Power struggle: What role should IT play in reining in energy costs?

Is it time for IT managers to add 'energy czar' to their list of job roles? Google, Yahoo and other early adopters explore the options.

IT buys the technology; facilities buys the energy. That's the way it's always been in corporate America. But that may be changing.

As energy costs seesaw wildly and public concern over the environment grows, data centers 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 data center 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 Data Center Design Group, who has been involved in the design and construction of data centers for 25 years. "In the end, you have two groups that report to different sides of the organization," 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:

1. To improve and integrate asset-management capabilities in the data center.

2. To include the true total cost of ownership in business-case justifications for adding facilities or applications to the data center.

3. To formally move accountability for data center 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 data centers but are unable or unwilling to commit to specific organizational 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 organizational steps to change," he says. They just aren't doing so publicly -- yet.

Forrest maintains that the organizational 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 organization," he says.

Ready for a reorg? Not quite

With no takers willing to publicly sign on to McKinsey's challenge, Computerworld sought out companies -- including Google Inc. and Yahoo Inc. -- that are leading the charge to take control of data center energy costs. The conclusion: Corporate America is indeed thinking seriously about data center 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, data centers 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 data center 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 data center 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."

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