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.

“There’s no real standard,” says Stefan Deutscher, a principal at Boston Consulting Group. “The challenge a lot of businesses are going to have is that, unlike an eBay, they don’t have as many homogeneous application workloads running on similar types of servers.”

As a result, it’s easier to produce a relatively accurate cost per transaction in an environment that is comprised mostly of x86 and RISC servers and mainframes, says Deutscher. In addition, other industries, such as the pharmaceutical industry, where IT is not as big a percentage of the overall cost of the business as it is in entities that are almost entirely digital, the cost of a transaction is harder to discern from an IT perspective.

Nevertheless, John Pflueger, Dell principal environmental strategist and a board member of The Green Grid, says there is growing interest in using the cost per watt as a metric to gauge the cost of IT.

“As a point of comparison with someone else, the cost per watt may not be that meaningful,” concedes Pflueger. “But it is a productive metric for measuring your own efficiency over time.”

In fact, that growing interest has led Schneider Electric, a provider of data center infrastructure equipment, to launch a new Mission Critical Services and Software division as part of an effort to bridge the gap that often exists between IT organizations and the facilities people who are tasked with power management.

“People are starting to talk about the cost per watt more and more,” says Domenic Alcaro, vice president of mission-critical services and software for Schneider Electric. “It’s becoming critical to get IT and facilities people all in the same room so they can get on the same page.”

Whatever the approach toward finding a way to measure the value of IT, things are quickly moving away from the theoretical to the practical.

“This is a problem every CIO in the world has,” says eBay’s Nelson. “If we come up with key indicators for the business, then we can start to change the way IT is consumed.”

This article was originally published on 04-09-2013
eWeek eWeek

Have the latest technology news and resources emailed to you everyday.

Click for a full list of Newsletterssubmit