By John Zipperer

Environmental costs receive a high level of attention in Australia, even affecting the way enterprises there pursue their data-center strategies. Just ask Andrew Cresp, Head of Infrastructure, Technology Services, at Insurance Australia Group (IAG), which underwrites some AU$7.4 billion (roughly US$6.8 billion) a year in premiums in Australia, New Zealand, the U.K. and Asia. Two years ago, the CEO of IAG, Michael Hawker, decreed that the company would become carbon-neutral within five years. Today Cresp's data centers are playing a major role in this effort.

Data centers everywhere are major consumers of electric power, and that was certainly the case at IAG. In fact, Cresp discovered that the company's data center in Melbourne, Australia, was consuming more electricity than any of the company's other offices—even more than its headquarters, which houses some 3,000 employees. The high energy usage helped point out to the company's leadership that IT as a whole was a big energy-user that it would need to address if it were to achieve its goal of significant energy reduction. "We had the finger pointed at us for carbon usage and carbon neutrality," says Cresp. To help reduce data-center power requirements, Cresp and his team at IAG have decided to consolidate data centers as well as examine why their carbon usage is so high, then take steps to lower it.

Reducing power needs is just one reason why enterprises in virtually all industries are consolidating data centers. Other reasons include assimilating systems from companies acquired in mergers and acquisitions; cost-cutting; replacing outmoded server hardware and software with newer, more efficient models; and improving operational efficiency.

In fact, improved operational efficiency was the reason behind data center consolidation that was cited by nearly 60 percent of experienced U.S. IT executives and managers in a 2007 survey by Forrester Research (see chart, p. 35). Other reasons cited include reducing real estate costs, reducing total cost of ownership (TCO) and addressing cooling costs. What they have in common is the desire to make data centers more cost-efficient and able to contribute more directly to a firm's bottom line.

As Cresp notes, data centers make juicy targets for efficiency initiatives. Because a data center can be so costly to operate, the fewer centers an enterprise has, the less expensive it is to run that enterprise, even when the cost of supersizing a consolidated center is included.

At IAG, the data center was receiving continually increasing demands from the business, Cresp explains. Some 300 people were working in the Melbourne data center, which runs the technology for IAG's 4,000 staff throughout Australia, as well as for a division that handles private lines of insurance.

Cresp realized he could do something about the data center's exponential growth by looking at server utilization. Before the switch, his CPU utilization rate was only about 5 percent. "When I saw that, I was shocked, but then I found that it was industry standard," says Cresp. "We thought there was probably a smarter way of doing this."