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September 15, 2011
CDP Explains Benefits of Cloud Computing
    by Robert Kropp

The Carbon Disclosure Project finds that the transition to cloud computing could lead to energy cost savings of $12.3 billion by 2020, and carbon reductions of 85.7 million metric tons.

Cloud computing has become the topic du jour for many information technology (IT) companies and their investors, as it is increasingly seen as a way to increase profitability while decreasing greenhouse gas (GHG) emissions.

When Google recently made public its energy usage for the first time, for instance, the company claimed that its reliance on cloud-based computing "has proven to be not only more convenient, secure, and time-saving than locally-hosted solutions, it's also more environmentally sustainable." Using its cloud-based applications such as Gmail, for instance, "can be as much as 80 times more energy efficient than running email services on local servers," the company stated.

But while many who follow developments in the IT sector are familiar with the term, fewer perhaps fully understand what it means.

In a report entitled Cloud Computing – The IT Solution for the 21st Century, the Carbon Disclosure Project (CDP) provides a definition, describing cloud computing as taking either one of two forms to replace the dedicated IT systems traditionally used by corporations.

Large companies can adopt a private cloud approach, in which their servers and applications are consolidated into a single, company-wide system. Other companies can contract with specialist cloud providers for services which can be accessed remotely and on demand.

Both approaches, CDP argues, provide "huge economies of scale" when compared to dedicated IT systems which require high capital expenditures and regular maintenance. "Also," the report states, "These systems are often underutilized as they must have the capacity to cope with the highest levels of traffic."

So much for the financial benefits, which, CDP found, could be "as high as 40%-50% when implementing an internal private cloud." But what of the environmental benefits? According to the report, "Cloud computing has the potential to reduce firms' carbon emissions…the total energy required to support a given service is reduced, which results in lower carbon emissions."

Using a hypothetical company in the Food & Beverage sector with $10 billion in annual revenues and operations in 30 countries, CDP concluded that implementing and operating the public cloud solution could result in savings of $12 million over five years and reduce carbon emissions by 30,000 metric tons.

Implementing the private cloud solution could result in $5 million in savings over five years for the company, and reduce carbon emissions by 25,000 metric tons.

Anticipating that firms with annual revenues of $1 billion or more will have migrated to cloud computing by 2020, the report projects that energy cost savings will reach $12.3 billion by that time. In addition, carbon reductions could be as much as 85.7 million metric tons.


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