Wall Street Firms Building More Energy-Efficient Data Centers

Financial institutions increasingly are employing new technologies to improve the efficiency and environmental friendliness of their data centers.

It's hip to be green. Former Vice President Al Gore won the Nobel Peace prize for his work on global warming. Hybrids are the new Hollywood "it" cars. And designer reusable grocery bags are selling on eBay for $500.

Now financial institutions are joining the green crusade. Companies such as Charlotte, N.C.-based Bank of America and New York-based Citi have pledged billions of dollars to promote environmentally sustainable business practices in the coming years. Chief among their plans is developing next-generation data centers that are increasingly energy efficient. But their efforts aren't entirely altruistic -- environmentally sustainable data centers carry fiscal benefits, too. To "green wash" their data centers, financial services firms are looking to a number of new technologies, specifically IT asset management, server virtualization and data center cooling solutions.

Why data centers? The data center is the nerve center, or the control room, for any organization. Data centers also consume more energy than any other area of the enterprise because they contain both IT equipment and the infrastructure that's needed to cool that equipment to optimal temperatures. The Environmental Protection Agency found that data centers consumed about 60 billion kilowatt-hours (kWh) in 2006, roughly 1.5 percent of total U.S. electricity consumption. In its August 2007 report, the EPA also said the energy consumption of servers and data centers has doubled in the past five years and is expected to almost double again in the next five years to more than 100 billion kWh at a cost of about $7.4 billion annually.

And the problem isn't limited to the United States. According to IDC, $26.5 billion was spent in 2005 to power and cool the worldwide installed base of servers, compared to $10.3 billion in 2000. The research firm says that today about 50 cents is spent on energy for every dollar of computer hardware, and that figure is expected to increase to 71 cents per dollar by 2010.

Not only is this increase in power usage bad for the environment and a strain on nations' power grids, it's becoming a major line item for financial institutions' IT departments.

The rationale behind data center spending has flipped in recent years, observes Joe Stephenson, VP of the platform team and head of the data center enterprise at Charlotte, N.C.-based Wachovia ($720 billion in assets). In the past, he says, the top expenses at data centers were hardware and applications; now, it's the bricks and mortar and the power costs that are increasing.

"The real issue is rising energy costs," says Steve Yellen, VP of marketing for Aperture, a Stamford, Conn.-based provider of data center management tools. "It just really has to be addressed."

But all is not lost. According to the EPA, U.S. organizations have the opportunity to save up to $4 billion annually in their data centers through the use of more efficient equipment and operations. As a result, Gartner (Stamford, Conn.) analyst Tom Bittman points out that next-generation data center strategies are more about cost cutting and consolidation than combating global warming.