Justifying the Cost of DCIM

This is Part 5 of our five-part series on the countless number of decisions an organization needs to make as it embarks on the DCIM purchase, implementation, and operation journey. The series is produced for the Data Center Knowledge DCIM InfoCenter.

In Part 1 we gave an overview of the promises, the challenges, and the politics of DCIM. Read Part 1 here.

In Part 2 we described the key considerations an organization should keep in mind before starting the process of selecting a DCIM solution. Read Part 2 here.

In Part 3 we weighed DCIM benefits versus its costs, direct, indirect, and hidden. Read Part 3 here.

In Part 4 we pondered the challenges of implementing a DCIM solution. Read Part 4 here.

The preceding four parts of this series examined vendor promises, purchasing guidelines, potential benefits, as well as the implementation challenges of DCIM. The long-term promise is gathering data across all areas and creating a centralized database used to deliver unified visibility for all management and technical domains. If this broad-scale vision is finally delivered, DCIM should be the solution that finally allows IT and facilities managers to work together to make more informed and presumably better decisions about overall energy usage, operational optimization, and workflow optimization. And now for the most elusive task, which is identifying which of the myriad of DCIM functions can produce the most quantifiable financial payback and provide clearly definable cost justifications.

Simple Payback – Facility Energy Savings

Let’s start with the simplest cost-justification example: the payback based on energy savings. This depends directly on several primary factors: the present facility energy efficiency, the potential projected efficiency improvement, and last, but certainly not least, the cost of energy. For example, in a large older facility with relatively poor energy efficiency (i.e. a PUE of 2.5), the largest energy waste will typically be the cooling system. While a DCIM system by itself will not deliver as much of an improvement as replacing an old inefficient chiller, it can identify, analyze, and help tune the operating parameters of facility equipment as well as optimize the airflow issues in the whitespace.

As a hypothetical case, if we assume an IT-equipment draw of 1,000 kW, at a PUE of 2.5, the facility overhead requires an additional 1,500 kW, for a total site draw of 2,500 kW. This results in an annual energy consumption of 21,900,000 kWh (based on 8,760 hours per year). Assuming an energy cost of $0.10 per kWh, the annualized energy cost would be $2.19 million. Assuming a DCIM system helped improve cooling system efficiency though optimization, thus reducing facility overhead by 20% to 1,200 kW, the PUE would then be 2.2 (a conservative projection). Therefore, the annualized energy cost would be reduced to $1.927 million – a direct saving of $263,000 per year.

This offers a well-defined basis for an ROI payback calculation. However, if your cost of energy is lower or higher, it will obviously change the ROI. In the US, the cost of energy can range from $0.025 to $0.25 per kWh. So, as can be seen from the above case, the cost of energy will directly impact the annualized cost saving ($131,500 at $0.05 per kWh to $526,000 at $0.20), either diminishing or enhancing the ROI.

Conversely, if the site is a newer, more efficient facility and already has a relatively good PUE (i.e. an initial PUE of 1.5), it is less likely that DCIM will be able to provide anywhere as much in energy saving. So, while any energy efficiency improvements are always welcome, in this case it would make it very difficult to make energy saving the primary basis for cost justification.