Step 2. Win over Stakeholders

Building the Business Case for Energy Efficiency in Your Data Center

Step 2. Win over Stakeholders

Win over stakeholders within your organization whose buy-in is critical to advancing your energy efficiency project. Improve your understanding of how their interests might be impacted (either positively or negatively) from a project. Learn which drivers and barriers are specific to them, and explore available resources that can help achieve buy in.

  • Hover over a stakeholder to see which drivers and barriers are may impact their decisionmaking on a data center energy efficiency project.
  • Click a stakeholder to learn more about how these drivers and barriers specifically impact their decision making when taking their priorities and position in an organization into context.
  • Explore resources that can help achieve buy-in for a data center energy efficiency project for that specific stakeholder.
Drivers
Reduce operating costs

Data center operational costs are often driven by energy consumption, and can be extremely expensive, with estimates that the electrical costs for large data centers running in the millions. It’s no wonder then, that 92% of companies report being influenced by operational savings in their decision to pursue energy efficiency projects. Energy efficiency improvements stand to significantly reduce energy costs in data centers. Larger investments can result in energy savings of 40% or more. Many organizations have found that operational savings outweigh the upfront capital investment required by a wide margin, with low (under a year) payback periods and notable energy cost savings over the lifetime of the equipment. These savings can be allocated to other organizational activities and goals. With organizations relying on and incorporating data centers as a critical part of their business, the incentive to effectively manage their operating costs will only increase.

Relevant Stakeholders:
Increase data center reliability and resiliency

As mission critical operations, data centers are already sited, designed, and operated with reliability and resiliency needs in mind. While there can be the perception that energy efficiency is at odds with resiliency and reliability, they can work synergistically. Energy efficiency measures can extend the life of existing facilities. Outages can be costly – with a recent survey pinning the average cost at over $700,000. Outages, whether manmade or natural, stand poised to continue to increase with climate change or with malicious attacks. Integrating renewable energy sources (whether solar, hydro, wind, or geothermal) into operations is one increasingly popular path to heightened data center resiliency. According to AFCOM’s 2018 State of the Data Center Industry report, approximately 42% of respondents have or are planning to deploy renewable energy over the next year. Most of these respondents also indicated that they expect this will lower their overall data center total cost of ownership (TCO).

Relevant Stakeholders:
Free up data center capacity

Even when electricity supply is maxed out, energy efficiency can provide a way to increase a data center’s effective capacity (and/or cooling capacity). Energy efficiency can result in improved computing performance per kilowatt, and consolidating data centers and equipment can free up floor space and reduce infrastructure complexity, physical constraints, and staffing requirements. This can, in turn, provide an opportunity to add new IT capacity if needed. More effective monitoring can help delay future capital expenditures related to data center expansion, as tools that continuously monitor capacity on UPSs can help operators reclaim stranded capacity in their current data center.

Relevant Stakeholders:
Comply with codes and standards

Energy codes and standards play an increasing role in data centers, particularly in new construction or major retrofits. Public and private organizations are required to demonstrate compliance with a range of standards- whether it be ASHRAE energy efficiency requirements for data centers, statelevel energy codes (e.g. Title 24), or federal statutes (such as OMB’s Data Center Optimization Initiative). Procurement and Contracting Officers also may be required to comply with purchasing requirements set by various standards, such as the purchase of ENERGY STAR data center equipment.

Relevant Stakeholders:
Address aging facility & IT equipment infrastructure

As data center equipment becomes old and obsolete, or begins to break down, there is the opportunity to replace it with newer, more efficient products. It is at this time that many organizations consider upgrading their equipment and data center infrastructure, and in tandem, may decide to invest in newer, more energy efficient IT equipment, or other energy efficiency measures – such as more efficient air management systems, for example. Some data centers may choose to retire equipment before the end of its useful life for several reasons. For example, in older data centers, the infrastructure may not be capable of meeting heightened security and privacy needs of the modern day, or equipment may be difficult to maintain as it becomes worn out.

Relevant Stakeholders:
Save energy in accordance with organizational values

Organizations are increasingly pursuing sustainability as part of standard practice. Taking meaningful steps towards energy conservation is a key way that organizations today are demonstrating their commitment to corporate social responsibility to consumers. This commitment can improve a company’s public image as well as employee morale.

Relevant Stakeholders:
Leverage utility & other incentives

Utilities, state energy offices, and other entities are critical partners in disseminating energy efficiency information, opportunities, and incentives for the marketplace. Utilities are well positioned to help data center customers realize significant energy and cost savings. Utility incentives can help motivate organizations to implement energy efficiency projects in their data center by offsetting the (often high) initial cost of a project. The level of support provided by a utility (both in terms of financial incentive as well as other benefits including free training opportunities or energy assessments) can vary greatly between programs. Program design and scope also impacts the energy efficiency opportunities a data center customer may pursue. For example, some utilities offer prescriptive programs, which typically assign a dollar rebate amount for the replacement of older equipment with newer, more efficient equipment. Utilities also, in some instances, have more customizable financing opportunities available which typically demand a greater level of effort and often entail performance assurance. Other entities, particularly at the state and local level, may also offer similar prescriptive and/or customizable incentives.

Relevant Stakeholders:
Stakeholders
Facility Manager

While others in an organization may spearhead data center energy efficiency efforts, Facilities Managers are one of the most common project champions (especially when an organization does not have a Sustainability Manager). The facilities department is responsible for maintaining a data center’s building and infrastructure as well as replacing equipment to ensure electrical power, air flow, and cooling needs. Facilities Managers also work to assure uptime and recoverability. Facility Managers are most likely to pay (or at least see) a data center’s energy bill. Therefore, they will likely be more receptive to energy efficiency improvements, particularly if they are expected to reducing operating costs (presuming the bill comes out of their budget). Energy efficiency efforts often have the added benefit of reducing the management burden of a data center (e.g. server rooms that lack standardization can result in inefficiencies and a higher management burden for IT and Facilities staff), which can make the job of facilities managers easier. Once physical infrastructure energy efficiency gains (e.g. hot and cold aisles) have been implemented in a data center, further improvements can require significant investment and diminishing returns. For this reason, facilities managers and operators may have an amplified incentive to turn to IT energy efficiency opportunities. With the needs of IT and operations converging, there are now more natural opportunities for collaboration between the two.

barriers
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IT Manager & Chief Information Officer (CIO)

IT Managers are responsible for ensuring the service and security of data center operations within an organization. They typically make purchases and upgrade decisions for servers and software with service and security goals at the forefront. Reliability is a key concern for IT managers- for example, they may be risk adverse to new technology for fear of loss of uptime. Certain energy efficiency opportunities require IT re-design and rest squarely with IT Managers and CIOs, like leveraging virtualization to reduce power consumption. Unlike Facility Managers, IT departments often do not pay (or even see) monthly energy bills and ultimately the financial consequences of their decisions. As a result, energy cost reductions alone are not a strong incentive for IT Managers to take energy efficiency actions. Despite this, IT Managers, have a lot to gain from energy efficiency improvements. Energy efficiency can simplify the IT environment, reducing the management complexity and allowing IT managers to focus on improving management of fewer responsibilities. Consolidation, for example, can free up floor space for increased flexibility and capacity, as well as reduce licensing software costs.

CIOs will likely be concerned with the impact of an energy efficiency project on operations, specifically on whether the project will allow the data center to sustain or increase its current operations. Since CIOs often have a role in project approval decisions, energy efficiency can provide the CIO more flexibility in increasing IT capacity within current facilities to support the company’s business growth. Energy efficiency improvements can also reduce power demands of the physical data center infrastructure, leaving organizations in a better position organizations to support future IT growth. Continually increasing IT capacity while containing operating costs is an important way for the CIO to contribute to company growth and demonstrate leadership within the executive team. While concerns of reliability may make CIOs wary of energy efficiency projects, project champions must address these concerns while clearly articulating the project benefits that align with these efforts. Framing the benefits as well as planning a project with their interests in mind, including safeguards against reliability issues, can help project champions get buy-in from the CIO and IT department.

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Chief Executive Officer (CEO)

Successfully attaining executive buy-in can make or break a project, and CEOs in particular may not be familiar with the benefits of data center energy efficiency projects. Not only do CEOs often hold the key for funding access, but their support (and enthusiasm) can also engender priority and attention of other resources (such as staff time). CEOs are driven by the opportunity to improve the financial health of the company and reduce operational spending. In some industries, there is competitive pressure to demonstrate commitment to sustainability. While CEOs have an interest in ensuring that data centers are cost effective, their foremost concern is likely that data centers meet business needs and are secure, reliable, and able to scale with organizational growth. Although CEOs are likely to be held accountable to a Board or shareholders, they may also be needed to reconcile differences between IT and Facilities (such as risk management). While a CEO’s interests and responsibilities vary across organizational type and industry, a project champion should look to identify leadership’s priorities and frame their energy efficiency project in terms that will resonate.

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Chief Financial Officer (CFO)

Like the CIO, CFOs often play a key role in project approval decisions. CFOs are tasked to conduct responsible financial management of an organization. The level of knowledge and justification required to build consensus among parties responsible for managing financial resources may vary organization to organization. Prior to deciding on an energy efficiency investment, most organizations perform some sort of financial analysis- whether it be payback, total cost of ownership (TCO), or return on investment (ROI). Further analysis and decision making, such as how “well proven” the ECM technology is, may also be required to convince CFOs and the financing or budget department. Outside funding or alternative financing mechanisms (such as utility rebates or energy savings performance contracts (ESPC)) can increase how receptive a CFO is to a project, or their willingness to pursue measures that have longer payback periods. It’s the responsibility of the project champion to understand what terms the CFO will view the project in, how they’ll view the opportunity cost of capital due to competing priorities in the organization, and to create and frame the project in such a way that will resonate.

 

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Sustainability Manager

Sustainability managers may be predisposed to view energy efficiency projects favorably, and are one of the most likely project champions within an organization. However, they may have a limited pool of resources (either human capital or funds) and must weigh these opportunities amongst others- such as an employee waste education campaigns, water efficiency measures, or pursuing lighting retrofits in office space. Sustainability Managers are likely interested in energy efficiency opportunities that not only provide an adequate return on investment but have clear tracking and reporting opportunities through which they can demonstrate their accomplishments. They are also likely interested in energy efficiency projects that are highly visible, innovative, and favored by management. Given their energy intensive nature, data centers offer ample opportunity for improving organizational sustainability. However, project champions may need to effectively convey this to sustainability managers.

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Procurement & Contracting Personnel

Procurement and Contracting’s role as it relates to procuring data center equipment and infrastructure varies from organization to organization. In some organizations, they may simply carry out purchase order from their IT and Facilities Departments. In other organizations, however, Procurement may have its own, more rigid set of policies to follow. This is particularly true in Federal Agencies. As a result, Facilities and IT departments may find that Procurement and Contracting officers are a key stakeholder who should be consulted with and included early on in an energy efficiency project. While some procurement departments may have policies that ensure equipment that is purchased is energy efficient (e.g. Federal requirements for EPEAT registered products), others may not. This department may first prioritize criteria other than energy efficiency – including lowest first cost, performance, or other specifications when selecting data center equipment. Energy efficiency and assessment of the total cost of ownership (TCO) should be integrated into the procurement process. Reviewing and revising current policies and practices to ensure that energy efficiency is a criteria in purchasing, (and that first costs alone do not drive purchasing decisions) is important in order to advance data center energy efficiency. Federal agencies also should look to emphasize energy efficiency requirements or criteria in their solicitations for IT equipment. 

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Barriers
Misaligned interests

The Problem:

Each department faces its own separate challenges—with facility staff struggling with limits on rack and floor space, power availability, and equipment, while IT staff try to ensure they have sufficient processing power, network bandwidth, and storage capacity to support upcoming IT initiatives and sufficient redundancy to handle system disruption. CEOs are concerned with organizational performance and image, while CFOs are focused on cost containment and the bottom line. Additionally, the mission critical nature of data centers tends to lead to a hierarchy of these interests, with some (e.g. reliability) superseding others. It is rational that different parties with different objectives view energy efficiency through a particular lens and express concerns where they may feel their core objectives may be threatened. However, many energy efficiency projects provide benefits to all of these parties- the challenge is framing them appropriately and effectively communicating them. Split incentives (e.g. one part of an organization paying for upfront equipment costs while another pay operating costs) can also reinforce misaligned interests.

Opportunities to Overcome:

Champions must take an active role in breaking down institutional barriers and silos. Establishing a cross-functional improvement team creates a forum in which stakeholders from different backgrounds can come together and better understand where their interests align and how they can leverage overlapping financial, environmental, and IT goals to build consensus. It is important to review how an organization allocates resources and hardware, as well as how billing and accounting function for these projects, as these practices often drive or explain the interests of stakeholders. Organizations stand to benefit from a more holistic energy management approach when internal processes and incentive structures are developed in a more coordinated manner. Project champions should push for more coordination between IT and Facility departments in order to advance more integrated decision making. Further, adverse incentives should be reconsidered (such as project designers who receive bonuses when projects come in under budget). This can help to ensure that the energy efficiency gains made by one department are not undone (or mitigated) by another.

Relevant Stakeholders:
resources
No one person within an organization is tasked with energy efficiency

The Problem:

Most organizations do not have an individual who is explicitly tasked with managing energy efficiency in their data center. Whether a product of organizational silos, an oversight, or lack of resources, this makes it less likely that energy efficiency projects will be undertaken. Even if efforts are unofficially assigned, (and participants are well-intentioned), energy efficiency improvements may constantly be pushed to the back burner as stakeholders prioritize other concerns that are formally part of their job (and a measure of their success).

Opportunities to Overcome:

Establish a point person or individual who is responsible for periodically assessing data center energy efficiency, as well as initiating, implementing, and tracking projects. This “Project Champion” is most likely to be the Facility or Sustainability Manager, but could be virtually anybody in an organization. Shepherding a project through initiation to completion and overcoming organizational resistance and inertia often demands an individual’s explicit attention to be successful. Given the significant effort required, this barrier is most effectively overcome when written formally into a job description. If that is not an option, establishing a cross functional improvement team (see “Misaligned Interests” barrier) can create action amongst different stakeholders to make energy efficiency improvements that can advance individual and mutual goals. However, having a project champion (whether formal or informal), is often of critical importance for seeing a project through successfully.

Relevant Stakeholders:
resources
Lack of awareness of current energy usage, costs, and opportunities

The Problem:

Data centers are costly to operate and can represent forty percent or more of an organization’s overall operational expenditures. Despite this, information on operating costs may be silo-ed in a single department -typically facilities. Facility Managers may see a monthly power bill that includes energy use in data centers and offices- while an organization’s IT department never sees the impact of their decisions on a utility bill. Even if there is a desire to assess the True Cost of Ownership (TCO) for data center energy consumption, split financial reporting can make this difficult. Data center energy management is simply outside the purview of key decision makers- from the CFO to the CEO. As a result, these stakeholders may not be aware of how energy efficiency benefits that align with and may advance their interests.

Opportunities to Overcome:

A project champion shouldn’t expect other stakeholders within an organization to be familiar with energy efficiency opportunities in their data center. Instead, becoming more familiar with your data center’s energy consumption, expenditures, and efficiency potential is a critical first step to effectively communicate opportunities to key stakeholders. Project champions need to take initiative to identify opportunities and benefits and educate relevant stakeholders. Importantly, champions should also work to establish common reporting mechanisms that will better enable reporting across fragmented departments. Creating a continuous improvement team will help with communication and create a forum where standardization can be established. Seek out fragmented information from relevant stakeholders and present findings to the cross-functional improvement team (if one exists) to increase information sharing. If feasible, establish a method for continuously sharing this type of information across stakeholder groups. Standardized and transparent documentation of current projects can also help advance awareness of energy efficiency opportunities (and the associated benefits) in an organization. Setting measurable goals, establishing benchmarks, and monitoring and reporting of current projects, makes it easier for stakeholders to understand current project benefits. This, in turn, makes it easier to communicate “wins,” paving the way for future projects.

Relevant Stakeholders:
resources
Opportunity cost of capital

The Problem:

Investing organizational resources (e.g. funds or staff time) in energy efficiency projects inevitably means that organizations are foregoing those funds for something else. Energy efficiency projects need to compete not only with other investments, but also different sustainability initiatives within the organization (e.g. an organization could prioritize water savings in plumbing). This problem is largely defined by the funding source- as this will determine what the project is “competing” with. Does investment for a data center energy efficiency project come out of a facilities budget, a dedicated sustainability fund, or a general fund? Additionally, some companies choose to be part of a multi-tenant data center (also known as a co-lo), rather than independently operate their data center, as to not detract from core business competencies, which may expenses related to data center efficiency improvements from capital expenditures (CapEx) to operating expenditures (OpEx). This can impact how organizational leadership may perceive a project – or the hoops a project must jump through, as CapEx spending may undergo a more rigorous assessment- e.g. payback and ROI calculations. Project champions need to effectively convince stakeholders that funds are worthy of being allocated considering the potential project benefits (see drivers for energy efficiency in data centers).

Opportunities to Overcome:

Project champions should determine the anticipated source of funding for the project, and assess whether there are other stakeholders also vying for those funds. For example, if project funds are slated to come from the sustainability office, are there other initiatives that might be foregone? Assess the financial and other reporting requirements of various stakeholders, and frame the project in terms that will resonate with key stakeholders. Project champions also should consider the risk tolerance of the organization. For example, in a more conservative organization, perhaps ECMs with a well-proven track record and shorter payback periods should be prioritized. Organizations report being more likely to adopt energy-saving technologies when the costs savings fully offset the higher initial purchase cost within the first few years of operation; and are less likely to adopt those that are paid off over a longer time frame.viii Project champions can improve odds of overcoming this barrier in the future by implementing consistent yet flexible financial benchmarks. Establish baseline consumption and costs so that improvements can be benchmarked against something. Concrete monetary savings that speak to a stakeholder’s’ bottom line are better equipped to pave the way for improvements in the future. Additionally, partnerships and alternative financing opportunities- e.g. efficiency programs, utility incentives or rebates, ESPCs, UESCs, other potential sponsors can be critical in building a case for an energy efficiency project. ESPCs for example, do not require any upfront capital for a project (with costs paid throughout the life of the project). Lastly, while identifying funds for energy efficiency is key, maintaining and continuing to advocate for those funds (e.g. through a green or revolving fund) is also important for sustaining investments.

Relevant Stakeholders:
resources
Mission critical & risk averse nature of data centers

The Problem:

Whether it’s a part of an organization’s core business offering or to keep daily operations running smoothly, data centers are mission critical to an organization’s operations. For this reason, energy efficiency actions taken in a data center may be viewed more cautiously than other sustainability measures (such as installing low flow toilets or switching to LEDs in office space). IT Managers and CIOs in particular will be concerned with ensuring data center operations are not compromised by energy efficiency measures. There is often a strong desire among stakeholders to maintain the status quo, and hesitancy to take any actions that are perceived as risky. Aside from lost productivity and reputation issues that can be associated with downtime, they are costly, estimated at over $8,000 per minute.

Opportunities to Overcome:

There are many positive testimonials of how energy efficiency can reduce energy consumption and operating costs without compromising (and even boosting) data center reliability and service. Energy efficiency improvements, particularly those that entail upgraded data center infrastructure and equipment, often have added benefits of improved and reliability and resiliency. For example, wider environmental envelopes (with more robust IT equipment), can allow for greater efficiency and continued operation under compromised conditions (e.g. failure of compressor cooling). Data center infrastructure management (DCIM) systems, which are often installed as part of an energy management upgrade, can detect faults and provide early warning of potential problems. When operating within a risk adverse organization, project champions may need to educate other stakeholders as to how energy efficiency actions can actually bolster a data center’s reliability and resiliency. Additionally, project champions could pursue energy efficiency measures that are perceived of as less risky from the IT perspective in order to demonstrate a proven process for implementing projects.

Relevant Stakeholders:
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