2. Electric Utilities
Pressure gauge reading: 10
IT operations come to a screeching halt without electricity; and in some parts of the world, the availability of reliable power is the main driver for improving the energy efficiency of corporate IT operations.
In London, Mumbai, Tokyo and New York City, data center operators can't get more power to their sites. If they want to add new servers, they need to retire older ones. They can't plan on data center expansion; instead, they need to eke the most amount of processing power out of the data centers they have.
"Data centers are reaching their capacity in electricity," says Simon Mingay, research vice president at Gartner. "As organizations go to more dense, power-consuming technologies like blade servers, data centers are reaching their limits
The lack of available power from utilities is why corporate IT buyers are starting to look at new metrics such as performance per watt of servers and desktops. It's also why data center operators are consolidating facilities and driving up their watts per square foot.
"One in four data centers around the globe is going to have an outage due to power over a five-year horizon," predicts Brian Brouillette, vice president of data center services at HP. "As companies are in growth mode and they are figuring out how to consolidate data centers, the issue that everybody is talking about now is cost. But the availability of power is a close second."
Over the last 36 months, HP has consolidated 85 data centers down to six, two each in Austin, Texas, Houston and Atlanta. Key to HP's strategy was making sure the remaining six data centers are as energy efficient as possible.
"If IT is fundamental to the way you run the business and you want to grow the business, you need more capacity online faster," Brouillette says. "If the CIO can't do more with its data centers, he can't meet the CEO's needs."
Companies that can't squeeze enough power out of their existing data centers are stuck building new ones at a significant capital investment or outsourcing to providers like Savvis and RackSpace.
"The number of new data center builds because there's no power at the existing data center is phenomenal," says Shally Bansal Stanley, managing director of Acumen Solutions, an IT consulting firm. "You can't get power generators. They're on back order.
Some electric utilities -- particularly California's PG&E -- offer rebates to corporate customers if they improve energy efficiency. Around 20 electric utilities offer such rebates, according to Climate Savers, an IT industry group that promotes energy savings that can be gained from purchasing the most efficient desktop computers and turning them off at night.
"In order to get some of the rebates, you have to give back the excess power," Stanley says. "You have to show that you reduced it and not redeployed it. Most of our customers are redeploying it. They're optimizing it so they can use it."
The scarcity of electric power in some locations is driving up the cost, so the two go hand-in-hand in driving CIOs to go green.
"We have a customer -- a financial services institution -- that was paying $6 million a year to the electric company for a data center. The electric utility told him that over the next 12 months, that cost was going to be $2.1 million higher," Brouillette says. "Nobody is giving him that extra money. This becomes a really big problem, really fast."
Pressure gauge reading: 8
CEOs are under increasing pressure to use natural resources -- energy, water, land -- in a more responsible, sustainable way. Urged on by outside directors and shareholders, CEOs are expected to understand their carbon footprint and start taking steps to reduce it.
For CIOs, C-suite pressure means not only reducing the amount of electricity they consume but switching their IT operations to locations with greener sources of power. That's why more data centers are being built using hydro in the Pacific Northwest, nuclear in Chicago and geothermal in Iceland.
CEOs "have to have a sustainability strategy that meets or exceeds the expectations of customers and shareholders," says John Skinner, marketing director for eco-technology at Intel. "One of the first people the CEO turns to is the CIO, because the CEO understands that technology is an enabler of efficiency
European CIOs are ahead when it comes to measuring their carbon footprint and understanding the trade-offs in how their IT equipment purchases and management decisions affect this metric.
"The cost in energy around the world varies, but the trend in unit cost per kilowatt hour is going up, and it's going up way ahead of inflation. That's pretty universal, and it's increasingly a point of contention," Gartner's Mingay says. "In the U.S., [cost of energy] is the most important driver. It's maybe 80/20, cost savings or cost avoidance vs. carbon footprint. In Europe, it's 60% about cost savings and 40% about carbon reduction."
How much pressure CIOs are under to reduce their carbon footprint depends on their industry. In a manufacturing business, where IT might count for 1% of total carbon emissions, there's not as much pressure as there is on a Web portal where IT is the business.
"For knowledge industries, like financial services, banking, pharmaceuticals and the public sector, IT is going to be a much bigger portion of carbon footprint and more of a focus of attention," Mingay says. "We think the need for action on climate change will increase significantly in the U.S. over the next two to three years. This will be a pressure on CIOs to be contributing toward carbon reduction."
Acumen's Stanley says the pressure on CIOs to reduce their carbon footprint because of a CEO-initiated green initiative is less than the pressure to maximize their data center footprint and keep electricity costs down.
"The biggest pressure on IT executives is data center footprint. That's No. 1," Stanley says. "Cost savings and energy efficiency is No. 2, particularly from a hardware perspective. Being green is a distant third as far as motivation is concerned."
For now, "the green that they are focused on on the IT side of the house is the color of money," Stanley adds.