quocirca.
Longbottom reckons CFOs should take heed. "Greenwash is going to become a major issue," he says. "The press will focus on it and shareholders will look at it. If they find there are cracks in the strategy, they will jump on them."
Eila Rana is senior editor at CFO Europe.
The Eco Itinerary
When it comes to green IT initiatives, "it's a road where you should never arrive at your destination," says Clive Longbottom, an analyst with IT research firm and consultancy Quocirca.
Just ask Matthew O'Neill, group head of distributed systems at HSBC, which is said to be the world's first bank and the first FTSE 100 company to go carbon neutral in 2005. A year later O'Neill, who is responsible for HSBC's IT services other than its data centres — including the bank's desktop computer network, printers, mobile phones and any other technology used by staff — kicked off a series of small, self-contained energy-saving projects as part of the bank's bigger programme to tackle the risks of climate change.
Among the initiatives was the introduction of "secure printing," so that employees make photo copies by swiping their building pass through printers. "That removes the historic problem of printing and never going to collect your print jobs," says O'Neill. He also helped introduce NightWatchman software, from a vendor called 1E, which automatically reduces the power used by idle desktops without losing unsaved work. The software is running on 75% of the bank's 300,000 desktops and O'Neill is aiming to have it implemented across the entire company by the end of the year. Finally, in order to reduce the amount of air travel, video-conferencing facilities — ranging from desktop video-conferencing to "telepresence" studios — allow staff at various locations to meet around a high-definition virtual boardroom table. Employees who used the video-conferencing at HSBC's headquarters in London's Canary Wharf, rather than hitting the road or getting on a plane to attend a meeting, saved the company €390,000 and 185 tonnes of CO2 in one month alone.
The project has not been without challenges. Many of the initiatives are dependant on employees changing their behaviour, be it printing less, switching off a computer or deciding not to take a flight, which doesn't happen overnight. "Most of the initiatives are simple steps that, if taken with the environmental impact in mind, can be hugely beneficial," says O'Neill. "It's really about raising awareness."
The message is getting through. Since 2004, energy consumption per person at HSBC has decreased by 10%. But that doesn't mean O'Neill is resting easy. He's now contributing to a group-wide project to train 2,000 employees to be "climate champions," who will then lead internal programmes to raise awareness.