Why CFOs need the right data centre

By Danny Reeves, CEO, Romonet

The fast-paced global economy and escalating competitiveness are driving many companies to focus their attention on new technologies that empower their workforce, satisfy the ever increasing demands of customers, and improve their ability to quickly change direction based on market trends and conditions.

To achieve these outcomes, organisations create and store a huge amount of data. Studies reveal that, at global level, people and corporations are generating over 2.5 billion gigabytes each day. As a result a significant number of companies are now putting data centres at the top of their priority lists.

As, in many cases, building and maintaining a data centre can be very expensive and with long return on investment, CFOs are investing significant time and energy into understanding how these facilities are run and how to increase their efficiency without depleting their budgets.

So how can CFOs assess the efficiency of their data centres, plan ahead and ensure sustainable growth for the company?

One of the first aspects a CFO should check, together with the CIO or the IT manager, is the overall engineering efficiency of the facility. Depending on the data centre’s design and location some efficiency metrics are more critical than others. However, most data centres are assessed on annual average PUE (Power Usage Effectiveness), water consumption, CO2 emissions and energy costs.

Financial and environmental responsibility

These metrics are closely connected with CSR targets. Considering that the data centre industry consumes up to 5% of the total global electricity supply and accounts for about 2% of total greenhouse gas emissions, an increasing number of governmental and regulatory bodies are holding facilities under close scrutiny to make sure they adhere to certain thresholds and environmental standards. Also, in some countries businesses can claim tax relief if they can prove the facilities are energy efficient and environmentally friendly.

Another reason why CSR targets are important for CFOs is an increasing number of investors refuse to back companies that don’t comply with their environmental targets.

Costs and ROI

Another crucial element that CFOs should keep a close eye on is how fast the company can achieve financial payback for past and future investments in facilities. Depreciation rates play a key role when assessing investments as some pieces of equipment could be more expensive initially, but the depreciation rate is slower and ROI faster.

The total cost, including capital and operating expenses, should also be a high priority element on CFOs’ lists. For a long time, data centres were perceived as financial black holes and minor contributors to business growth. Nowadays, as technology is playing a critical role in achieving the desired business outcomes, CFOs are carefully comparing the impact of each investment needed for the data centre to what potential business value could be generated if the same investment were to go towards a different business initiative.

Smart analytics

Assessing all these technical assets, creating an efficient strategy, and running various ‘what if’ scenarios aimed at increasing efficiency and decreasing expenses is not an easy task.

To validate decisions and ensure maximum profitability with minimum investments CFOs need to access razor sharp intelligence regarding a data centre’s strong and weak areas and the best solutions for improving overall performance.

However, an average data centre can have thousands of sensors and hundreds of pieces of equipment. Monitoring and understanding this entire complex ecosystem can be a significant challenge without a good analytics platform showing what savings could be achieved with specific designs and equipment, and how each decision might shape the facility’s development.

All these metrics and measurements are important and can be used in assessing and improving data centre efficiency. However, CFOs need to keep in mind that each data centre environment is constantly changing and therefore needs to be continuously calibrated, which requires an ongoing tailored approach to deliver its full potential.

As a result, CFOs need to put in place regular evaluation and feedback systems so they can closely monitor each change in the data centre. In this way they can prevent the facility’s failure but also spot development opportunities early and gain significant competitive advantages.

Photo by Markus Spiske on Unsplash