Measuring IT's Business Value in Kilowatt Hours
To better define IT’s business value, eBay is using a new methodology that ties a transaction to the cost of the kilowatt required to generate it.
By Michael Vizard
Measuring the value of IT to a business has always been a difficult goal. The challenge most IT organizations face is that while there is no shortage of IT metrics, translating those metrics into something the average business person understands has been problematic.
At the recent Green Grid Forum hosted by The Green Grid consortium, however, the IT leadership at eBay revealed it may have cracked that code using a Digital Service Efficiency methodology, which the company has been developing for the last three years, to determine the value of an eBay transaction against the cost of a kilowatt hour used to run the IT infrastructure that processed the transaction.
Dean Nelson, vice president of global foundation services for eBay, says the e-commerce site started developing its approach to measuring the business value of IT as part of an effort to help the company’s business leadership better understand the monetary value of an IT investment.
“A lot of time when we’re talking to the business, you could see the eyes glass over,” says Nelson. “We wanted to uplift the conversation.”
By giving business execs access to a set of key performance indicators that are tied to the value of a transaction on eBay, Nelson says one of the benefits to IT is that it becomes easier to justify an investment in IT infrastructure.
But, just as importantly, the performance indicators are shared with application developers and can end up saving lots of money in investments in IT infrastructure, says Nelson. Because developers can see how much their applications are consuming in IT resources compared to other applications, they are more aggressively fine-tuning their applications.
“Because we were able to show one developer how much memory their application was consuming, we were able to put off a $200 million server refresh,” says Nelson. “Developers don’t want to show up on the list of shame we now keep.”
Of course, there’s also a corresponding eBay list of fame that identifies the applications that are making the most efficient use of IT infrastructure. Once developers can see their decisions’ impact on the cost of IT, their behavior starts to change, says Nelson.
The application and energy usage information is gathered using a data collection and analytics framework from OSIsoft, and eBay shares the information via a set of dashboards delivered by Apptio, a provider of IT financial management software.
Nelson concedes there may be an occasional discrepancy between what a developer thinks is occurring versus what the reports are presenting, but that also creates an incentive to further fine-tune the system.
“It’s really about starting the right dialogue,” says Nelson.
With more than 52,000 servers to manage, eBay needs to operate its data center like a factory because, as a digital business, a direct relationship exists between IT investments and the business’s profitability.
While that direct relationship may not exist in every vertical industry, there is an increasing consensus that the cost per watt of power consumed by IT provides a base unit of measurement that IT organizations need to track.