Green IT guru, Steve O'Donnell reviews and explains the recent McKinsey & Company thinking on Data Centers

Published by Steve O'Donnell on Saturday 7th June 2008, 08:10 | Related | Filed Under

I have just been exchanging emails with my good friend and colleague, Will Forest. Will runs the Data Center Consulting Practice for top drawer strategy consultants, McKinsey & Company. I engaged Will, and we worked together on delivering BT’s Data Center Strategy. Will and his team brought a great deal of experience and clarity of thinking to our deliberations, resulting in a great document and a strategy that we were able to share and agree with BT’s board.

Will has been working with Ken Brill’s Uptime Institute to produce a great white paper called Revolutionizing Data Center Efficiency.

Unsurprisingly, most of the key themes of the report are in line with my own thinking and understanding of the issues. I am going to devote the next few articles to covering the main finding of the report:

In summary McKinsey believe that the rapid recent (and projected) growth in the number and size of Data Centers creates two significant challenges for enterprises:

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. McKinsey believe that some intensive data center users will face meaningfully reduced profitability if the current trends continue
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)
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 Greenhouse Gas emissions. McKinsey propose a three part solution to double IT energy efficiency by 2012 and to arrest the growth of GHG emissions from data centers:

Rapidly mature and integrate asset management capabilities to reach the same par as the Security function
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
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. McKinsey propose one metric here for discussion and adoption. This metric would deliver immediate financial and transparency benefits to executive management of enterprises large and small and could become a government recognized measure of efficiency

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