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Propelled by swelling energy costs, many corporations today find themselves embarking on new conservation and “green” initiatives. According to the U.S. Energy Information Administration, global energy supplies will remain tight for the foreseeable future, keeping worldwide energy prices very high through 2008.1
Over the past several years, information technology (IT) has become a significant contributor to rising energy consumption among businesses. In the last decade many corporations heavily invested in powerful IT capabilities, often ignoring how efficiently these capabilities consumed energy. Today many firms are taking a closer look.
In addition to mitigating energy costs, major corporations are also looking to “green” initiatives to generate new business. Whether it’s investing in alternative energy markets or manufacturing more energy efficient products, “going green” can also be good for business.
But what does all of this mean for small and mid-size businesses? How do energy costs compare to other cost increases these firms have seen over the past two years? How big a factor is IT and what are these firms doing about it? And how is concern about the environment impacting everyday business policies for small and mid-size firms?
To find answers to these questions, IBM interviewed over 1,100 executives across ten markets in Europe, Asia and the Americas. These executives hold IT leadership roles at companies employing between 50 and 500 people. The small and mid-size firms interviewed include manufacturers, financial services firms, retailers, healthcare providers, professional and IT services companies and hospitality providers.
As small and mid-size firms expand into new markets and evolve in today’s globally interconnected economy, opportunities abound. Any firm with a game-changing innovation and internet bandwidth can reach new markets regardless of their size or location.
But with this tremendous opportunity and global reach come new challenges. Computing and information demands are increasing exponentially each year, and companies require new, expanded IT capabilities. This means more equip-ment, producing more heat and consuming more energy. With inexpensive energy virtually non-existent today, firms find themselves at a juncture.
Among some of today’s skyrocketing costs—like payroll, employee benefits and supplies—most small and mid-size firms see energy rising the quickest. Nearly one out of two firms interviewed say energy represents one of their largest cost increases over the past two years. In food and hospitality 50 percent of firms say it is their largest cost increase. In addition to energy, many firms also say employee payroll costs have risen sharply over the past two years as well. In financial services large cost increases outside of energy also include office supplies and equipment.
As energy costs increase, an underutilized IT infrastructure can often be a significant contributor to unnecessary consumption. Approximately one out of three firms interviewed believe IT accounts for 10 to 50 percent of their total energy costs.
Some firms don’t know how much their IT infrastructure contributes to total energy costs. More than one out of four firms interviewed – outside of professional and IT services—could not quantify how much IT contributes to their total energy costs.
For some firms this can be a result of a flat internal facilities rate. For example, a marketing department that occupies 1,200 square feet of office space is charged the same internal facilities rate as the IT department. Although they both occupy the same amount of space, a data center or server room can consume up to 10 to 30 times more energy.
The benefits of a “green” IT infrastructure
Most data centers or server rooms today make inefficient use of the energy they consume. Some industry estimates reveal that more than 50 percent of the energy used in a data center or server room goes to power and cool equipment rather than computations and processing.
To combat this, approximately one out of four small and mid-size firms in most industries are evaluating the utilization and performance rates of their server and storage equipment.
This can help uncover inefficiencies on several levels, from room power and cooling to individual system utilization. New opportunities to decrease occupied floor space in the data center or server room also can be identified.
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