Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
CIO INSIGHT: Dr. Anderson, you recently wrote that in 1995, there were just 20,000 servers in the world. Today, there are 6 million. Just one new server farm proposed for the economic development zone of the south Bronx, for example, would draw more than twice as much power as the entire World Trade Center complex. Forty-six such developments are proposed for New York City and neighboring Westchester County alone over the next four years, increasing the total electricity demand on Con Edison by 4 percent. Are the electricity demands of the Information Age starting to push the nation's power grid to its limits?
ANDERSON: The system is crashing. The energy demands of the computer age represent the extra load on the nation's electricity system that wasn't there 10 years ago.
Is this the straw that breaks the camel's back?
ANDERSON: Yes. But the funny part about it? It's not really a power generation problem. There are seven new generators going up here in New York City alone. The big problem is that the nation's transmission grid itself is all messed up. The camel's back in this case is the transmission system that gets the fuel into the power plants and then the electrons out to the consumer. You can argue all day about what causes it, but brownouts are bad, brownouts are happening, brownouts are headed for New York City, and that's the fact. We should all go out and buy batteries.
HURLE: And the scary part of it is that we're not sure what's causing the outages. It's really not the increased demand for electricity that's been causing the problems in California, and I think you can extrapolate that to the rest of the country. It's more the organization and the topology of where the power generation is and how we get that generation out to the consumer.
GEHL: In Silicon Valley, we're at the end of a long distribution line. So we are pretty much at the mercy of everyone upstream of us. Combine that with the fact that we are highly reliant on power imported from other parts of California and other parts of the U.S.
How do we rethink the future of electricity generation, transmission and delivery? If it's not just a question of needing more power, what other issues do we need to address?
ANDERSON: Well, there's nobody in charge of the transmission system. You've got this tremendous increase in complexity with all of the new generator companies throwing power onto the grid and no software or hardware to redistribute it and handle it. It's like an air traffic control system without the Federal Aviation Administration up there running things. Of course, you can put planes in a holding pattern. You can't do that with electricity on a grid. You get these waves of chaos sweeping through the system, and as it gets more and more connected, it's going to get more and more chaotic.
HANDFIELD: In one of the studies we did, we looked specifically at this issue of developing a supply management strategy for sourcing electricity. In fact, there is a process you can use to effectively look at the market, the contingencies [and] the risk factors. There are things you can do in terms of long-term contracts, hedging contractsagreements that specifically set levels of reliability that you establish in key relationships with providers. And I think the most important thing is to know thyself, to know what your usage pattern is, what things are going to look like in the future. Once you have a baseline of that kind of information, you can set an appropriate strategy to be able to deal with the possibilities. Unfortunately, most companies don't do that. They don't understand how much power they use today, how much they will be using in the future. Those metrics simply aren't available.
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