Companies seek early returns on "green" technology
NEW YORK |
NEW YORK (Reuters) - U.S. companies are increasingly demanding early returns on "green" IT investments, even as they show a growing interest in energy-saving technologies as a way of cutting costs.
Companies like Cisco Systems Inc, IBM and Juniper Networks Inc sell equipment and services to help corporate clients manage their swelling data centers with technologies like server virtualization, which allows companies to use less hardware, less power, and frees up space.
Sales of such products have proven surprisingly resilient in the past year, but executives say that the chief investment officers responsible for IT buying decisions have lately begun to scrutinize costs more closely as they try to make the most of shrinking budgets.
"In these times, major capital investment without a clear return on that investment is unlikely," said Steven Sams, vice president of IBM's global site and facilities services.
"These days, they're not going to the board with stand-alone large requests on capital requirements. They're no longer just saying 'we need new sites.'"
IBM advises customers in improving their data centers, for example, by simplifying storage and server equipment and improving cooling systems. Its shift from commodity hardware to the software and services business, including green IT consulting, has helped IBM escape the worst of the recession.
It recently affirmed its expectation for growth in the services business in the first quarter, in contrast to many other technology companies expecting a sharp decline in sales.
FOCUS ON DATA CENTER
While most CIOs are buying less, or only what they absolutely need for the next several months, some are actually buying new equipment in hopes that it will help them lower other costs.
According to Goldman Sachs research, around 75 percent of enterprise spending consists of operations like maintenance and staffing, while 25 percent consists of capital budgets.
That means companies can invest more on some equipment but still manage to control or cut overall spending.
"We see some customers that have calculated that for the amount of money that they can save by reducing the number of servers and switchboards, they're saving more money than it costs for them to buy new equipment," said Jeremy Bennett, a software architect at Aruba Networks.
Companies seeking large-scale, long-term cuts in their IT spending are focusing on data centers, which according to some analysts account for around 30 percent of many large corporations' energy spending.
IBM says data center rationalization, by consolidating storage and server equipment, can typically help companies cut energy usage by around 40 to 50 percent.
Cisco is scheduled to announce its new data center strategy next week, and is widely expected to unveil a blade server that helps lower costs and improve power efficiency.
Rival Juniper late last month introduced its own data center strategy, which also focused on improving efficiency.
Some executives saw a silver lining in the economic downturn, saying that as long as they are able to demonstrate early and definite returns, customers show interest.
"Right now people are looking for those opportunities to drive costs down in the very short term," said Mark Bauhaus, executive vice president and general manager of service layer technologies at Juniper.
"If we can field value propositions that address that need, we've got the eyes and ears of our customers."
(Reporting by Ritsuko Ando, editing by Matthew Lewis)
- Tweet this
- Share this
- Digg this