Navigating the Energy Crisis with Efficient Cloud Infrastructures

By now, businesses everywhere will have felt the impact of energy prices that have risen significantly since the end of 2021 – a trend given massive impetus just a few months later when Russia invaded Ukraine. In the 12 months to February 2023, for example, UK electricity prices went up by two-thirds, with gas prices reaching even more alarming levels, rising by almost 130%. Despite better news recently, energy prices are still much higher than levels seen historically. As one expert put it, the latest wholesale price reductions have “taken us down from six times normal pricing to double normal pricing.”

This forms just part of an extremely challenging economic and business backdrop that has seen organisations facing issues ranging from volatile trading conditions on the one hand to a severe lack of qualified staff on the other. For many, however, the financial burden created by the unprecedented rise in energy prices has given the most cause for concern.

Indeed, faced with little scope for reducing costs by switching suppliers, organisations are instead examining the options available from more energy-efficient technologies to reduce consumption for the short and long term. In many of today’s digitally-centric businesses, the obvious place to look is within their power-hungry data centres and, in particular, how cloud-related energy costs can be more effectively managed.

But what is the scope for making energy-related savings across the typical cloud infrastructure strategy, and how can IT and business leaders be sure that any choices they make to achieve savings in one area won’t impact performance elsewhere?

Workload optimisation

For many organisations, the ideal starting point is to look closely at their data hosting costs. One useful option is to focus on economies of scale by moving more workloads to private or collocated data centres. While the issue of migration costs must always be factored in, this approach can be among the easier and cheaper options available and is often described by IT teams as a ‘lift and shift’ approach.

Another option is to look at the options available by moving to the public cloud. In this context, data migration can be more complex (and therefore more costly), but the scope organisations have to scale resources up and down according to need can deliver some useful financial benefits over time. For businesses whose requirements are more seasonal, such as the travel and retail sectors, for example, the flexibility to match business peaks and troughs with the use of IT resources in the public cloud can be a game-changer from a cost perspective. This becomes particularly apparent when compared to hosting workloads all year round in more rigid on-premises setups with the associated high energy costs.

In contrast, however, organisations that need constant access to data and technology resources might find that public cloud costs more. The important point is to consider the relative merits and energy costs of each option carefully because, for every requirement, there will be an optimum solution that balances energy efficiency with tech performance.

The Role of Managed Service Providers 

The same kind of issues apply to businesses that partner with managed service providers (MSPs) to deliver some or all of their cloud-based infrastructure requirements. Good MSPs are fully aware of the financial pressure their customers are currently facing and will work hard to demonstrate a compelling ROI, including the costs associated with energy consumption.

But it’s healthy to consider how flexible the MSP’s model is when issues such as energy price fluctuations are in play. How quickly do they pass price reductions on to customers, for example? Don’t forget, choosing an MSP should not be about which is the cheapest. Decisions about who to partner with should also be based on their ability to optimise the services hosted on behalf of the customer, their Service Level Agreements, and the costs associated with scaling resources up and down (energy included).

Leaving a Legacy

What’s sometimes overlooked in energy efficiency discussions is the impact of legacy technology. Outdated data centre equipment is not just more likely to be power-hungry, but it also leaves organisations significantly more vulnerable to the risks of security breaches. Many cybercriminals, for instance, rely on the security gaps left open when organisations fail to keep technology up to date or prioritise other spending decisions in an effort to control costs in general.

In this scenario, migrating to the cloud or a colocation environment can deliver a win-win whereby security can be delivered by an experienced and well-resourced MSP and, at the same time, inefficient legacy technology can be recycled in favour of much more modern and cost-effective technologies.

Focusing on Sustainability

While it’s understandable that many businesses are focused on short and medium-term cost control, there are also some bigger, long-term issues that every organisation should also be focusing on, particularly sustainability and the environment.

As a major energy user, the cloud industry worldwide is under the spotlight to improve its efficiency significantly. According to data from Synergy Research Group, there were at least 700 hyperscale data centres operating worldwide in 2021, with the number continuing to “grow at an impressive pace.” As demand for cloud-based services continues to rise, so does the requirement for always-on energy consumption for processing and cooling, bringing with it the associated increases in CO2 production if power isn’t generated by renewable sources.

To address these valid concerns, leading cloud operators have embarked on major investment initiatives in order to reach net zero targets and ensure the industry and the modern economies that rely on it have a long-term future. On the Google homepage, for example, the company claims to have been carbon neutral since 2007 and goes further to say that its “. . . 24/7 carbon-free energy programme aims to eliminate emissions associated with our operational electricity use and run on clean energy every hour of every day by 2030.”

This isn’t just about corporate responsibility and doing what’s right – energy efficiency is increasingly a commercial imperative, with more enterprises using it to inform their cloud investment decisions. Looking ahead, those organisations that fail to deliver on their environmental obligations will be squeezed out of the market by those who have looked long-term and made the right decisions for the benefit of everyone.

Phil is an experienced technology leader, combining a collaborative approach and a culture of continuous improvement to transform businesses across a range of disciplines including cyber security, service management and software delivery. Phil joined Six Degrees from easyJet, where he served as Director of Services and Transformation Lead.

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