The economy is clearly dependant on energy. Anything which impacts price or availability of oil, gas, coal or electricity has a profound effect on business, government, and society.
When NPower raised consumer gas and electricity tariffs by on average 17% this January, there was widespread outcry that a typical customer will now pay around £1000 per year for gas and electricity. These rises are largely the result of increasing wholesale gas and coal prices - the UK generates 40% of its electricity from gas, with North Sea Gas production in decline.
Press and politicians have been quick to point out the impact on Scottish households. Likewise, the impact on rising energy costs are clear in industries involving freight transportation and manufacture have been noted through fuel price demonstrations in 2000 and 2007.
However, its not clear that business leaders outside these industries have a clear understanding of the impact of energy costs. This is perhaps because it is difficult to measure costs for all energy use. Different forms of energy are used (and therefore operating costs are rising) in many activities and facilities such as staff air and road transportation, and building facilities costs. A significant facilities cost is the increasing electricity required to run desktop and server computing and communications equipment.
In the last decades, ICT has become critical to society, particularly for the UK with its thriving Financial and Services sectors which are heavily dependant. ICT systems are expected to be available 24/7 to support the increasingly globalised economy, and Communications and Internet innovations have opened new markets and provided new partnering opportunities for business.
However, in the same period, the energy needs of this technology have transformed - the number of Personal Computers has increased exponentially, and semiconductor processors have doubled in complexity, processing power every 2 years. Hard disk storage has followed a similar trend. All of this has come at the expense of growing power consumption and costs.
This cost is now significant - it is estimated that around 2% of electricity generated in the USA is used to run computing equipment in datacentres and a $7.2B annual cost to business worldwide (IDC 2005, with predicted $12.7B by 2010. Power doubled from 2000 to 2005). Any business providing PCs to employees and running business applications on server equipment is incurring such costs, although they may be buried in the electricity bill to appear as a line item on the annual report.
A similarly hidden cost is that people travel further and more frequently to support business in this environment. This cost increases with fuel costs, not to mention the lost opportunity costs of staff stuck at airports or waiting in the tailback to cross the Forth Road Bridge.
So, business is under a double whammy of increasing energy requirements, and rising energy costs.
Fortunately, technology also presents some opportunities to reduce energy usage. Consumers understand this, as the growing trade in low energy light bulbs, solar heating panels and wind turbines at your local B&Q will testify. In the same vein, consumers are beginning to select products and services based on environmental impact, or at least reputation.
The flipside of rising business energy requirements is of course increased carbon emissions, or carbon footprint - but for many businesses such issues have so far been of more interest to the Corporate Responsibility Officer than the FD or MD. This will change - if potential cost savings are not sufficient incentive to shift focus onto energy consumption issues, it's likely that UK businesses will soon be compelled to do so by statute.
The Westminster government Climate Change Bill, drafted in March 2007, is likely to pass into law this year and will commit the UK to reducing its carbon dioxide emissions by 30% by 2020, and 60% by 2050. Although it is too early to say precisely what impact this will have on business, it is clear that it will introduce some form of individual emissions capping, and devise tax, subsidy and trading instruments for businesses. it may also require the adoption of technology which reduce energy use. Likewise the Scottish Government's emphasis on encouraging a Greener Scotland. is likely to strongly influence energy use in the coming years.
As stated above, IT equipment is a growing offender in energy use. To put this in perspective, consider a typical Scottish Medium sized organisation with a high dependancy on ICT, with 1000 PC devices and 100 server devices running in its datacentres.
The IT world has not historically prioritised energy efficiency. As a result, many computing devices consume lots of power even when they are idle - crudely put this is not unlike revving your engine at 7000rpm even when stationary at the traffic lights.
At the worst case, these PCs are left switched on when not in use - not unusual in a corporate environment. Each PC (including LCD monitor) might consume the equivalent of a 100W light bulb, with mounts up to 876KWh per year, or around £87 based on 10p per KWh. That adds up to around £87,000 for our 1000 desktop company. For most companies, this is not measured, and has crept up over the years as PCs have increased in number.
Meanwhile, the 100 server devices are housed in an expensive datacentre facility. A reasonable guesstimate is that, taking into account all cooling and auxiliary equipment, each running server consumes about 1kW. This translates to around £87,600 pa.
Our typical medium sized organisation has a power bill of £174,000 from computing equipment alone. A back of the envelope calculation of greenhouse gas emissions from generating this electricity gives us around 1.2 Metric tonnes of carbon dioxide emissions- about the same as 100 motor cars
Although this power bill may not be a significant fraction of net profit today, planning for an increased energy cost and stricter control over emissions may drive organisations to measure and take steps to control these costs today.
Fortunately there are some practical steps that organisations can take to address these issues. Most of these pivot on reducing power when devices are idle.
For our PC desktops, real efficiencies can be made by either powering down the system at night, or weekend, and for more modern PCs "feathering the throttle" so the hardware consumes less energy.
Switching off can be difficult to enforce by policy, as employees dislike waiting 3 minutes whilst their PC switches on and "boots up". So organisations using modern PCs and the Vista desktop operating system can take advantage of technologies such as "Sleep mode" to automatically put the PC in a very low power state after idle, and "Superfetch" to make sure it can start up within seconds. Based on the PC being idle outside of the 5 day working week, this could save about £60 per PC pa.
All the figures above are based on worst case energy usage, and best case energy savings. To have a chance of realising these savings, it is necessary to take steps to automate and control power management across the whole organisation.
One such example is Microsoft partner 1E who worked with Peterborough City Council to implement "Night Watchman" and Microsoft System Centre management software. This organisation of 4,500 staff found that 30% of PCs were being left switched on costing between £40 and £60 per machine. The solution saved the organisation £50,000 per annum in electricity costs, supported management reporting of energy use, and realised automation and efficiency benefits for the IT department. To estimate how much these steps could save your organisation, you can enter your vital statistics into 1E's cost calculator.
In the example above, 100 servers may seem like a too many for an organisation with 1000 employees, but personal experience has shown it to be not unusual. This "server sprawl" is because it has been simpler for IT Managers to deploy one application per server, so that they can isolate each application and maximise its reliability. The side effect is poor energy efficiency - servers may be running at a tenth of their processing capacity, but as they remain switched on 24/7 they use most of their peak power requirements. To extend the high revving car analogy, we are doing 5000rpm and never take it out of 1st gear.
IT Managers take this route because servers are cheap - but IDC studies suggest that in by the turn of the decade, energy will account for around 40% of the overall cost of running a server, taking into account hardware procurement and staff costs. And the issue will get worse as server numbers increase by 15% each year - a factor which has led many organisations datacenters to run out of space and test the grids capacity to deliver power to their facility.
Virtualisation is a strategy which allows these servers numbers to be consolidated to "virtual images". This technique allows several physical servers to be replaced by one, and yet preserve the application isolation and reliability which IT Managers desire. With the appropriate analysis, discipline and control, it is possible to consolidate with a 10:1 ratio, and reduce power requirements by a factor of 10 at a stroke.
Furthermore, by using clever management software, its possible to be far more flexible in when each "virtual image" is actually enabled or "switched on", leading to further power efficiencies.
As with most ideas that sound too good to be true, the reality is not quite so simple. By putting "all the eggs in one basket" through virtualisation and consolidation, it becomes critical to effectively control, manage and automate everything about the server environment, in a way which was not necessary when each application ran inefficiently on its own server. For most organisations, this necessitates an investment in revised procedures & processes, and software tools to control the virtualised environment.
Microsoft's approach to this exercise is the Infrastructure Optimisation model, and the System Center family of management tools.