Companies seek early returns on 'green' technology

* IT managers seek early returns on investments

* Data centers the focus of green IT investments

By Ritsuko Ando

NEW YORK, March 12 (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 (CSCO.O), IBM (IBM.N) and
Juniper Networks Inc JNPR.O 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)