After an intensive study of server and data center energy efficiency for Congress, the U.S. Environmental Protection Agency (EPA) reported that the U.S. data center industry is in the midst of a major expansion period spurred by increased demand for IT capacity to support business growth. The Agency listed several trends that are stimulating this demand, including:

• Increased use of online banking and electronic stock trading
• Adoption of Internet-based communications and entertainment
• A shift to using electronic medical records for healthcare
• Globalization of competition
• Government regulations requiring digital records retention.1

IT management is responding by building more data centers. In recent
surveys, 73 percent of U.S. senior decision makers surveyed said they
were planning expansion in the next 24 months,2 while 67 percent of
senior decision makers in European markets said they were planning
to do so.3

IT capacity growth meets increasing energy costs

To satisfy this robust demand for computing capacity, IT executives are
increasing both the numbers and the density of their servers and storage
devices. IBM and consultant studies project that the server installed base
will increase by a factor of six between 2000 and 2010, while storage is
expected to grow by a factor of 69.4

The data center is often the engine that drives the growth of the enterprise, and energy efficiency is the key.

One result of this IT capacity growth is that data centers have become
major consumers of electrical energy to power and cool the equipment.
In a recent study, Gartner reported, “The average power consumption
per server quadrupled from 2001 to 2006, while the average number
of servers doubled and is expected to grow another 50% by 2010. This
rapid growth has resulted in data centers typically consuming up to 100
times more energy per square foot than a typical office building.”5

As data center energy use increases, the cost of that energy is increasing as well. According to Energy Insights, an IDC Company, a recent survey for Johnson Controls revealed that “[s]eventy-nine percent of businesses expect their energy costs to increase [over the next year]. More than half believe prices will increase 6-20%.”6

And rising energy costs affect businesses of all sizes. IBM surveyed more than 1,100 executives from small and midsize businesses across ten markets in Europe, Asia and the Americas. Nearly half said energy represented one of their largest cost increases over the past two years.7

A new field of competition

Increased demand for IT capacity to support business growth, increased energy use by the data center, rising energy costs and environmental concerns are coming together to define a new field of competition for the enterprise—data center energy efficiency. The more energy efficient your data center, the more able your company is to compete in a business environment where energy is becoming more and more expensive.

Business demands, IT capac-
ity growth, increased power
consumption and rising energy
costs are defining a new field
of competition—data center
energy efficiency.

And this shift in the competitive landscape is being noticed by high-level
organizational management. Top executives perceive several benefits
of energy efficiency—including the fact that it is possible to double the
size of a data center in the same energy footprint and reduce data center
energy costs by close to 45 percent8—which should help reduce your
company’s environmental impact. The pursuit of these overlapping IT,
financial and environmental goals creates a situation where your company’s
top management—CIO, CFO and CEO—can all benefit by
acting as an integrated team.

CIO: gaining flexibility while doubling IT capacity

IT management often does not feel the pain of rising energy costs—the
bills are paid by facilities managers. But energy-efficient solutions can
directly benefit the CIO. Increased energy efficiency can not only help
reduce a company’s current energy costs but can also make energy
previously used by the physical infrastructure available to power new
server, storage and communications equipment as it becomes needed
to support business growth.

Energy efficiency therefore gives the CIO more flexibility in increasing
IT capacity within current facilities to support the company’s business
growth. This tactical fix buys time for you to grow and time for you to plan
a longer-term strategy. Demonstrating leadership in continually increasing
IT capacity to support business growth while containing operating
costs is one of the most important ways for the CIO to contribute to the
successful growth of the company—and be valued as a member of the
executive team.

Management teams see several
benefits from working together
to achieve data center energy
efficiency, beginning with cost
cutting and more productive
energy use.

CFO: finding the truth about energy costs

In a recent global study done in cooperation with The Wharton School
and Economist Intelligence Unit, IBM identified successful CFOs as those
who can provide hard data “about the business that reflects the reality of
the enterprise’s performance.”

As the report continues, “With data turned into information then turned
into insight, Finance moves beyond ‘taillights’—historical reporting—to
a keener sense of ‘headlights’ with which to illuminate the future direction
of the enterprise. As truth owner, the CFO can help shape operational
decisions and strategic directions.”9

The first place you should turn your headlights toward is the allocation
of energy costs. For example, within IBM, data centers account for
6 percent of our total floor space but are responsible for 30 percent of
our energy cost, and this cost grew at 18 percent last year. However,
at many companies, energy expense is treated as an allocated cost
based on occupied square footage of floor space rather than as a
charge to users for the actual energy they consume.

A recent study conducted by Bernstein Research found that 50 percent of
CFOs surveyed were already actively exploring how to reduce data center
power consumption and data center energy costs.10 The growing importance
of accounting for, properly allocating and managing data center energy
costs creates one of the most important emerging areas of opportunity for
CFOs to exercise corporate leadership.

Start by finding out the truth
about energy consumption in
the data center—and whether
your allocated costs really
match usage.

CEO: building positive environmental brand stewardship

CEOs are increasingly concerned about environmental issues. Many
want to demonstrate that they lead environmentally friendly organizations
in an era when responses to global warming have become dominant
measures of how corporations are viewed by important stakeholder
groups such as stockholders, customers and government regulators.

In a recent survey of 1,150 CEOs in 50 countries, PricewaterhouseCoopers
found that many of these executives were concerned about energy costs
and other environmental issues. “Sixty-four percent are ‘somewhat’ or
‘extremely concerned’ about rising energy costs … while 49% are nervous
about increasing costs in areas such as compliance and insurance,” the
report said.11

Further, more than a quarter of the CEOs surveyed believe that climate
change will benefit their business economically (in revenues, operational
efficiencies, etc.) or intangibly (in brand or reputation, access to talent,
etc).12 Achieving data center energy efficiency may therefore produce a
long-term positive impact on your company’s operating performance as
well as people’s willingness to do business with you.

IT managers can take action today to get ahead of the competition

In recent interviews with 1,000 global senior business and IT managers,
Enterprise Strategy Group found that nearly half said professional services
to assess, design and implement technologies to support green
initiatives were most important in selecting IT vendors.13

CEOs are growing concerned
about both energy costs and
their organizations’ environ-
mental image.

IBM has a decade of experience in owning and managing eight million
square feet of data centers around the world. And we’ve been working
closely with our clients the past year in implementing energy-efficiency
solutions. Based on our firsthand experience implementing energy-efficiency
projects, IBM has identified five strategic building blocks companies can
use to take action today to begin to achieve energy efficiency and gain
an edge over their competition.

Diagnose—get the facts to really understand your energy consumption

According to InformationWeek, more than half of 472 business technology
professionals surveyed said the facilities team at their companies
gets the electric bill and IT never sees it. Another 21 percent said that
IT is aware of the electric bill but isn’t responsible for managing it.14 Yet
“cost reductions from reduced energy consumption” is the most closely
tracked metric being used by senior business executives to gauge the
success of their green initiatives.15 Data center energy-efficiency assessments
can help you close that accountability gap and start to get a
handle on your energy consumption—and the results can be startling.

According to Gartner, “Traditionally, the power required for non-IT equipment
in the data center (such as that for cooling, fans, pumps and UPS systems)
represented on average about 60% of total annual energy consumption.”16
IBM has learned from the data center energy-efficiency assessments that
we do for our clients around the world that we can implement solutions to
cut that consumption by 15 percent to 40 percent annually. This means that
the payback on your investment can be achieved in as little as two years,
thereby covering the cost of the assessment in the first year.

The data center energy challenge affects both the physical data center
and the IT infrastructure. IBM assessments provide insights into not only
the data center’s energy efficiency but also the potential for gaining efficiencies
through server and storage consolidation. These assessments of
the current state of your data center can be compared to industry benchmarks
and provide a fact-based business case for making improvements.

Five building blocks can
help companies start gaining
competitive advantage through
energy efficiency.

Assessments help determine
the true state of your energy
consumption and provide
a benchmark to what
is possible.

For example, a major IT company needed to support its growth in computing
capacity with its existing 5,000-square-foot data center while improving
its energy efficiency and reducing costs. It asked IBM to conduct a comprehensive,
fact-based analysis of its physical infrastructure. The IBM
analysis evaluated cooling system components, electrical systems and
other building systems. IBM provided an industry-standard metric that
established a baseline for the client’s data center energy efficiency. We
found that only 28 percent of every dollar spent on energy was actually
used by the IT equipment. The rest was spent on air-conditioning and other
infrastructure—not generating productive use of IT for the business.

However, when the client reaches its objective of 53 percent annual energy
savings, it will save US$125,000 to US$170,000 in energy costs every
year. To get there, we recommended reducing recirculation and bypass of
cooling air, increasing computer room air conditioner air discharge temperatures,
adjusting indoor temperature and relative humidity, and improving
the efficiency of the uninterruptible power supply (UPS). Most of the recommendations
are designed to have a payback of less than a year.

Build—explore options to upgrade your data center or build a new one

Compounding the environmental and financial challenges that occur
when the rising demand for IT capacity meets the rising cost of energy,
data centers themselves are often out of sync with the information technologies
they support. A study by Gartner found that “36 percent of
respondents indicated that their organizations’ newest data centers are
seven or more years old.”17 By contrast, IBM’s client experience has
shown that the IT equipment in those data centers is typically turned
over every two to four years. As a result, the older data centers may not
be able to power and cool the newer IT equipment—especially blade
servers—in an energy-efficient manner.

Older data centers have trouble
powering and cooling newer
IT equipment—especially
blade servers.

With rapid IT growth, companies often are looking to consolidate data
center operations to achieve space savings and other benefits such
as increased manageability. Building or upgrading a new data center
provides the perfect opportunity to rationalize the data center strategy
as a way for you to gain major capital and operational savings, including
energy-efficiency savings.

Bryant University in Rhode Island needed to reduce costs and grow the
capacity of its IT infrastructure to meet rising student enrollments—and
their expectations for IT services. The university’s previous decentralized
IT infrastructure was costly, inefficient and increasingly unable to scale to
meet these growing demands.

The university worked with IBM to consolidate and upgrade its IT operations.
IBM helped Bryant design and build a centralized, 500-square-foot
data center. The new data center was implemented in half the total space
required by the previous three. This smaller footprint, coupled with energy-
efficient components, significantly reduced the university’s energy
costs—contributing to a 40 percent reduction in overhead costs. The
project consolidated 75 servers in three data centers down to three IBM
BladeCenter® platforms holding a total of 40 IBM System x™ and IBM
System p™ servers.18

It also gave them flexibility. Rich Siedzik, director of computer and telecommunications services at Bryant, told InformationWeek, “Before we
did this data center, it was the thing that kept me up at night. … Now, we
have more time to be innovative.” According to the article in InformationWeek,
“The university needed to move from an operational focus to a
strategic one.” And, Siedzik said, “the data center allowed us to do that.”19

Rationalizing your IT infra-
structure through a new build
provides flexibility as well as
saves energy costs.

Virtualize and simplify—increase the efficiency of your existing servers
and storage devices

Virtualizing servers and storage devices can increase processing loads
and boost individual utilization rates. A happy by-product of increasing
operating efficiency through virtualization is that energy efficiency can be
increased as well. Virtualization can increase your available storage space
and reduce the overallocation of resources. Bernstein Research found that
technology priorities are generally consistent between CFOs and CIOs and
that “[v]irtualization is widely viewed as having compelling ROI.”20

An example of that comes from the University of Pittsburgh Medical Center
(UPMC), which is seeking to become a truly integrated, self-regulating
healthcare system using evidence-based medicine to produce superb
clinical outcomes and lower costs. To support this goal, UPMC has been
undergoing an IT service transformation program with help from IBM.

Health Industry Insights, an IDC Company, has been tracking the project
and reports that, “UPMC is facing multiple challenges that translate into
doing more with less.”21 Health Industry Insights noted such challenges
as pressures “to improve customer service, patient safety, and service
quality while reducing care delivery costs.”22

“In order to deliver highly integrated, efficient care in the face of this rapid
growth and industry pressures, UPMC recognized that enterprisewide IT
systems, data integration, and platform standardization were crucial for
its quality and business integration goals and to achieve the economies
of scale expected to accrue from these acquisitions,” Health Industry
Insights said.23

Virtualizing your IT infrastructure
can let you do more with
less and save on energy
consumption.

UPMC worked with IBM in virtualizing its Wintel and UNIX® systems and
consolidating 1,000 physical servers down to 300 IBM servers. Storage
also was reduced from 40 databases down to two centralized storage area
network (SAN) arrays. Health Industry Insights reports, “Our initial estimate
that UPMC would avoid almost $20 million in server costs has grown
to $30 million and is likely to exceed $40 million by the conclusion of the
project in 2008.”24

“Considering that IBM and UPMC are only midway through this transformation
project, the results have been impressive. We have already proven
that standardization, along with aggressive implementation of virtualization,
yields unprecedented productivity and efficiency,” said Paul Sikora,
vice president of IT Transformation at UPMC.25

Cool—use innovative cooling techniques to beat the heat

Cooling has become a major problem in many data centers. According
to Gartner, “High-density equipment, such as blade servers, demand
enormous equipment power and air conditioning power. Rack enclosures
can accommodate 60 to 70 (1U) units equating to 20,000 watts to 25,000
watts of power per rack. In addition, for every watt of equipment power,
there is a need for another 50% to 60% for air conditioning equipment.”26
But innovative cooling technologies can help you beat the heat in high-
density computing facilities. They can enable and accelerate the growth
of IT capacity by making it possible for the data center to increase its use
of blade servers.

Georgia Institute of Technology’s Center for the Study of Systems Biology
required supercomputing capabilities for protein structure simulations
and other techniques supporting research into new drugs. Its supercomputer
demanded the highest possible computational performance while

Innovative cooling technologies
are available to handle high-
density computing and keep
capacity growing.

Generating significant heat output from its ultradense blade servers. By
implementing a mix of advanced IBM cooling technologies—including
an innovative rear door heat exchanger—the university was able to maintain
computing performance while reducing air-conditioning requirements
by 55 percent. The resulting energy savings helped cut operational costs
10 percent to 15 percent and helped save an estimated US$780,000 in
data center costs.27

Manage, measure and enhance—take control to automate
energy consumption

If you can’t measure it, you can’t manage it. But with innovative energy
management software, it’s possible for you to have the energy billing metrics
necessary to help control your data center’s energy consumption.

Tracking energy usage history and service levels can be valuable tools in
allocating or capping power to enhance energy use. Taking the process
to the next level, an organization can automate energy management to
preset energy usage levels to support service level and energy optimization
objectives.

InformationWeek reported that Bryant University is working with IBM to
deploy software that automatically manages server clock speed to lower
power consumption. In addition, software helps monitor and control fan
speed, power level used at each outlet, cooling capacity, temperature
and humidity, and it distributes power to server blades as needed.

Automation helps you put
data center energy consump-
tion on cruise control to meet
service level agreements and
other objectives.

Act now—cut costs and gain competitive advantage today

Those companies that start now in implementing energy-efficient data
centers can begin to achieve payback earlier than those that wait another
year or two. First-mover advantage is critical in a world where nearly
every company now faces energy constraints that can undermine business
growth.

The range of energy-efficiency services available from IBM Global
Technology Services has already delivered value to other clients.

IBM IT Facilities Assessment, Design and Construction Services helps
you make optimal investments in energy efficient data centers. IBM Data
Center and Facilities Strategy Services – data center energy-efficiency
assessment helps quantify potential energy savings. Options to improve
energy efficiency include a turnkey, scalable modular data center that can
be deployed quickly to help you consolidate your IT assets and cut costs.

IBM Server Optimization and Integration Services – server consolidation
efficiency study helps lay out a high-level strategy, roadmap and
business case for designing, planning and implementing a consolidated
server environment. IBM Server Optimization and Integration Services –
server consolidation helps you make the transition to higher utilization
rates, greater energy efficiency and reduced operating costs.

IBM Storage Optimization and Integration Services – storage consolidation
assessment provides an evaluation of the power and environmental
benefits of moving to a new storage platform. IBM Data Mobility Services
enables you to more safely migrate your data to new, more energy-efficient
storage platforms.

For more information

Energy-efficiency services from IBM can help you double your IT capacity
using the same amount of energy, gain tactical flexibility, cut operating
costs, build a positive environmental brand—and gain sustainable competitive
advantage.

To learn more about one of the broadest data center energy-efficiency
solution portfolios in the industry, please contact your IBM representative
or visit:

ibm.com/systems/greendatacenter

ibm.com/services/siteandfacilities

ibm.com/services/server

ibm.com/services/storage

Gain sustainable competitive
advantage by doubling your
IT capacity in the same
energy footprint.

NOTES

1 U.S. Environmental Protection Agency, Report to Congress on Server and Data Center Energy Efficiency
Public Law 109-431, August 2, 2007, http://www.energystar.gov/index.cfm?c=prod_development.server_
efficiency_study

2 Digital Realty Trust, “Research study indicates more than 80 percent of companies planning to
expand datacenters,” news release, May 10, 2007, http://investor.digitalrealtytrust.com/phoenix.
zhtml?c=182279&p=irol-newsArticle&ID=999086&highlight=

3 Digital Realty Trust, “Research study indicates widespread datacentre expansions by European companies during next 24 months,” news release, November 7, 2007, http://investor.digitalrealtytrust.com/
phoenix.zhtml?c=182279&p=irol-newsArticle&ID=1074318&highlight=

4 IBM, CIO Leadership Exchange, October 2007.

5,16,26 Gartner, The Data Center Power and Cooling Challenge, David Cappuccio and Lynne Craver, November 2007.

6 Energy Insights, an IDC Company, Rising Energy Prices Are Fueling Business Customer Investment in Energy Efficiency, Doc #EI210356, February 2008.

7 IBM, IT energy efficiency for small and mid-size businesses: Good for business and the environment, December 2007.

8 Taneja Group Technology Analysts, The Greening of the Data Center: A Four-Part Strategy to Achieve the Energy-Efficient Infrastructure, Technology in Depth, August 2007.

9 IBM, Balancing Risk and Performance with an Integrated Finance Organization: The Global CFO Study 2008, October 2007.

10,20 Bernstein Research, Technology Sector Strategy: CFOs Cautious On End Market Growth In CY08, But Support For CapEx/IT Spending Remains Positive; Will It Materialize? Richard Keiser and others,
November 26, 2007.

11,12 PricewaterhouseCoopers, 11th Annual Global CEO Survey, January 2008.

13,15 Enterprise Strategy Group, Global Green Business and IT Initiatives, John McKnight and Mary Johnston Turner, March 3, 2008.

14 Art Wittmann, “The Cold Green Facts,” InformationWeek, September 3, 2007, http://www.informationweek.com/story/showArticle.jhtml?articleID=201803326

17 Gartner, Gartner Survey Suggests Extensive Data Center Expansion Plans Are on the Horizon, Mike Chuba, February 11, 2008.

18 IBM, The art of the possible: Rapidly deploying cost-effective, energy-efficient data centers, February 2008, http://www.ibm.com/services/us/its/pdf/smdc-eb-sfe03001-usen-00-022708.pdf

19,28 J. Nicholas Hoover, “Data Center Best Practices,” InformationWeek, March 3, 2008, http://www.informationweek.com/

21,22,23,24 Health Industry Insights, an IDC Company, Virtualization: Healthcare’s Cure for the Common Cost, Part 2, Doc #HI209705, December 2007.

25 IBM, University of Pittsburgh Medical Center—Server virtualization supports medical innovation,
October 29, 2007.

27 IBM, Georgia Tech implements a cool solution for green HPC with IBM, October 2007.