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Data Center Pulse is an industry group on LinkedIn, which was convened earlier this year by Dean Nelson of Sun Microsystems and Mark Thiele of VMware. The group has launched a channel on YouTube with a video describing the 2009 version of The Chill Off, a side-by-side evaluation of the energy efficiency of leading cooling technologies (see our coverage of the 2008 Chill Off). In this video, Dean Nelson provides a detailed overview of the Chill Off, which is sponsored by the Silicon Valley Leadership Group (SVLG), Data Center Pulse and Lawrence Berkeley National Labs. This video is in two segments running about 11 minutes.

The second segment can be viewed by clicking the “Read More” link at right.

For additional video, check out our DCK video archive and the Data Center Videos channel on YouTube.

After sifting through the blizzard of Monday morning blog posts in Google Reader without finding much of interest (glad to hear Jobs looks to be in reasonable health), I turned to Twitter and immediately vectored onto some more interesting stuff.  The best yet was Andrew McAfee’s post on the impact of IT capital spending as a barrier to entry.  Conventional B-school wisdom is that industries mature in proportion to their capital spending.  Businesses that require a lot of capital spending have a barrier to entry, and so relatively few smaller firms can afford to play in those industries.  He gives oil exploration as one example.   But apparently IT capital spending runs completely counter to this.  The more an industry spends on IT, the more likely more businesses are going to be able to get in:

IT capital, in other words, appears to be unique in that it lowers barriers to entry rather than raising them.

What a great story for IT and our industry!  Interestingly, this study specifically excluded companies and industries that make or sell IT hardware or software, so this is the real economy, and not just the High Tech industry.  The theory for why this is so is that IT capital spending increases the efficiency of other parts of the business far in excess of the cost of the IT.   Hence overall, it makes things easier for the business.

Here is another interesting tidbit from the study:  it has been an established maxim that IT evens up the playing field for small companies versus large companies.  In other words, the right IT can make a smaller company very competitive with a larger one.  But this particular study appears to dispute that.  The more IT capital spending there is, the more the concentration of players is shifted towards big companies.  Interestingly, other kinds of capital spending favor fragmentation between large and small companies, albeit fewer of either due to the increased barriers to entry.

McAfee’s theory on this is that:

I believe that this is because modern IT increases the scope, the precision, and the fidelity with which a business innovation can be propagated throughout a company. To put it as tersely as possible, good ideas and good execution separate winners from losers, and IT helps companies execute on their good ideas (technology also helps companies generate good ideas, but that’s a subject for other posts).

I would put that another way, which is to say that IT reduces friction in an organization if well implemented, and allows a large organization to “think small” in nimbly and efficiently implementing smart strategies while growing to a larger scale.  ERP and other Enterprise Software makes it possible for Big Companys to “bottle” their Best Practices discoveries, and ensure consistent implementation of these practices through business process automation.  Another of McAfee’s great posts shows that the variation in profitability for industries that make outsized investments in IT is much greater than industries that don’t.  Put another way, there is a bigger spread in lowest to highest profitability where large IT investments are being made.  This tends to reinforce the idea that IT spending lowers the friction and enables the winners to rise more quickly over the losers.

If that’s all true, I think I see the problem for smaller companies.  Implementing the level of IT available to larger companies still becomes a barrier to entry for companies lacking the scale to undertake such expensive projects.  There is still friction there that keeps the little guys from competing effectively.  That’s where SaaS and Cloud Computing can still come in as equalizers that give the little guys a chance.

Forrester’s TEI (Total Economic Impact) ROI analysis makes the advantage of SaaS for smaller businesses more apparent.  For example, they state that for small business, with 100-249 employees and 50 users, SaaS has a better TEI throughout a 10 year life cycle, as well as lower cumulative costs.  Medium businesses with 250-499 employees and 100 users this advantage falls to 7 years, largely due to a need to handle more integration and other more specialized requirements.  Somehwat larger businesses with 500-999 employees and 250 users have an advantage for 6 years in SaaS.  The largest business category in the report is businesses with 2500 employees and 500 users still show an advantage for SaaS out to 6 years, but it’s a pretty muddled picture where you have to look closely after about year 3 to see that advantage.

I find Forrester’s data to be a pretty convincing reason for why larger businesses have had an advantage in deploying IT technology, but also for why SaaS changes that picture to make it easier for smaller businesses to enjoy some of the same advantages.

More than a third of data center managers say they have been asked to cut their data center budgets for 2009, according new data from AFCOM, the industry group for data center professionals. The survey results, taken in late November, show that the economic crisis is having an impact on data center spending, but that any belt-tightening will be far from apocalyptic.

Thirty eight percent of managers surveyed by AFCOM said they have been asked to cut data center spending, with the average goal being a 15 percent reduction in the data center budget. Of those making cuts, 20 percent said they would delay or cancel a planned physical expansion of relocation. That equates to about 8 percent of all respondents.

Here’s a look at AFCOM’s breakdown of where managers say their cuts will be targeted:

The areas taking the biggest hits are travel and training, which suggests 2009 may be a challenging year for data center conferences.

The two major industry conferences held after the financial crisis hit in mid-September were the AFCOM fall Data Center World in Orlando and the Gartner Data Center Conference in Las Vegas. Both shows were well-attended, but travel decisions were likely made prior to the Wall Street meltdown.

The economic downturn may be tough on corporate travel, but will likely boost video conferencing. Seventy percent of data center managers said they expected to increase the use of video conferencing to help reduce travel costs.  

The AFCOM survey also found that virtualization is a top priority for 2009, with 86 percent of managers saying they would virtualize to reduce the need for new physcial servers.

The data also showed significant resistance to software as a service (SaaS) and cloud computing. Just 12 percent of respondents expected to adopt SaaS for application hosting, while 22 percent said they would increase their use of cloud computing. Forty nine percent said it didn’t fit with their current strategy, while 16 percent cited security as their key resistance point, and 13 percent said they were “not confident with service providers.”

The responses, representing 133 large-scale data centers worldwide, were collected from Nov. 18-24 from managers who had previously participated in AFCOM research.

It is clear that most every company now realizes the importance of controlling the efficiency of data center environments, regardless of company size. We are finally starting to see all IT vendors realize that they need to be part of the solution. Server vendors were the first to recognize this, since the increase in chip power consumption and heat dissipation was the first obvious problem. However, all elements in the data center need to contribute to improved power and cooling metrics.

We are finally starting to see network equipment manufacturers own up to this, with Cisco Systems Inc. starting to increase its focus and marketing on energy awareness. I also expect to see a great deal of hype and marketing in the storage community. We started to here alot last year about solid state disks (SSDs), which dramatically reduce power while incresing performance of storage arrays. The costs today are prohibitive to consider a complete replacement of fixed disks for most business, but I expect to see them used in niche high-performance environments and also bundled in tiered storage solutions by companies such as EMC Corp. and Hitachi Data Systems (HDS).

There is still some confusion on whether the data center environmentals are the responsibility of data center or facilities, but there is no disagreement on the fact that both of these groups need to work very closely together to make sure current and future data center requirements are feasible from all aspects of power, cooling, IT systems performance, and costs.

I have been working on several committees over the last couple years to work through the trends and best practices on these issue, including the Next Generation Data Center and the Blade Systems Insight. While the focus is shifting from being green for green's sake to being green to save money, the good news is that most of my research has shown that increased attention to environmental considerations usually saves companies a tremendous amount of money, so it makes good business sense to be environmentally aware in the data center. Some of the new topics to come up in future conferences I expect to be around how to analyze the return on investment (ROI) for IT equipment
replacement decisions, as they relate to power and cooling, and whether the dynamics for managed services change as a way for companies to look at outsourcing strategies for saving money.

The bottom line, as I see it, is that EVERYONE owns responsibility for data center efficiency, especially the responsibility for coordination across all IT disciplines and facilities management to make sure any initiatives have taken all aspects of efficiency into consideration for future data center growth.

Drop 36

Topics include:

• Welcome Michael Nielson to my Reader
  
• AWS v Dedicated
  
• AWS S3 CloudFront with JS and CSS
• Amazon S3 tripple encrypted true Rsync backup
• RightScale v Scalr
• A Mainframe on AWS - WOW!
  

Listen Here…

For those of you who can’t get enough of those roundup/predictions stories for the New Year, here are some lists from other sites:

• Data Center Links: John Rath looks back at 2008 in review.
• Renesys: The Internet Year in Review, 2008.
• Contentinople: Top 10 stories for 2008
• Circle ID: Top 10 stories of 2008
• Telecom Ramblings: Predictions for 2009.

I just did some small research on what CMS and web server/application server systems the Norwegian political parties are using for their web sites. This autumn it is election for parliament in Norway. Note of course that it is not necessarily a political statement to use Free Software and Open Source software in production.

Under follows the list of the parties represented in the parliament today in the oh-so-nineteeneighties left-to-right scale. Free software marked with light-green, non-free with pink and unsure with yellow.

This list is compiled with the help of friends, Google and some HTML poking. Please post corrections on any error found.

What changes will the Obama administration bring for the data center industry? The change in Washington figures to create both challenges and opportunities, with the potential for new environmental regulations, as well as new investments in industries that could boost demand for data center services.

President-elect Barack Obama’s appointments for key positions reflect his campaign focus on the development of renewable energy sources and a “green economy.” Obama has named Prof. Steven Chu, a Nobel Price winning physicist and the director of the Lawrence Berkeley National Laboratory (LBNL). Chu is well known in Silicon Valley, and LBNL has been conducted extensive research on energy efficiency in data centers, which are often among the largest users of power within an organization.

“I look forward to the positive attention that our new Secretary of Energy can bring to the whole Department of Energy’s priorities for data center energy efficiency,” said Deborah Grove, Principal with Grove Associates. “Having an advocate in the top spot at this juncture can only bring terrific results.”

While data centers may not be direct targets for regulation, they would feel the impact of broader regulations on corporate carbon emissions. The Obama energy plan includes an “an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.”  A cap and trade system would set limits on corporate emissions, but allow companies to purchase or sell capacity in a carbon trading market.

“I wouldn’t be surprised to see cap and trade mechanisms put in place,” said Christian Belady, Principal Power & Cooling Architect for Microsoft, which has been a leader in measuring power efficiency in its data centers. “Tracking and trading carbon emissions will be a natural next step in evolution.

“However, many companies are still not measuring as they should and will have to invest heavily to ramp up these competencies to meet government requirements,” he added. “I would recommend that companies start tracking power and carbon now.”

One area where regulation may boost demand for data center services is the financial sector, according to Jack Pouchet, director of energy efficiency at Emerson Network Power.

“There will undoubtedly be a plethora of recommendations and perhaps legislation much like Sarbanes-Oxley that will dictate new practices in the area of financial data record retention,” said Pouchet. “Most likely we will see a higher degree of financial transaction reporting requirements along the way to greater transparency in order to track the flow of Federal loan/bailout dollars.

“All of these requirements will drive the need for larger, deeper, faster database engines, increased network capacity, some form of ‘watchdog’ program, and a massive increase in data storage and retrieval systems,” Pouchet continued. “Combine this with the related activities within the auto industry and you have the makings for a huge increase in not only the demand for increased data center productivity but also in the sheer number of data centers and related enterprise hardware required to enter, track, manage, and report the data.”

Similar expectations have been voiced about the Obama administration’s plans for health care. Comprehensive health care reform could increase data storage demand, especially if the plan includes a move to Electronic Health Records (EHR). John Halamka, the CIO of CareGroup Health System and Dean for Technology at Harvard Medical School, says his hospitals’ move to electronic records shows it could be a job engine for the IT sector.

“We’ve created 22 jobs for the rollout and support of our EHR project,” Halamka writes at his blog, Life as a Healthcare CIO. “Multiply this by the number of clinicians needing EHRs in the country and you’ll see that the Obama plan will create tens of thousands of new high tech jobs.”

While most of the current focus is on the potential impact of Obama’s plans, the data center industry is likely to reap the benefits of existing government energy efficiency programs, including the EPA’s development of and energy ratings for enterprise servers, which will allow companies to compare the performance of vendor offerings.

“We expect to see a greater push by the US EPA on ENERGY STAR for servers that will drive standby and idle energy demands down significantly,” said Pouchet. “This may very well have the single greatest potential for energy savings within the data center industry as today’s idle energy consumption still averages well over 60 percent of full-power.”

What will the year 2009 bring for the data center sector? The big story will be the economy, and how companies balance the mission-critical nature of their data center operations with the new austerity.

“With revenue growth and profitability at risk for many companies in today’s global economy, IT and Infrastructure plans will be scrutinized as never before,” said Christian Belady, Principal Power & Cooling Architect for Microsoft. “As a result, a company’s growing IT demands will need to be met with existing infrastructures, and efficiency will be more important. Data center costs will need to be flat or decrease to maintain viability.

“Even more importantly, companies will need to do more with less, which will create the stimulus for greater adoption of new technologies and processes that improve both IT and infrastructure utilizations.”

The changed economic climate will drive a renewed focus on productivity within the data center in 2009, agreed Jack Pouchet, director of energy initiatives for Emerson Network Power, who said he expects continued focus on data center efficiency metrics.

“Given the severe restrictions on budgets and the paucity of capital, everyone from line managers to the C-suite will need, to paraphrase Jerry McGuire, to ’show me the productivity,’ ” said Pouchet. “This attention to productivity will shift the data center discussion away from PUE (Power Usage Effectivness), which is merely a ratio of power distribution with no impact on productivity, and towards defining a MPG metric for servers, storage, networks and the data center as a whole.”

Such data is critical to helping managers make a reliable cost-benefit analysis on new hardware purchases - which require a capital outlay but could bring long-term cost savings through improved energy efficiency. Emerson has advanced a new metric called Compute Units per Second (CUPS) to quantify the performance gains delivered by more powerful chips and servers.

“Once we can begin to wrap our arms around the idea of useful work, be it through CUPS or other proxies, then we can truly drive productivity improvements, not only in the data center but throughout the enterprise,” said Pouchet. “The shift will be to monitor, track, and report units of useful work against energy, manpower, capital, and other resources in order to identify logical strategies for improving operational efficiencies.”

This could also be an important year in data center design, as enterprises get a stronger understanding of the potential for containers and other innovative approaches like Microsoft’s Generation 4 design,

“A key trend for 2009 will be the reaction by pundits and actual implementation of pilot chillerless, roofless data centers as described by Microsoft,” said Deborah Grove, a Principal with Grove Associates who writes a Green IT blog. “Who will build these after Microsoft? How much cost savings? How much energy savings? Will it dramatically change fundamental data center design over the next 12 to 18 months?”

The data center industry will likely continue to seek ways to incorporate renewable energy into their power usage, which could generate activity for the many firms that provide data center services..

“The move to an increased use of renewable and alternative energy sources will drive demand for engineering services, manufacturing, design, data bases, and utility along with CO2 tracking, metering, and reporting services - all of which will drive computational and data center demand,” said Pouchet.

“We can expect to see the continued growth of large-scale privately owned and operated power generation systems,” he added. “It is feasible that we will see multi-megawatt class solar thermal systems or combined PV/thermal technology being deployed in campus-like environments were several data center operators combine to own or lease a shared power generation system.”

Follow this link to see a demo of the Nexus 1000V and how it interacts with VirtualCenter to set up VN-Link services.