SaaS: The Secret Weapon for Profits (and the Planet)

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Counting Your Green

The contributions of SaaS to greening the planet are not going unmeasured or unmonitored. Some companies, such as Entuity, a provider of network management and service delivery solutions, have set to workbuilding dashboards that monitor progress. In November 2008, the company launched what it boasts is the "first ever network management solution focused on
Green IT." The product, known as Green IT Perspective, measures power ratings, server utilization, and system shutdowns, and it offers a green dashboard to give users a personalized view, down to energy use per employee, of a company’s network operations carbon footprint.

According to Michael Jannery, president and CEO at Entuity, "Using Green IT Perspective, IT departments can rest assured that their budgets and technologies are being allocated most efficiently. Because service providers and enterprise IT staff can now rate and identify devices based on energy usage, they have the ability to make intelligent decisions regarding which to load to capacity and which tore place with more efficient alternatives."

The expense and energy consumption involved in storing data and running networks is increasingly taking center stage in the sustainability debate. Carl Guardino, CEO of the Silicon Valley Leadership Group, warns that data centers will continue to consume more power: "By 2011, at current growth rates, they will consume enough power to require ten new power plants in the U.S. alone." He points out that the green emphasis would be in the "best interest of companies in Silicon Valley, which can become the epicenter for burgeoning green industries."

Holm of Industrial Color asserts that environmental concerts are atop priority at its hosting facility. He says, "Greening our facility is a constant priority. We operate a 30,000 square foot location in Tribeca so there is always a need to be as efficient as possible.Greening an operation should include everything from properly sealing doors to designing software to make the best use of available server resources."

The Green Grid

Maintaining a data center is expensive, and companies have begun to collaborate with the U.S. government to look at ways to reduce that cost along with energy consumption. The Department of Energy (DOE) hasa Data Center energy reduction initiative led by Paul Scheihing of the DOE’s Industrial Technologies Program. Having completed 450 energy assessments of data centers across the country and working with the Lawrence Berkley Laboratories in Berkeley, Calif., the DOE launched atool called DC Pro that helps companies track and manage their data center energy use. The goal is to achieve a 10% reduction in energy use by 2011 or the equivalent of 1 million U.S. households, or 10.7 billion kWh per year. 

The DOE works closely with a group founded in 2007 known as The Green Grid Consortium. Companies in The Green Grid include Dell, a SaaS company, and an array of top technology companies not (yet) widely known for their SaaS offerings such as HP, IBM, Microsoft, Sun Microsystems, and VMware. There are currently more than 200 members of The Green Grid.

The success of DC Pro and achieving results with it depends on how great a grasp a data center has on its data. According to William Tschudi of Lawrence Berkeley National Laboratory, who helped to develop and implement the tool, "For some, obtaining this information is a challenge, yet the more sophisticated operators have most of the data or can easily get it. So it depends on the sophistication of the data center staff."

Beyond energy consumption, the optimization of data capacity is central to the SaaS industry’s green capability. A group that offers the ultimate green, shared, SaaS solution includes the companies offering cloud computing. Amazon, Google, EMC, and Salesforce are top cloud computing players, along with more traditional vendors such as HP, IBM, Intel, and Microsoft.

Data in the Clouds

The underlying concept of cloud computing is akin to that of a public utility, where customers pay depending on their usage. The first player to make a big push into cloud computing was Amazon in 2002 with the introduction of Amazon Web Services. Since then, many have followed suit, and many more are evaluating their ability to offer their excess computing capacity to the IT marketplace for a fee. 

Cloud computing services allow client companies to develop and run software as a suite of technology and tools offered by the hosting company and then pay a fluctuating rate depending on their usage of the software. One drawback to this is a lack of compatibility of development tools for programmers. However, cloud offerings have been a boon to startups not already wedded to a platform, as they can have their systems up, hosted, and running within a matter of weeks and see savings on usage as their businesses fluctuate. 

Larry Schwartz, president of Newstex, LLC, a news and content syndication company with 25 full-time employees—all of whom work as a virtual team—predicts that there will be a "mad stampede to these services because they are so cheap," adding, "Startup companies can use the excess capital they save on hosting center fees to fund their businesses." Currently, Newstex uses Google Apps, Salesforce, QuickenOnline, JungleDisk (from Amazon), and Zoho for project management.Schwartz says his company recently began using Amazon’s Web Services for his video products only. Based on that success, he looks forward to cutting an estimated $25,000 a month in expenses with the two hosting centers where he currently has the majority of his data. 

However, some larger companies reject the idea without venturing this far in their analysis. Ed Park, chief software architect of athenahealth, responded that the company would not consider using cloud computing for a host of reasons. Paraphrasing for Park, John Hallock says that the response underscores security and reliability concerns."The data is so critical, we cannot risk losing any of that information. So we feel a lot better using our own computers and our own space given the data we are dealing with," Hallock explains. The company currently runs seven different data center facilities; four operational, two in the office, and one for backup. 

It is easy to illustrate in everyday life that sharing any resource is less wasteful than having your own. In Connecticut, a good quality play set for children could set a parent back about $4,500 or, if it is used for 7 years, about $643 per year. On the other hand, it costs $39per person to support the annual parks and recreation budget.Financially, it is a no-brainer to just work in a few weekly trips to the local playground instead of buying your own play set. Nonetheless,a casual drive around town reveals that an awful lot of houses have play sets, perhaps for some of the same reasons cited by companies who have private hosting facilities: privacy, security, and perceived convenience. However, as economic times tighten, perceived necessities often become seen as luxuries.

Nonetheless, it is a good bet that a lot of major SaaS players will continue to run their own data centers without plugging into anyone else’s cloud for years to come.

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The cloud seems to be manna to most analysts, investors, and vendors these days. As my colleague Alan Pelz-Sharpe writes, "It's a great term, ‘Cloud Computing,' since it conjures up visions of an invisible internet—an ether-like zone in the sky where computing power and storage is unfettered by the petty restrictions of boxes, cables, and technicians. Cloud computing sounds fluffy, it sounds cool, it sounds limitless, it sounds like the future."