Leadership

How to Eliminate Millions in Operating Expenses and Improve Network Security: A Green IT Project that Makes Business Sense

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Editor’s Note: JouleX is a leading innovator in sustainable energy management for the enterprise, and the rapidly growing company has garnered multiple industry awards for its unique approach. I spoke with Tom Noonan, president and CEO, about the trends in green IT adoption and why many companies are missing the boat on this opportunity to improve their bottom line – and surprisingly even improve the security of their networks.

SandHill.com: I’ve talked with several CIOs of large and midsized companies who tell me that they don’t adopt the green IT approaches currently in the marketplace because the investment would not produce a return for shareholders. Is this perspective pervasive?

Tom Noonan: Yes, and it speaks to the immaturity of the market. We talk to so many CIOs who say, “We tried to do a green project; but honestly, we couldn’t find one that made business sense.” JouleX, which is the only green IT experience that I can speak from, provides a value proposition that is 100 percent operating expense reduction.

When we work with our customers and show them how to eliminate $40 – 50 million or euros of operating expenses a year just from wasted power, it changes the context of the discussion from a green IT discussion to a discussion around optimization and cost reduction – which every executive is focused on today, whether the company is big or small.

SandHill.com: How are you able to convince them that JouleX can make a difference?

Tom Noonan: No one has ever attempted to manage energy at the scale that we’re managing it across a very distributed network. The CIOs don’t have any visibility into how much energy their IT infrastructure consumes. Ask a CIO how much energy at peak load his network consumes and what that consumption costs, and you’ll get a blank stare. They don’t have any idea until we show them. And when they see how much it costs, they’re shocked.

SandHill.com: Does this lack of visibility pertain to companies of all sizes?

Tom Noonan: Absolutely. Because it’s not a size issue – it’s a capability issue. No one has had the ability to measure energy consumption remotely over the network. That’s where we’ve been doing pioneering work that is now changing the way industry thinks and works when it comes to energy.

No one wants to waste $50 – $100 million a year. So if we can give them back $100 million a year with no impact to productivity, then that’s a green IT project that every business person wants. And that’s why JouleX is growing so fast.

SandHill.com: Does your company help customers see the value of green IT in any way other than the lower energy consumption?

Tom Noonan: I think the value proposition drivers are all related. A reduction in energy consumption corresponds to a reduction in cost, which means more profit to the bottom line, which corresponds to a lower carbon footprint, which corresponds to a cleaner environment in the world.

But in addition to that, we also provide visibility into the performance of the network in a way that our customers say they have never seen before. I’ll give you an example.

We have a customer that correlates energy anomalies with their security system. The reason is when a system gets hacked or “owned” and starts exfiltrating information, it peaks the energy of the system. Oftentimes security systems can’t detect a zero-day virus because they don’t have the signature. Yet, by being able to look at the energy pattern of these systems – when you have a strange anomaly at a strange time of the day – often they find that’s a security event that the security system missed.

There’s all kinds of new science that I think is becoming available now enabling us to dynamically understand the energy telemetry of a network, not just the performance telemetry of it.

SandHill.com: So where is the real root of the problem? Is it that the executive committee or board sees value only in the reduced costs, or is it that the CIO is so inundated with so many other issues and also having to keep up with the pace of innovation, that he/she doesn’t have time to think about green IT?

Tom Noonan: It’s more of the latter than the former because the CIO has to take all the risk to implement a green IT project. Let’s face it: the CIO gets paid to keep the network up, keep the performance at prescribed levels and keep it secure. The company doesn’t ask the CIO to also run it at the highest possible energy efficiency. The CIO has never seen an energy bill. If the CIO has to take all the risk and gets none of the benefit – having never seen the energy bill – that creates an interesting dynamic in a sales cycle.

SandHill.com: Is there a difference in the way this is viewed in a large enterprise as opposed to midsized company?

Tom Noonan: And in the middle-tier companies, the sales cycles are shorter because they’re less complex and the networks are less complex. But the bigger companies provide the best opportunity to save because they have massive investments in IT. Over the last 10 years, the single biggest capital expenditure in the Fortune 1000 companies has been IT – new data centers, new servers, new video conferencing equipment, storage upon storage, virtualization. All those things.

They’re spending billions and billions of dollars on them, and they’ve never ever looked at that infrastructure through the lens of the operating cost associated with energy. And we’ve all implemented our IT infrastructures to be always on.

Saving is not just turning things on and off. That’s the old world. Our JouleX products can save 30-50 percent of the energy going into a PC, phone or printer while the user is using it, and the user will never know it.

And the power bill to run an infrastructure isn’t small. Some of our large customers spend over $1 billion a year in energy just to power their information network. Saving even 20 percent of $1 billion, results in a lot of money that’s available for investing in other projects or for profitability for shareholders.

SandHill.com: You mentioned earlier that your product monitors and controls energy consumption remotely over a network. Is this the primary differentiator from other green energy solutions in the market?

Tom Noonan: Typical solutions in the marketplace are the systems that have been around for 20 years – PC power management for instance. These are systems where you have to install a software package or agent on the PC. Ours is installed once in the core of the network and monitors, analyzes and controls energy for any Internet Protocol (IP)-enabled device — throughout the distributed office, data center and even facilities.

The beginning of our innovation is that we do it remotely over the network, and we do not require an agent to be on the end device. For most of the end devices we’re monitoring and controlling, the companies have no ability to put an agent on them. Storage devices, phones, wireless access points, printers, copiers, LED lighting are all being IP connected today.

In my prior company, we invented intrusion detection and vulnerability detection for the network. We all have 20 years in the security business on the network, and we really understand the core base protocols at a deep level. Our JouleX technology actually looks like a security product under the covers.

SandHill.com: Is this a service companies pay for monthly? What’s the model?

Tom Noonan: The business model today is either an annual subscription license or a managed energy service.

Many corporations such as big banks and also government entities don’t want to use a service where critical operating data leaves their network. So we license them software on an annual subscription basis. They install the software on a server that’s connected to their network. From that server, they continuously monitor their enterprise infrastructures and analyze and control energy consumption.

In our managed energy service model, service providers such as Swisscom in Switzerland, Deutsche Telekom in Germany and Telstra in Australia deliver the energy management as a service. It’s in a SaaS model, and customers pay for it monthly.

SandHill.com: JouleX has several global locations. Are you experiencing the same growth worldwide as in the United States?

Tom Noonan: Interestingly, in Europe and Asia we see budgeted, funded projects to reduce energy. Whether they are called “green IT” or not depends on the location. But in the United States, we see very few budgeted, funded projects. This could be the first technology market in history that is not led by adoption in the United States.

SandHill.com: Is that because of government regulations in Europe and Asia?

Tom Noonan: I think it’s a combination of regulation and also cost. Many businesses in Europe pay four to five times as much base rates for electricity and then pay carbon taxes – consumption taxes – on top of that. And in some countries regulations require businesses to report their consumption. These factors have motivated their markets to be more advanced than the U.S. market.

At the same time, many countries are dealing either with a systemic lack of power or energy, where they simply can’t power their economy. A great example is Japan. A year ago they had the horrible earthquake, which created a tsunami, which melted down the nuclear plant, which caused Japan to shut down its entire nuclear power industry. So now they’re trying to run the world’s third largest economy on 37 percent less power. Clearly in Japan everyone is interested in how to save energy.

SandHill.com: Are there any risks in introducing your product to a network?

Tom Noonan: No, and there’s also no risk of a protracted, failed implementation. It typically takes us one hour to one day to install this product in a customer’s network.

So the time to value is very quick. Most of our customers get a payback within the first three months of running the software. It goes to that issue we hear CIOs mention: “We’d like to do a green IT project, but none of them make sense financially.” This one makes absolute sense financially and it doesn’t introduce any new risks to the network – that’s very compelling.

Tom Noonan became president and CEO at JouleX in 2010 and also remains a partner at TechOperators, an early-stage investing firm he co-founded in 2008. He is the former chair, president and CEO of Internet Security Systems (ISS), which was acquired by IBM for $1.5 billion. In 2002, President Bush appointed him to serve on the National Infrastructure Advisory Council (NIAC), a White House homeland defense initiative that protects information systems critical to the nation’s infrastructure. Prior to ISS, he was vice president of worldwide marketing for Dun and Bradstreet Software. Earlier he founded two successful control systems technology companies: Actuation Electronics, a precision motion-control company and Leapfrog Technologies, a software development environment for real-time process control and automation applications.

Kathleen Goolsby is managing editor at SandHill.com

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