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How Thinking of IT as a Utility Can Improve Efficiency

Microsoft | Tuesday July 26th, 2011 | 5 Comments

We have partnered with Microsoft to run key findings from a recent white paper entitled The IT Energy Efficiency Imperative as a ten-part series. To read the full series, click here. The white paper can be downloaded here in PDF format.

As we have seen in earlier posts in this series, server underutilization is a major barrier to energy efficiency. Most large IT departments have been trying to improve server utilization for some years, primarily through the use of server virtualization technology. But many of these efforts have stalled for a number of reasons including financial constraints, organizational politics, and a shortage of sufficiently skilled IT staff.

Building a consolidated IT infrastructure often requires a significant up-front investment of time and money that doesn’t necessarily pay off right away, making it a challenge in a cost constrained environment. Furthermore, owners of mission-critical applications are often reluctant to migrate applications to shared IT infrastructure due to concerns about reliability. This is unfortunate because not only do these applications typically represent a large portion of the IT infrastructure but they also often have low to average utilization rates. Long lead times between ordering and installing servers also compound the problem by driving business units to overbuy equipment far ahead of actual needs.

In 2010, according to a report by Forrester Research, only one in four IT departments had a plan for optimizing IT resource use, increasing energy efficiency, and minimizing waste generated by their operations. Improving IT infrastructure energy efficiency was a critical priority for just 12% of companies. Another recent study found that many IT departments did not have sufficient budget to improve the energy efficiency of their IT systems, and that senior management did not view IT energy efficiency as a high priority.

IT departments must be presented with the appropriate incentives and resources to transition from simply providing “lodging” for other business units’ servers to offering “IT as a utility”—through centralized computation-and-storage services hosted in private or public clouds.

Operating IT in this manner can dramatically improve equipment utilization and energy efficiency, as well as significantly reduce IT costs across the entire organization.

Public and Private Clouds
Centralized computation-and-storage services are at the heart of so-called public and private clouds. Public clouds consist of IT infrastructure that is shared among many organizations. They improve energy efficiency through economies of scale, multi-tenancy, and the motivation of the cloud provider to improve its bottom line without sacrificing reliability or security. In fact, for all but the most sophisticated IT operations, public cloud computing from a reputable vendor, when used appropriately, is almost certainly the most secure, reliable, and cost-effective method of obtaining IT services.

Private clouds—typically installed on premises and operated by and for the exclusive use of a single organization—share many of the same attributes, although they are generally less energy efficient than public clouds because of their smaller scale and because most organizations are less adept at running IT systems than specialized vendors. However, private clouds do have one important advantage over public clouds: migrating data and applications (such as virtual machines) is typically much faster and easier given the physical proximity between the existing IT infrastructure and the private cloud.

In either scenario, consuming IT services from a cloud enables business units to pay for only what they use, which encourages them to be more prudent in their use of IT resources. As the lower costs—compared to a dedicated infrastructure—attract more business units, the cloud will become even more cost effective and energy efficient.

The Importance of Education
Educating business units on the true cost of running their applications and teaching them how to optimize and reduce IT resource usage are important tasks for an organization that wants to run its IT as a utility. For private clouds, IT departments must work closely with business units to accurately forecast demand and avoid wasteful overbuilding or potentially catastrophic underbuilding of the supporting infrastructure. Of course, any forecasting exercise will be imperfect, but a centrally controlled private cloud allows any excess resources to be used by other applications rather than sitting idle.

IT departments that focus on energy efficiency as a core practice can stretch their budgets and respond more rapidly to demands for additional services, thereby improving their organization’s productivity and competitiveness. By embracing IT energy efficiency in areas such as system architecture, hardware provisioning, software design, and operations, organizations will almost certainly realize significant energy and cost savings up and down the IT stack.

We’ll be exploring these issues in depth in the coming weeks. Follow along here


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  • Steve

    I love it that MSFT is taking steps to consider the whole picture of data center usage. There’s a piece over on Treehugger today about using data centers to heat homes! http://www.treehugger.com/files/2011/07/heating-your-home-with-data-furnaces.php?campaign=th_rss

  • http://www.1e.com Rod Trent

    Uh…wow… “IT departments must work closely with business units to accurately forecast demand and avoid wasteful overbuilding or potentially catastrophic underbuilding of the supporting infrastructure”

    Accurately forecasting? Isn’t forecasting an imperfect solution by it’s very nature? Do you know there are tools already available that can allow companies to monitor, manage, and report on datacenter and server usage? 1E’s NightWatchman Server Edition allow companies with private and public clouds to ensure each server is doing useful work.

    • Jen Boynton

      Right, but the point is big companies aren’t using them, because data center managers are incentivized to make sure there’s always space for absolutely every possible processing need rather than efficiency.

  • Viswanadh

    The author mentions about utilizing private cloud as a utility so that efficiency can be brought in. What to do with the ups and downs of demand (say for retail company which has seasonal variations or other enterprises where demand is highly fluctuating). Aren’t you anyway under-performing in either case?

  • David

     With the help of IT, trading became faster and easier however there are pros and  cons with this kind of system so we also have to know more about trading before investing in it.