Our associates were involved with a major data center build and migration for a Fortune 500 customer in the Midwest. The old data center had been in operation for over 20 years and was inadequate to our customer’s needs for the usual reasons, primarily that the support infrastructure was worn out and obsolete.
We were told that on the day the migration to the new data center began the UPS load for IT equipment in the old facility totaled 375 kW. On the day the migration was complete, the old facility still contained 75 kW of IT assets for which no owner could be found. So the data center management took the rational action of shutting it off to see who screamed. Wager a guess? No one!
At the same time this operator was implementing a DCIM package in other facilities to help address this and other problems. Unfortunately, the inventory was only able to be inventoried once per quarter, and was always off by greater than 15% of the recorded assets. In addition, it tied up valuable IT personnel for 2 months per quarter doing inventory and updates.
We began to look at the ROI for a better way. We began by analyzing the Net Present Value of the power wasted by these “useless” assets, which we believe exist in significant amounts in every major data center. We began by assuming we had a full data center five (5) years old with a remaining ten (10) year expected life and 75 kW of abandoned load, a theoretical but reasonable expectation.
Total yearly wasted Power was 657,000 kWH. Power cost was $.08 per kWH, resulting in a direct cost of $52, 560 per year. Since the data center is older, we also assume a PUE of 2.5, resulting in a total direct power expense of $131,400 the first year, which we estimated would increase in cost by 3% per year compounded. At the end of 10 years this amounts to an extraordinary $1,506,000 of waste.
This is not the correct number with which to make a financial decision. Corporate finance departments would want to know the Net Present Value (NPV) of the series of yearly cash flows from eliminating this expense. This calculation results in the amount of dollars that I would need to invest today at the company’s Internal Rate of Return (IRR) to attain the same amount of dollars at the 10 year mark, discounting the savings to a smaller number.
A smaller but not insignificant number. With an IRR of 14%, the NPV of these savings is a very impressive $761,000 dollars. This NPV from power savings alone could justify a significant investment in asset management. In future articles we will examine other savings that further support the case for asset management solutions.