CEOs in banking have never been more focused on bringing down costs and reducing complexity; after liquidity they continually site the need to be agile in the new economy as a foremost concern.
With data centers using ten to 30 times more energy per square foot than office space and data center energy use doubling every five years, energy efficiency is becoming a key metric of IT operational effectiveness. Simply put: a green IT strategy is becoming a necessity. The heart of this strategy is about working smarter, not harder-gaining competitive advantage by doing more with less.
Smarter banking is not just about minimizing overall costs, but uncovering new ways to use available resources better. Seventy percent of the average IT budget today is spent on maintaining the existing infrastructure versus adding new capabilities. Did you know that up to 85 percent of computing capacity in a company's distributed computing environment may sit idle on any given day? Or that for every 100 units of energy piped into a datacenter, only three units are used for actual computing? But on the flip side, some environmentally-conscious banking and insurance companies are turning this trend on its head: taking the heat out of their datacenters to help heat their offices.
The good news is that a flexible, secure, dynamic infrastructure can help banking institutions address critical energy and power costs. As the pace of the industry continues to accelerate, banks will need to eliminate unnecessary layers of complexity, and implement systems that offer more efficiency and flexibility. This will be especially important as data and transaction levels continue to explode, and the use of digital devices further intensifies the demands being placed on IT.
THE SMART PATH
So how do banks get started on taking the green path to improving performance? They can start by looking at three things:
First, know your systems-and how they operate. Many banks struggle with putting a green IT strategy together because they lack the knowledge of how much energy is being utilized. The first step to maximizing efficiency in the datacenter is to measure the energy usage of its systems. After being armed with the knowledge about how much power is being consumed, and by what application, a bank can make smarter decisions about consolidation or reduction.
To more efficiently leverage computing capacity in a distributed environment, banks can put asset and service management technologies in place to maximize system utilization and yield considerable savings. Service management software can automatically shut down a system once maintenance is performed and enable an organization to dramatically reduce consumption and CO2 emissions.
Next, optimize your datacenter. Optimizing a datacenter means taking a fresh approach to system management. New technologies such as cloud computing provide tremendous resources for increased flexibility and power. By harnessing the power of a virtual cloud, banks can tap into large amounts of virtual computing power without making a large capital investment.
In addition, virtualization technology enables banks to consolidate data centers and utilizes staff resources in critical areas rather than in the maintenance of proliferated server farms. Virtualization can optimize the utilization of servers at the rate of 80 percent or more.
Lastly, optimization might require a different approach to system cooling. Banks should exploit liquid cooling solutions vs. using traditional cooling systems with air. Analysts at IDC estimate that for every $1.00 spent on new hardware, an additional $0.50 is spent on power and cooling. By implementing more efficient cooling solutions, banks can reduce this expense.
Finally, consider ways to streamline and consolidate. Datacenter consolidation is becoming a product of today's economy. As banks increase in size through mergers and acquisitions, they are both consolidating physical operations and reducing redundant systems and applications. It is more cost effective and efficient to move the workload of a number of smaller servers to a one larger system-such as a mainframe -that has greater transaction power and processing capability.
Due to constraints in available floor space, some banks are moving IT operations to remote locations. This trend is especially pronounced in banks that are located in metropolitan areas and feeling squeezed because they can't get any more power, can't get more space or are have problems cooling their systems.
Furthermore, a typical bank has a tremendous amount of duplicate and/or redundant applications and code being executed on a daily basis. By simplifying application and data complexity, data centers can not only reduce the amount of machine cycles and energy consumed but can also radically improve business agility.
TWO WAYS TO WIN
There are many reasons why a bank should pursue a holistic green IT strategy-starting with a greener datacenter. For banks, "going green" means reducing IT costs by curbing electricity consumption and maximizing efficiency. It also means generating revenue through green investment. The bottom line: it's a win-win proposal. IT can be a source of energy consumption, but also a conduit for driving conservation if it is utilized properly.
Shanker Ramamurthy leads IBM's Banking & Financial Markets Industry business worldwide.