Datacenter Costs: Horror Stories

My colleague Pedro Hernandez, who blogs about Green IT over at Enterprise IT Planet, and I sat down today with IBM’s Steve Sams. Sams is VP of IBM’s Global Site and Facilities Services, and the go-to guy when it comes to IBM customers seeking to cut datacenter costs.

And man, do businesses need to cut datacenter costs.

Recently, Commercial and Industrial Bank of China tapped Sams’ group to refashion its datacenter strategy. The end result: The bank consolidated 38 datacenters (!) down to two, saving around $180 million annually.

Despite the widespread talk of “going green” — IBM has its own massive “Big Green” initiative, for instance — the need is not just about becoming more eco-conscious, Sams said: It’s about implementing greater operational efficiency.

That’s because companies are throwing money out the window due to poor space, server and environmental management.

This can lead to some truly bizarre situations.

For instance, businesses routinely allocate too much datacenter space to too many underutilized servers. (We’re talking average Intel-based server utilization rates of around 5 percent.)

At the same time, Sams said enterprises are holding off on a third of all server-related decisions — because they don’t think they have enough space in the datacenter!

Other businesses are allocating unnecessarily huge portions of their datacenter expenses to power and environmental costs. One datacenter observed by Sams’ team spent a piddling 28 cents of every dollar on running its servers: the rest went to keeping the lights on and the air cool.

Efficient? Hardly. There’s plenty of room for improvement, which is one of the reasons why Sams’ group is ranking in millions annually in helping companies rationalize their datacenters.

And some enterprises do get it: One of the best datacenters Sams’ team saw had almost the inverse spending ratio as the example above. These guys should be an example to others.

Yet Sams said his group routinely encounters datacenter air conditioners that are cooling nothing; overly chilled server rooms; jury-rigged or dauntingly overbuilt and overcomplicated (and in both cases, accident-prone) datacenter designs — and IT and company management largely ignorant of how far out of whack their cost structure has become.

More notes to come from our talk.

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