Low-Cost Locations

The high price of power is driving some companies to look for cheaper data center locales.

Industry giants such as Ask.com, Microsoft Corp. and Google Inc. have good reason to build data centers near inexpensive hydroelectric power sources. Their growth depends on serving tens of millions of customers, which requires massive data centers drawing huge amounts of power no matter how efficiently they are run.

For example, lower electricity costs were a primary driver in Ask.coms decision to develop a new data center in Moses Lake, Wash., with its environmentally friendly and comparatively low-cost hydropower, says Chief Technology Officer Chuck Geiger. But the presence of an experienced workforce (and a neighboring junior college to train workers) as well as the availability of a building suitable for renovation were also important.

At Microsoft, data center power consumption has roughly doubled over the past four years and will at least triple over the next five, says Debra Chrapaty, vice president for Windows Live operations. One reason, she says, is Microsofts plan to offer customers online storage of digital data as part of its Microsoft Live Drive service. Among other moves to hold down electricity costs, Microsoft began operations in April at a new data center located near a hydropower source in Quincy, Wash.

Aaron Branham

Aaron Branham Google says it hopes to create 50megawatts of renewable generating capacity for its data centers by 2012. The search giant also says it plans to set an internal cost of carbon based on the expected impact of future regulations.

In such cases, power represents a huge percentage of operating costs and the total cost of the data center, says Aaron Branham, vice president of technical operations at VistaPrint Ltd., an online provider of printing services for small businesses. However, he says, if youve only got one or two racks [of equipment], its probably not going to justify making a drastic change unless you really want to be environmentally conscious.

Beyond Power

In many cases, locating a data center in another part of the country to reap the benefits of low-cost power isnt an option. For some companies, certain locations could cause unacceptable delays in critical applications such as financial trading. But while most companies arent choosing to relocate data centers solely to save money on electricity, the rising cost of energy is becoming a key issue.

For VistaPrint, the trigger event behind a decision to set up a new data center in Windsor, Ontario, was a lack of space in its new headquarters in Lexington, Mass., and the need for a disaster recovery site to back up its main data center in Bermuda.

One reason why Vista­Print chose Windsor was that electricity costs only 7 cents per kilowatt-hour there, compared with 22 cents in the Boston area. But another major factor was Windsors $7-per-square-foot real estate prices, compared with more than $30 a square foot near Boston. Finally, says Bran­ham, VistaPrint already had a production facility in Windsor and could easily use space available on the second floor above the loading dock for the data center.

Among other variables to consider, says Drue Reeves, vice president and research director at Burton Group in Midvale, Utah, is whether a new data center has the physical space, Internet connectivity and utility connections to grow as the companys needs increase. Josh Aaron, president of Business Technology Partners Inc., an IT and business consulting firm in New York, advises clients not to commit to a specific building until architects and consultants have confirmed that it meets the companys needs.

When Wachovia Corp. went looking for a new data center location, it considered power costs but didnt make them the main criteria for choosing a site. The search was mainly driven by the need to mitigate disaster risk, says Jim Houghton, head of utility product management at Wachovias corporate investment banking service, a demanding user of the companys IT infrastructure. The other side of it was the organic growth were experiencing. It has us, like every other major company, bursting at the seams.

Houghton says Wachovia achieved its goals by building the data center in Oxmoor, Ala., which is far enough from two facilities in the Winston-Salem, N.C., area and has power costs that are relatively similar to those of Winston-Salem.

Even companies moving to areas with inexpensive power are looking to cut demand by using virtualization to load multiple applications on single servers, encouraging vendors to build equipment that draws less electricity, and developing ways to more efficiently cool their equipment. Through such measures, Microsoft expects to cut its data center power bill 30% to 40% in the next two years.

Wachovia isnt trying to solve the problem by simply building a traditional data center in an area with lower- cost electricity. Instead, the company is working with vendors to produce more-efficient equipment, using technologies such as virtualization and conducting a three-year IT optimization drive to increase the efficiency of its existing IT hardware and software.

Houghton is using Tideway Foundation from Tideway Systems Ltd. to identify which server, storage and network resources support various business applications. That helps ensure hes making the best use of his IT resources as he moves applications from Winston-Salem to Oxmoor. It also delivers immediate savings by identifying under­used, or even unused, servers that can be unplugged with little or no impact on users.

At Wachovia, were using this as an opportunity to [eliminate] some of our legacy systems and put them on our grid and fabric server computing environments, says Houghton. Were also making a conscious decision to use more-efficient systems and also fewer physical systems.

If youre going to move, its time to take a holistic view of everything that you do, says Branham. Do you have legacy gear, and is it time to change that? Can you get better consolidation using virtualization technology? In some cases, that can pay for the [relocation] project or help pay for the project.

Taking this overall view forces the IT administrator to get a handle on all his costs so he can quantify IT in terms of a service, says Reeves. If you dont do that, everyone else views your data center as a sinkhole of money, instead of understanding how much money the data center helps the company make or save.

And thats before you even cut a cent or two off your electricity costs.

Scheier is a freelance writer in Boylston, Mass. He can be reached at bob@scheierassociates.com.

Copyright © 2007 IDG Communications, Inc.

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