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Monday, April 24th, 2017
- College – You may want to get an additional degree. Clearly going to school will require extensive energy and time, but it is often the best route for those wanting to work their way up the ranks. If you sign up for classes that are taught online, you won’t need to commute. You also may be able to find college-based continuing education courses that are unattached to a degree track. Kalm specifically recommends Marist College for its web-based programs.
- Vendors – If you need expertise on a particular product, you will often be able to get the best training via the vendor, whether at your location or theirs. Generally it makes sense to get this type of training if you are switching to a new position or your on-the-job tasks have changed. For those who don’t want to go directly through vendors for information, there are a number of organizations and consultants that teach vendor-neutral classes on various products. Data Center World – Chicago 2017 on July 12 is a great way to meet with industry leaders face-to-face.
- Mentoring – If you want to work toward a certain position, one of the best possible ways is to go straight to the source: the person who currently holds it. If your company does not have an established mentorship system, you can still ask a person to mentor you and provide you with career guidance. Asking someone to mentor you is not just flattering for them. It also gives them a different lens into the field as they assist in your progression.
- Memberships – Getting involved with organizations, such as AFCOM, that focus on various aspects of IT provides access to a wide range of perspectives and problem-solving techniques. Many of these groups interact regularly online, including SHARE and Computer Measurement Group (CMG). Local chapters give you the ability to meet and learn from peers in your region. Find out more about AFCOM local chapters.
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| 12:00p | Apple’s Leased Data Center Energy Use Quadrupled Since 2012 The amount of energy Apple used in data centers it leases from third-party providers more than quadrupled over the last four years, going from about 38,550 MWh total in fiscal year 2012 to more than 180,200 MWh in fiscal 2016, according to the latest annual environmental responsibility report the company released this month. Leased footprint now consumes close to one-quarter of Apple’s total data center energy consumption. Fiscal 2016 was the first year Apple started tracking its exact energy use in colocation facilities using meters and reporting it as part of the company’s global footprint in its environmental report, offering for the first time a glimpse into the scale of its leased capacity and how quickly that scale has increased over the years. This rate of growth illustrates just how much hyper-scale cloud platforms still rely on leased data centers, despite also spending enormous sums on building out their own server farms around the world every year. In addition, Apple’s focus on energy supply of these third-party facilities is an example of the growing demand for colocation services powered by renewable energy, which many providers and their customers have been observing recently. See also: Here’s How Much Energy All US Data Centers Consume More than 99 percent of energy powering its leased data centers came from renewable sources, Apple said in the report. All energy powering data centers the company owns and operates on its own comes from renewable sources, according to the company. Apple started using leased data centers in a big way in 2012; before then, it relied almost exclusively on its own capacity. As Data Center Knowledge reported at the time, it signed one of its first major data center leases in 2011 with DuPont Fabros Technology — a 2.3 MW deal in Silicon Valley. Its leased capacity has been growing by leaps and bounds since. Apple’s newly released historical colocation energy use figures illustrate the trajectory (click chart to enlarge):
(Data source: Apple Environmental Responsibility Report 2017) Companies like Apple, Facebook, Microsoft, Google, and Amazon all rely on leased data centers to expand the reach of their global networks in addition to building their own mega-server farms. Third-party providers enable them to move into hot new markets quickly or get into new markets whose future growth prospects are uncertain, making investment in big local construction projects too risky. The cloud giants also take small amounts of capacity in various colocation data centers around the world to cache content closer to their end users, which improves their application performance. While its colocation footprint is growing, the bulk of Apple’s computing power still lives in data centers the company builds and operates on its own. Those data centers are in Maiden, North Carolina; Newark, California; Prineville, Oregon; Reno, Nevada; and Mesa, Arizona. New Apple data centers are under construction in Viborg, Denmark, and Athenry, Ireland. Together, its live data centers, including both owned and leased (colocation) facilities, consumed about 780,000 megawatt-hours of energy in fiscal 2016 (Click chart to enlarge):
(Data source: Apple Environmental Responsibility Report 2017) Leasing a lot of capacity around the world makes the cloud giants’ goals of reaching 100 percent renewable energy supply for their operations harder to meet. Colocation providers have to take all their customers’ needs into consideration, as well as their own interests, factors that often lead them to build data centers in places where clean power is not easily obtainable or not obtainable at rates that work for their bottom line. But since more and more companies want third-party data centers that use renewable energy, and since the cost of renewable energy has come down in recent years, more and more data center providers have been willing to make the extra investment required to help their clients meet their sustainability goals. For example, Infomart Data Centers, which serves hyper-scale customers (including LinkedIn), this year started buying renewable energy to power its entire Silicon Valley data center campus. The price premium for renewables, the company said, is about 6 percent more than the “higher-carbon alternative.” Had it done the deal a few years earlier, it would’ve had to pay a lot more. “We could’ve cut this deal five years ago; the price premium would’ve been higher,” John Sheputis, Infomart president, told DCK in an interview. Today, “the premium to be all green is acceptable.” Data center providers that recently made big investments in renewables also include Equinix, Digital Realty Trust, and Switch, among others. Results of a colocation user survey Data Center Knowledge conducted last year showed a clear uptick in interest in third-party data center services powered by renewable energy. (Read more: How Renewable Energy is Changing the Data Center Market) |
| 3:48p | IBM Says CEO Pay Is $33 Million. Others Say It Is Far Higher Anders Melin (Bloomberg) — When IBM shareholders gather on Tuesday, they’ll be asked to sign off on a $33 million pay package for Chief Executive Officer Ginni Rometty. It’s a hefty sum for any CEO, let alone one who’s overseen five years of falling revenue and left shareholders with a total return of less than 0.1 percent. And the truth is, that figure might understate her actual compensation — by perhaps 50 percent or more, because of the way IBM values her stock options. According to proxy adviser Institutional Shareholder Services, Rometty’s 2016 package may actually exceed $50 million, based on its own estimate for the value of her options at the time they were granted. Independent calculations by Bloomberg also suggest that at current values — which take into account the rise in IBM’s share price since the grant — her compensation is now worth $65 million, or almost twice as much as her reported pay. This disparity — between what companies say they pay and what CEOs actually get — reflects the imprecise art of valuing stock options, which involves a complex, and at times opaque, numbers game. By tweaking certain assumptions, awards disclosed in regulatory filings can appear smaller than they really are. While it’s legal and even fairly common, the particulars of Rometty’s case have raised more than a few eyebrows. “Their valuation is very unusual,” John Core, a professor of accounting at MIT’s Sloan School of Management, said of IBM’s valuation of Rometty’s options. “There’s certainly a measure of discretion in these models, although this seems to be on the more extreme side.” Ed Barbini, a spokesman for International Business Machines Corp., said the Armonk, New York-based company has used the same methodology to value option grants for more than a decade, in accordance with generally accepted accounting principles and Securities and Exchange Commission regulations. Neither Rometty nor the directors responsible for setting her pay were available to comment, he said. PricewaterhouseCoopers, which audited IBM’s books, also declined to comment. IBM holds its shareholder meeting on April 25 at 10 a.m. in Tampa, Florida. Red FlagThe company, which awarded Rometty 1.5 million stock options on a one-time basis in January 2016, valued the grant at $12.1 million. That came on top of her normal compensation, consisting of about $21 million in salary, bonus and shares. IBM didn’t disclose any of its assumptions for valuing the options and declined to do so when asked by Bloomberg. ISS sees Rometty’s grant as a red flag. Based on its calculations, the award is almost 60 percent below the proxy adviser’s own “fair value” estimate of about $29 million. That’s the biggest gap for S&P 500 companies that granted options to executives last year. The grant is a big reason that ISS took the rare step of recommending IBM shareholders — which include billionaire investor Warren Buffett’s Berkshire Hathaway Inc., and fund giants Vanguard Group and BlackRock Inc. — vote down the pay program. Rival proxy adviser Glass Lewis & Co. also said investors should give it a thumbs down, though it didn’t comment on the valuation of Rometty’s options. While “say on pay” votes are non-binding, anything below 70 percent approval can not only be highly embarrassing for company directors, but could also lead to unwanted scrutiny and activist investor campaigns. Vanguard and BlackRock declined to say how they will vote, while Berkshire didn’t respond to a request for comment. Black-ScholesOf course, there are any number of possible reasons that IBM’s valuation might differ from those made by Bloomberg and ISS. Both Bloomberg and ISS use the Black-Scholes model, a widely accepted standard for pricing options. It’s the same methodology that IBM employs. However, board compensation committees that divvy up grants into portions with different exercise prices and vesting hurdles, which IBM did with Rometty, sometimes use a combination of the Monte Carlo and binomial lattice models. Inputs such as volatility, dividend yield and expected life of the security can drastically impact its fair value. If anything, the sheer amount of wiggle room is a big part of the problem. And the hypotheticals involved shine a light on the black-box math that underlies many executive compensation packages. Helped by last year’s 21 percent rebound in IBM shares, Rometty’s pay package is currently worth $65 million, according to the Bloomberg Pay Index. That’s higher than any of her closest industry rivals, like Microsoft’s Satya Nadella and Hewlett Packard Enterprise’s Meg Whitman, and puts her among America’s 10 best-paid CEOs. ‘She’s Overpaid’Long-term IBM shareholders, on the other hand, have almost nothing to show for their investment during Rometty’s tenure. Since she became CEO in January 2012, IBM has returned 0.05 percent. That’s including dividends. (Based on price alone, shares have fallen 13 percent.) The S&P 500 has more than doubled over the same span and technology companies have, on average, returned even more. “She’s overpaid,” said Tigress Financial Partners’s Ivan Feinseth. “She has not created shareholder value in five years.” To be fair, Rometty, 59, rose to prominence as the first woman CEO in IBM’s 105-year history at a difficult time. She had the unenviable task of playing catch-up as she tried to shift IBM away from shrinking businesses such as computers and operating system software, and into higher-growth areas like the cloud and AI. Rometty also inherited her predecessor’s promise that IBM’s earnings would reach $20 per share by 2015, which some analysts say pushed her into short-sighted decisions such as buybacks and divestments that ultimately cost the company time and money. Cramming OptionsWhile Rometty finally abandoned the profit target in late 2014, she still hasn’t been able to right the ship. Last week, IBM reported that revenue in the first quarter fell to a 15-year low, and analysts predict sales will continue to shrink for another year. Gross margins fell by the most in at least a decade. How IBM got to $12.1 million for Rometty’s option grant remains a mystery. But generally, equity planners agree the process is the same for most companies. It usually goes like this: The board sets a dollar value for the award, and then tasks compensation experts to reverse engineer a structure that results in the lowest possible per-option price. The cheaper each option is, the more can get crammed into the award. That way, an executive stands to reap the maximum number of shares while reported pay figures will remain under control for shareholders and governance watchdogs alike. “It is striking that the values are so different” in IBM’s case, said Barbara Baksa, executive director at the National Association of Stock Plan Professionals. “There’s definitely some judgment calls there that have a very significant impact on the value of the option. If you knew those, you’d know the secret of the difference.” Lowballing also helps a company’s bottom line. It reduces stock-based compensation costs and can boost the tax deduction a company gets when the options are exercised. Bigger deductions also happen to improve EPS, a key financial metric that IBM has repeatedly emphasized over the years. Timely AwardWhatever the case, the option grant was particularly timely for Rometty. It was awarded on Jan. 26, 2016, just days after IBM shares hit a more than five-year low, to underscore the board’s “strong confidence” in her leadership. Soon after, IBM’s stock began to rebound. And even though the options came with strike prices between 5 and 25 percent above the share price on the grant date — a shareholder-friendly performance condition — all were in the money in less than six months. (The stock could still fall below those hurdles before she has a chance to exercise the options, making them worthless.) To Greenwich Wealth Management’s Vahan Janjigian, Rometty is already getting much too much — irrespective of what her package might actually be worth. “I don’t think it’s deserved,” said Janjigian, whose firm owns IBM shares. He declined to say how it will vote. The stock “has done well since it hit the bottom, but I don’t think she should be rewarded for that.” |
| 4:45p | Don’t Put Your Eggs in One Cloud Basket Chuck Dubuque is VP of Product Marketing for Tintri. Like cutting toenails in transit, some things don’t belong in public. In a similar way, the public cloud might not always be the most appropriate place for all workloads. This statement has never seemed more relevant than in the aftermath of two latest, very public cloud outages. Both Amazon and Microsoft had to move swiftly to appease users who couldn’t connect to data and apps stored on their AWS and Azure platforms. Many technology companies couldn’t access SaaS-based technologies such as invoicing systems, HR software and A/B testing services. In addition, global multi-platform media and entertainment company Mashable half-jokingly threatened to produce its first printed newspaper. The outages were felt globally, and were swiftly accompanied by the realization that it may not always be wise to put all your eggs in a single cloud basket. But downtime is not the only reason to avoid putting all your eggs into one cart or public cloud. Yes, outages happen, but for individual companies, cost and performance are the most relevant day-to-day concerns when it comes to public cloud. Price is More Than Just a Dollar SignMany organizations assume that public cloud will cost less than private cloud, since no upfront capital expenditures are required. But there are other costs of public cloud that need to be factored in to decision-making. Moving applications to public cloud platforms can result in significant migration costs and effort, requiring applications to be recoded, reconfigured, refactored and reintegrated. While a public cloud can scale applications with fluctuating demand, the unexpected cost from unpredictable data growth or the cost of a large-scale cloud deployment can quickly get out of control. The financial cost and wasted effort combine to provide another challenge. Some workloads and applications are resource-intensive. When this workload sits in a company’s data center, it utilizes free network bandwidth. However, when this same workload is moved to the public cloud it simply runs up a credit card bill. Many companies that have braved the public cloud can share billing horror stories, like surprise monthly bills of $50,000 for network bandwidth usage. Conversely, the right private cloud can offer predictable costs. Analytics can forecast precise needs for additional capacity and performance to avoid over-provisioning. And when scaling your footprint, automation can optimize the location of every application. Performance is the Be All and End AllIn today’s business climate, IT teams are held accountable for the highest performance standards. As a general rule, the bar for enterprise availability is five-nines, 99.999% availability. To my calculations, with the three hour and 50-minute outage that Amazon experienced last month, it will take them 30 years of flawless performance to achieve five-nines again. At a more practical level, the public cloud normally works at a consistent level of three-nines or four-nines unbeknown to most organizations that trust the platform with mission critical workloads. And digging a little deeper, applications have to provide their own availability and resiliency in the public cloud, rather than depend on the infrastructure to provide them, which makes it difficult to maintain availability. It is also important to quantify the impact of downtime to revenue and reputation. How much downtime can each application afford before it impacts the bottom line or causes customers to complain? This should be a primary question when deciding if a workload is right for the public cloud. Enterprise cloud on the other hand can be the perfect answer for workloads that are more business critical. An enterprise cloud can guarantee availability by eliminating resource conflicts and performance through quality of service controls. Many organizations are discovering that public cloud alternatives can provide the same benefits of greater agility and scalability and lower capital expenditures. Find the Right Basket for Each EggChances are there is a high degree of variability in your applications. Some are perfectly suited to public cloud. But public cloud may not be the right solution for all applications. Some need the control of cost and performance you can deliver in your data center. That’s why as you construct your cloud strategy, remember not all of your workloads – or eggs – fit in the same basket. Opinions expressed in the article above do not necessarily reflect the opinions of Data Center Knowledge and Penton. Industry Perspectives is a content channel at Data Center Knowledge highlighting thought leadership in the data center arena. See our guidelines and submission process for information on participating. View previously published Industry Perspectives in our Knowledge Library. |
| 7:00p | Busy in the Data Center? Here’s How to Make Time for Learning Continuing education should be a top priority for anyone involved with data centers or the entire IT field for that matter. It’s especially important in industries such as healthcare for example. While new technologies and approaches don’t always save lives, they can certainly alter the landscape of the market. Times change, and so should you. While we may agree that continuing education is fundamental to both organizational success and the development of one’s career, it’s not always easy to fit it into a busy schedule. Keep in mind, continuing education does not have to mean an additional university degree or even a new certification. Your CE approach can take a number of different forms. See also: IT Certifications – How Valuable Are They? Here are a few basic tips to help set aside time for continuing education, along with a number of different ways in which you can keep learning while holding a demanding IT position. Baby Steps
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