NetSuite quantifies green benefits of SaaS model | Operation Green

Posted on July 16, 2009 by

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The notion that one huge, well-run data center is more energy efficient than thousands of average data centers is at the crux of a study recently concluded on behalf of NetSuite, a vendor of ERP and other business management software that offers its solutions under a software-as-a-service (SaaS) model. With SaaS, the vendor hosts and runs the system for you in the Internet cloud, thus doing away with the need for your own data center capacity for the applications you use via the cloud.

According to the NetSuite announcement on the study–conducted by green solutions provider Greenspace–the energy savings are substantial. Among the findings:

  • The savings amount to nearly 595 million kilowatt-hours (kWh) annually, the equivalent of nearly 423,000 metric tons of carbon dioxide per year
  • This is equivalent to nearly 1 million barrels of oil, the average electricity consumption of 56,000 homes per year, or the fuel used to run 77,000 automobiles.
  • The energy cost savings amount to $10,300 per year for each NetSuite customer versus running the same application set up in house.

In advance of the announcement, I spoke with Stuart Rauch, Director of Product Marketing for NetSuite. Rauch says the savings basically arise from the fact that most companies don’t run their data centers very efficiently, packing in too many under-utilized server boxes. This trend, says Rauch, is backed up by research from consulting firm McKinsey & Company which show that for some companies, server utilization can be as little as 3 percent (this McKinsey 2008 study, on page 9, concludes that server utilization generally tops out at 5 to 10 percent).

A major SaaS vendor such as NetSuite, says Rauch, can squeeze much higher utilization out of its servers while sticking to a high up-time pledge (Netsuite guarantees 99.5 percent up time). NetSuite runs one large data center for its 6,600 customers, using highly efficient servers from Hewlett Packard, as well as efficient cooling and lighting. The result, says Rauch, adds up to major efficiencies versus the prospect of all of NetSuite’s customers running similar solutions in-house. “Imagine 6,600 companies running servers inefficiently, and building air conditioning capacity and lighting infrastructure as part of running them,” he says. “That is a lot of wasted energy.”

Until now, says Rauch, more attention has been put on SaaS’s ability to save upfront costs for hardware, IT personnel, and other costs of getting a system licensed and deployed, with the energy factor being largely overlooked. Now with the study, says Rauch, “there is a real green story here.”

Posted by Roberto Michel on July 15, 2009

Yet another benefit to add to the list of reasons to at least explore the SaaS computing model.

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