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How Can Wall Street Tackle the Datacenter Crisis?

Datacenters
NEW YORK -- It's no surprise that datacenters consume power and money, and IT teams are being asked to make do with less of both.

Fortunately, there are plenty of strategies, from co-generation to virtualization, that can help them meet this challenge, experts told the financial industry during last week's seminar of the Wall Street Technology Association.

Energy efficiency starts with energy monitoring: You have to know what you're using before you can decide how to save, said Johna Till Johnson, president and senior founding partner of Nemertes Research. She said that far too many companies are not measuring energy usage, and added that those that aren't should start doing it now.

The challenge comes at a time when many companies are facing a datacenter crisis. Many enterprises need increasing amounts of storage and computing capacity but are trapped by small, inflexible datacenters. The solution has become a mixture of building more datacenters while conserving energy in existing ones.

The largest firms are consolidating multiple datacenters, said Ron Bowman, executive vice president of Tishman Technologies, a datacenter subsidiary of the Tishman real estate firm. He said that his company has developed a matrix consisting of over 80 variables to help companies choose which datacenters to keep.

Cutting power costs

Such an elaborate process is necessary considering the heavy power use and the consequences of that power use that make datacenters a headache. On the other hand, the construction itself is far less of a factor.

"Datacenters are just bent metal," said Bowman.

Nemertes' Johnson said that a datacenter is like a machine that takes in power and uses it to generate heat and bits. But machines fall into disrepair and out of date for the latest tasks: Companies with old datacenters find their buildings are not designed to handle the heat generated by the latest blade servers, she said.

The problem is not the servers alone, though. Johnson admitted that when she was CTO of a company, she made a basic error in designing a datacenter: She neglected to factor in the power used by the routing equipment.

But servers are where the easiest power savings are found. Even the most savvy may not know how much energy they use. Nemertes tracks a few hundred companies that it calls its "benchmark group" -- early adopters that she said "tend to self-select when they choose to participate."

Nevertheless, even this elite group is in the dark about its power usage. Johnson said that 87 percent of the benchmark group do not know their datacenter energy costs and don't turn off servers when they're idle.

If you don't know how much you're paying for electricity, hire an intern, Johnson said. One of her clients hired a college student over the summer and put him in charge of the company's "green project." He went throughout the company, gathering the utility bills, and presented the data at the end of the summer. "He was motivated," she said.

[cob:Pull_Quote]There are other expenses businesses should weigh when thinking about reducing power costs. For one thing, while energy is a big expense if you have a large number of servers in several datacenters, it's more expensive than it needs to be if they're located on prime real estate.

Bowman noted that the financial industry has located the majority of its datacenters in the most expensive real estate in the U.S. -- which is often where electricity is also the priciest: New York and New Jersey, Washington D.C. and Northern Virginia, San Francisco, Chicago, and Los Angeles.

He said companies can save millions by building datacenters near cheap energy and land. Electricity is over $0.20 kilowatt-hour (kWh) in the New York area and nearly that high in California, but far lower in other places. Dominion Power in Northern Virginia provides electricity at $0.08 per kWh, he said.

[cob:Special_Report]Locations that use geothermal or other renewable energies can deliver even lower prices, he added, and companies should consider locations as distant as Iceland, Russia, and Dubai in the United Arab Emirates, as well as places that are closer such as Greensboro and Nashville in the U.S. Real estate is also cheaper in Greensboro and Nashville than in the urban areas that house so many datacenters today.

Bowman said that companies should also consider the dollar savings that can be earned by moving to low tax areas. Tax law is changing, he said, and some states may waive sales taxes on equipment to make them more attractive to companies building or improving their datacenters. Others already have low taxes.

Companies should also learn about state and federal subsidies for fuel cells, said Kathy Perone, president of First Element Technologies. She said that a 400 kW fuel cell could cost $2 million to install, but could be eligible for $1 million in state grants (depending on the state) and a $500,000 federal tax credit.

Page 2: Virtualization... and the nuclear option.