A Regulatory Boost for the Cloud

From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

In a recent podcast interview on Tech Nation, Tim Sanders, author of Saving the World at Work, quotes a remarkable statistic: it’s been estimated that Google could save 750 megawatts of electricity every year by changing the color of its ubiquitous homepage from white to gray.  That’s because monitors require more electricity to energize the brighter white phosphors.

The total cost savings of roughly $75,000 a year may not convince Google to overhaul its site design, but the statistic drives home the effect that economies of scale can have in computing.

There’s a lot of attention being paid to economies of scale these days as IT consumes a growing proportion of natural resources in the US. IT organizations are increasingly going to find themselves on the hot seat to go green not just because it’s the nice thing to do, but because it’s good sense for the bottom line.

Consider these facts:

  • The Environmental Protection Agency has estimated the data centers consume about 1.5% of all electricity in the US and that about a quarter of that energy is wasted;
  • Gartner estimates that more than 2% of global atmospheric carbon emissions can be traced to the IT industry;
  • Gartner expects that more than 925 million computers and one billion mobile phones will be discarded over the next two years.
  • The International Association of Electronics Recycles estimates that about 400 million units of electronic refuse are generated annually. The actual amount of “e-trash” may be higher because nervous businesses have stockpiled old equipment rather than paying for disposal.

The twin effects of spiraling energy costs and environmental hazards are creating a double whammy. Underutilized computers are consuming increasingly expensive energy and also taking a greater toll on the environment. In Europe, businesses are working under a new standard called the Restriction of Hazardous Substances directive, which limits the use of dangerous chemicals in computers.  US businesses are keeping a close eye the directive, not only because it affects their European businesses but because they see it as a role model for similar legislation here.

Some very large businesses are beginning to make green computing part of the core corporate values. An article by the University of Pennsylvania’s Wharton school tells of Bangalore-based IT services firm Wipro Technologies’ energy efficiency mandates. It tracks metrics like carbon dioxide emissions and paper consumption per employee and is outfitting workers with a new kind of energy-efficient workstation.

In the US, the most promising option is hosted or “cloud” computing. This takes advantage of the excess capacity that exists in giant data centers run by companies like Amazon and IBM. Why let that spare power go up in smoke if there are small businesses that can tap into it?

Increasingly, they are. On Palo Alto’s Sand Hill Road venture capital foundry, technology entrepreneurs that propose to run their businesses on internal servers are referred to as having a “Hummer” strategy.  In other words, they’re consuming far more power than they need to drive their computing environment.  New software and services firms are bypassing captive data centers and opting to farm out everything to third parties. Technology entrepreneur John Landry recently told me that the cost of hosted computing is coming down so fast that it no longer makes sense for a new business to even consider investing in a captive data centers. In other words, it will never be cheaper to manage the infrastructure yourself.

In a consolidated hosting environment, every tenant benefits from the economies of scale provided by the host. What’s more, the arrangement shifts responsibility for technology recycling and disposal to a central entity that has a vested interest in best practices. As the cost of energy continues its inevitable rise and legislators stump for stronger regulation, the appeal of the cloud only grows.

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