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 Wednesday, May 07, 2008

McKinsey & Company, with its McKinsey & Company Report: Revolutionizing Data Center Efficiency, provides critical analyses, key findings, and recommendations on data center efficiency.

Some of the key points in the report include:

  • The rapid recent (and projected) growth in the number and size of Data centers creates two significant challenges for enterprises: 1.) Data center facilities spend (CapEx and OpEx) is a large, quickly growing and very inefficient portion of the total IT budget in many technology intensive industries such as financial services and telecommunications. Some intensive data center users will face meaningfully reduced profitability if current trends continue; 2.) For many industries, data centers are one of the largest sources of Greenhouse Gas (GHG) emissions. As a group, their overall emissions are significant, in-scale with industries such as airlines. Even with immediate efficiency improvements (and adoption of new technologies) enterprises and their equipment providers will face increased scrutiny given the projected quadrupling of their data-center GHG emissions by 2020.
  • The primary drivers of poor efficiency are poor demand and capacity planning within and across functions (business, IT, facilities), significant failings in asset management (6% average server utilization, 56% facility utilization), and boards, CEOs, and CFOs are not holding CIOs accountable for critical data center facilities CapEx and data center operational efficiency.
  • Improving efficiency is the best near term means to solving the twin challenges of rising spend and GHG emissions. The report proposes a three part solution to double IT energy efficiency by 2012 and to arrest the growth of GHG emissions from data centers: 1.) Rapidly mature and integrate asset management capabilities to reach the same par as the Security function; 2.) Mandate inclusion of true total cost of ownership (including data center facilities) in business case justification of new products and applications to throttle excess demand; and 3.) Formally move accountability for data center critical facilities expense and operations to the CIO and appoint internal “Energy Czars” with an operations and technology mandate to double IT energy efficiency by 2012.
  • To achieve this doubling of energy efficiency CIOs, equipment manufacturers, as well as industry groups in dialog with regulators should quickly establish automotive style “CAFE” metrics that will measure the individual and combined energy efficiency of corporate, public sector and 3rd party hosted data centers. The report proposes one metric that would deliver immediate financial and transparency benefits to executive management of enterprises and could become a government recognized measure of efficiency.

A related OECD meeting on ICT and the Environment will be held in Copenhagen, Denmark on 22-23 May 2008. A paper on Khazzoom-Brookes postulate and datacenters is also available online. This paper presents how Khazzoom-Brookes have demonstrated that improved efficiency actually results in increased energy consumption as it decreases the overall cost of a product or service and therefore increases demand.

Read more on the McKinsey report here.