As energy costs seesaw wildly and public concern over the environment grows, datacentres have landed in the corporate cross hairs. And IT managers find themselves on the hot seat, asked to account for the huge energy costs their systems incur. Some forward-thinking companies are even beginning to wonder if it isn't time for their IT and facilities departments to merge.
Should CIOs get ready to add "energy czar" to their list of job roles?
McKinsey & Co, a management think tank, seems to believe as much. In a study presented last year at the Uptime Institute's Green Enterprise Computing Symposium, McKinsey called on companies to move accountability for facilities operations to the CIO and to appoint an internal energy czar to better focus on the true cost of datacentre ownership, which includes both equipment and facilities expenses.
That's a tall order. Historically, the two departments have been in a power struggle -- figuratively and literally. Each has its own budget and reports to a different part of the corporate structure.
Typically, IT reports to the CIO and facilities reports to the corporate real estate unit, which in turn reports to the CFO or CEO, says Ron Hughes, president of California Datacentre Design Group , who has been involved in the design and construction of datacentres for 25 years. "In the end, you have two groups that report to different sides of the organisation," he says. "That's always been a conflict."
Indeed, when McKinsey presented the report, it issued a challenge -- calling on senior executives at 10 companies to commit to implementing the three main recommendations of its study, which are these:
- To improve and integrate asset-management capabilities in the datacentre
- To include the true total cost of ownership in business-case justifications for adding facilities or applications to the datacentre.
- To formally move accountability for datacentre facilities and operations expenses to the CIO and appoint internal energy czars with operations and technology mandates to double IT energy efficiency by 2012.
No one stepped forward to take the bait, at least not publicly.
"It's been a lot of talk but little action," says Kenneth Brill, founder and executive director of the Uptime Institute , a consulting and education firm that helped develop the report. Like others who follow corporate energy issues, Brill is frustrated that many companies express interest in greening their datacentres but are unable or unwilling to commit to specific organisational changes that could bring those results about.
Will Forrest, the McKinsey analyst who wrote the report, is more optimistic. "Companies are putting energy efficiency on the table and, in certain cases, are starting to take organisational steps to change," he says. They just aren't doing so publicly -- yet.
Forrest maintains that the organisational restructuring he and the report's other authors recommended will emerge over the coming year. "It may not come about exactly as we've suggested, but I think ... you'll see [restructuring] become a de facto part of the IT organisation," he says.
Ready for a reorganisation? Not quite
With no takers willing to publicly sign on to McKinsey's challenge, Computerworld sought out companies -- including Google and Yahoo -- that are leading the charge to take control of datacentre energy costs. The conclusion: Corporate America is indeed thinking seriously about datacentre energy costs, but many companies aren't yet ready to commit to changes as sweeping as what McKinsey proposes.
Why does McKinsey advocate such a radical shift in responsibilities? Forrest points out several reasons behind the recommendation. First, datacentres are usually the biggest users of energy in a corporation. Second, IT would be charged with developing and implementing the technology -- such as dashboards -- required to measure and monitor energy efficiency anyway.
And third, it's important that companies designate someone who can be held accountable for total datacentre costs and energy efficiency, he notes. Even in companies that have set up a "green champion," if that person isn't given the power and authority to deliver results, "it makes the job very limited," says Forrest. The company may trumpet a goal of reducing greenhouse gas emissions by 8% a year, for example, "but there's no means of tying that to any real executive action."
Jonathan Koomey, a datacentre energy efficiency expert at Lawrence Berkeley National Laboratory, agrees with the basic premise of the McKinsey study, but he says he believes the responsibility for total cost should be above both IT and facilities so that the person with that responsibility "is able to make a decision about total costs, rather than having his or her own budget in mind."
And energy-minded corporations themselves? Computerworld 's spot check found that, rather than making one person accountable, most organisations are scattering energy efficiency responsibility through several organisations -- IT, facilities and even marketing.
Google 's energy czar
Google is one of very few, if not the only, major US corporation that currently employs someone with "energy czar" in his title, although he is not directly responsible for datacentre costs. "My focus is on 'greening' Google's energy supply," explains Bill Weihl, Google's green energy czar for the past two and a half years.
Weihl's goals are to figure out how Google can use more sources of renewable energy as well as how to use that energy more efficiently. But when it comes to datacentres, his role is advisory.
There is a single person at Google who is responsible for both equipment and operating infrastructure energy costs, says Weihl, and that's his boss, Urs Holzle, senior vice president, operations, and a Google fellow. Holzle reports to a senior vice president of engineering, who in turn reports to the CEO.
But everyone at Google is "empowered to think about total cost of ownership," Weihl stresses. "That has led to a lot of innovation around energy efficiency. We've been ahead of the curve in making trade-offs between the equipment budget and the operations budget." For example, Google has been designing and building its own energy-efficient equipment for several years, Weihl says.
Yahoo 's energy strategy
Yahoo does not have an energy czar, but it does have Christina Page, who has been director of climate and energy strategy since July 2007 and whose job it is to coordinate energy efficiency efforts across the company, including the datacentres.
Page reports to Meg Garlinghouse, a senior director and the head of a committee known as Yahoo for Good, which focuses on community relations, including efforts to promote green practices. Garlinghouse reports to the senior vice president of marketing.
When energy reports to marketing, it raises a red flag among skeptics on the lookout for companies that are more interested in " greenwashing " than they are in real organizational change. Page bristles at the suggestion that that's the case at Yahoo.
"I have a budget and a mandate that reaches across organizational silos and comes with the blessing of the co-founders," she points out. "I have authority and flexibility to look for the leverage points across the entire company that will create the maximum positive impact in addressing global greenhouse gas emissions."
Day to day, Page says that she shares best practices and works to help forge partnerships. "It's really important to have a conversation between IT and the folks who run the datacentres," she says. She talks with engineers and facilities staffers on a tactical level and with executives at a strategic level -- and that can involve making recommendations to the CEO and chief technology officer. Total cost of ownership, she says, "is top of mind for our folks here, all the way up to the CTO and co-founders."
Bank of Montreal : CTO in charge
Bank of Montreal has come fairly close to the McKinsey ideal by putting IT and facilities under one executive -- the CTO.
As part of a program launched two years ago to better manage its IT equipment and infrastructure, the company created a new position -- manager of datacentre governance. The position is responsible for forecasting IT equipment needs and translating them into language that the facilities department can understand, says Mike Wills, director of facilities management.
Wills, who helped create the new role, has 30 years of experience in IT, having moved over to facilities only about three years ago. The datacentre governance manager, Rocco Alonzi, is Wills' counterpart in facilities.
The two men work in partnership to manage the overall energy portfolio. Alonzi reports to the senior vice president for enterprise infrastructure, who reports to the company's CTO. Wills, who forecasts utility needs, floor buildouts, cooling and mechanical requirements, reports to the senior vice president of corporate real estate and strategic sourcing, who also reports to the CTO.
The structure encourages integration of IT and facilities staff. The company has already moved some IT people into facilities, and Wills is now working on moving more facilities people into IT.
And he has started requiring his facilities quality control managers to be certified in ITIL standards for managing IT infrastructure, development and operations. "So now they have the same language as the IT people when they come to communicate about maintenance, changes, upgrades," says Wills.
A new kind of power struggle
Some companies haven't embraced that type of energy-efficiency-driven reorganization but are nevertheless starting to hold CIOs responsible for IT energy use.
Last year, for example, reducing power consumption became for the first time an important part of Atti Riazi's job at Ogilvy & Mather Worldwide . Riazi, who is worldwide CIO and a senior partner at the advertising agency, has a goal of reducing its carbon dioxide emissions by 20% over the next three years. As a result, IT has begun measuring its power use and devising ways to reduce it. Every six months, Riazi must report IT energy consumption to the CEO and CFO.
Reducing IT energy use is also a priority at medical insurer Highmark Mark O'Gara, vice president of infrastructure management, who reports to the CIO, says the company has a goal of reducing power consumption within the raised floor of its datacentre by 10% this year. But IT consumes only 40% of the power used in the datacentre -- facilities and infrastructure consumes the other 60%, with facilities reporting to the vice president of human relations and administrative services, who reports to the CEO.
IT and facilities are working together on ways to reduce energy consumption, such as improving air flow, which reduces the need for air conditioning. Other measures have reduced the expenses in the facilities budget.
That said, facilities does not have a target comparable to IT's for reducing its energy use, according to O'Gara. "Maybe that will be the next level of dialogue next year," he says.
Accountability for all
While very few companies are tackling energy management in just the way McKinsey envisioned, and energy czars are still few and far between, organizations are indeed beginning to realize the importance of tinkering with, or wholly reorganizing, their reporting structure to better control energy usage and costs.
At Bank of Montreal, the new energy-centric reporting structure makes it very clear who is responsible for what costs, says Wills. "You cannot control these costs without aligning these accountabilities up," he notes. "I think that's the tough part for a lot of large organizations -- to get that clarity."