Executive summary Introduction
The sustainability agenda of many firms is increasingly seen as a core strategic priority. Executives are looking across the entire business to understand ways in which they can operate more sustainably and thereby increase their competitive edge.
ICT is seen as a key area of focus for achieving sustainability goals. Computing requirements have accelerated rapidly over the last ten years. Back in 2006, the Environmental Protection Agency (EPA) estimated data centers consumed 1.5% of total US electricity1
they suggested this was double the consumption in 2000. With data center growth continuing, the Department of Energy believes data centers may be consuming up to 3% of total US electricity today.
Businesses are aware this level of electricity usage comes at a cost in both financial and carbon terms. The adoption of cloud computing allows firms to deliver on sustainability while reducing costs. Executives are coming to view cloud computing as a way to transition to a lower carbon business model while increasing the efficiency and effectiveness of business operations.
“Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g. networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.”2
Key findings This study, produced by independent analyst firm Verdantix, used detailed case study evidence from 11 global firms that have been using cloud computing for at least two years. The information was used to build a forecast model3 which assesses the financial benefits and carbon reductions for a firm opting for a particular cloud computing service4
The analysis also demonstrates how projected cloud computing adoption would drive economy-wide business benefits from a financial and carbon reduction perspective in the US5
Cloud computing can avoid millions of metric tons of CO2 • A typical food & beverage firm transitioning its human resources (HR) application from dedicated IT to a public cloud can reduce CO2 emissions by 30,000 metric tons over five years. These reductions are equivalent to the annual emissions from 5,900 passenger vehicles6
• The same food & beverage firm transitioning its HR application from dedicated IT to a private internal cloud can reduce CO2 emissions by 25,000 metric tons over five years. These reductions are equivalent to the annual emissions from 4,900 passenger vehicles.
• From an economy-wide standpoint, US businesses with annual revenues of more than $1 billion can cut CO2 emissions by 85.7 million metric tons annually by 2020 as a result of spending 69% of infrastructure, platform and software budgets on cloud services.
Potential financial benefits from cloud computing run into $ billions • Through the forecast uptake of cloud computing, US businesses with annual revenues of more than $1 billion can achieve economy-wide savings in energy alone of $12.3 billion a year by 2020.
Cloud computing delivers a positive net present value (NPV) • A typical food & beverage firm transitioning its HR application from dedicated IT to a public cloud can achieve a NPV of $10.1 million over five years with a payback period of under a year.
• A typical food & beverage firm transitioning its HR application from dedicated IT to a private internal cloud can achieve a NPV of $4.4 million over five years with the payback coming during year two.
Cloud computing brings business efficiency savings • Significant non-monetary benefits are also achieved with cloud computing including business process efficiency and increased organizational flexibility.
3. See appendix
4. Forecast was limited to an individual firm due to the significant variations which exist in the IT estates of different firms
5. For firms generating $1 billion plus revenues in the US 6. Environmental Protection Agency – Green Power Equivalency Calculator http://www.epa.gov/greenpower/pubs/calcmeth.htm
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