eBay’s DSE — Making IT Efficiency a True Business Metric

eBay’s DSEThere’s a change in the way businesses look at energy efficiency today. An IT conversation is becoming a business conversation. eBay is leading the way, yet RampRate continues to play a part in this massive shift by embedding that new language and metrics at higher levels in each organization we work with. Look at the groundbreaking live results on eBay’s DSE Digital Service Efficiency – Dashboard.

It’s not often that we get to be a part of something big and are able to talk about it. Sure, we negotiated groundbreaking deals for some of the biggest streaming events at the dawn of online video, saved buyers  hundreds of millions in IT spend, and enabled the coolest online games to be available worldwide. But between confidentiality agreements and letting our clients take the credit, there’s not much fame for RampRate. We have always boiled down IT  to nuts and bolts and simplified measurements, always asking the question for our clients- How much are you saying that strategic thing costs? Now the language will be properly socialized amongst key stakeholders in every executives place at the table. Consensus drives decisions and today  IT decisions become more actionable and measurable.

But today we get some reflected glory at least — because we put in our two cents to help our client eBay’s Dean Nelson launch a metric in his keynote in todays Green Grid Annual Meeting that’s going to elevate measurement of efficiency and cost from the IT level to the business level. There will be challenges in mass adoption of the metric, and it will continue to evolve. But, in an industry that’s usually a follower, eBay is pushing to have the data center business take the lead in measuring and optimizing to what’s really important.

 

Deconstructing DSE

Deconstructing DSE

eBay’s DSE Digital Service Efficiency metric, announced at Green Grid today, finally cuts to the bottom line of IT energy efficiency – what’s the amount of energy consumed for a transaction. By using the denominator of actual business volume, it enables all forms of energy saving measures to be weighted and traded off against each other; from more efficient CPUs, to better PUE, to right-sizing the data center, even to coding that minimizing energy consumption. eBay aspires to have it become the new “Mile Per Gallon” of the IT industry, making ”an end-to-end connection between what customers do and the fundamental business metrics they influence— including cost, performance, environmental impact, and revenue.”

 

 

eBay’s DSE - Digital Service Efficiency

Source: eBay

The pursuit of maximum energy efficiency is not new for eBay – it is consistently ranked as one of the most socially-conscious firms in the online industry by CSR Hub. Nor is it new for the data center team at eBay, which has published a number of case studies on groundbreaking PUEs, among other accomplishments. But what is new is the data center team taking a leadership role across all IT disciplines and saying “energy efficiency is everyone’s concern.”

Overall Community Employees Environment Governance
eBay Inc.

53

46

52

50

64

Amazon.com, Inc.

43

37

44

39

51

 Electronic Shopping and Mail-Order Houses

47

44

49

39

55

Source: CSRHub

Next Steps – Cross-Industry Adoption

Of course, one adopter does not make an industry standard. eBay’s transaction may differ from the Gap’s transaction, which in turn definitely differs from a Ford, Boeing, Fidelity, or GE transaction. But the framework and foundation allows us to start setting standards for various industries and building towards best practices in a way that was much harder without it.

Industry Potential DSE Denominator
Retail, Finance  Transaction
Online Gaming  Gaming Hour
Digital Media  View
Mfg  Unit Shipped

 

At RampRate, we’re going to be adding these metrics to our SPY Index for full IT outsource operations, PaaS, and online retail platforms, and ask the folks higher up in the stack to start tracking their work and output on a per-transaction basis where appropriate. This will help us engage those business level and financial decision makers in the buying process. It will help them identify misallocations in the budget by showing which levers affect the cost of the transaction the most / least and get them to invest in IT that really drives down the cost of each transaction as opposed to flashiest marketing or strongest internal voice.

We’ve dealt with per transaction price models on occasion for the last 5 years – just as we have pushed for energy efficiency with our clients since 2007, but there’s still a lot of work to be done before measurement of costs and efficiencies on a business metric level becomes the rule rather than the exception.

But even today we can start thinking of how to use DSE in other industries. For instance, we can document that when one of our gaming clients uses 50% of their allocated power on average instead of the industry-standard 75%, they’re not being wasteful – but instead using servers that are put on standby during off-peak hours. Without DSE, there’s no metric that properly rewards that design – PUEs are higher since data centers are designed for peak loads, processor utilization may be lower, and it looks inefficient by standard metrics.

But if we track, say, energy per gaming hour, that value now shines through. Similarly, maybe a digital media firm’s “transaction” will be a view, while a manufacturer uses a unit shipped. Other industry-specific transaction units may apply for financial services, pharma, etc. The important part is building a platform for a common comparison among things that are alike and then we can tackle the question of who’s more efficient across industries and start putting together dashboards consumable by the business and metrics that financial analysts will probe to predict performance.

 

eBay’s DSE - Digital Service Efficiency

Source: eBay

Going Even Bigger

In some ways eBay is taking off and flying when the rest of the industry is still stuck between crawling and walking. PUE measurement is far from universal or pursued. Plenty of outsourced data centers still settle for 1.5-2.0 when 1.3 has been achieved in a mixed environment time and time again. In-house facilities are often even worse. Most wholesale facilities providers refuse to commit to a PUE target while retail ones frequently don’t measure it lest they face the horror of having to provide metered power and lose a source of fat margins.

But even as eBay reaches high, there’s a loftier metric goal that the industry would do well to pursue; dropping the D in “Digital Service Efficiency” and looking at service efficiency overall and how digital contributes to a quantum leap.

When Jim Glanz shook up the data center industry with an assault on its energy usage a few months back, the best response to it came from the inimitable George Rockett at Datacenter Dynamics, whose riposte was a simple “well, what’s the other option? Computers in closets with PUEs that are unmeasurably bad? Or no computers? A few misrouted cargo planes would burn more fuel in a day than FedEx’s entire data center in a year. Functionality uses energy, and digital functionality uses less energy than anything that came before.”

And George is, in the end, correct. Computing is not a cost center for energy – it is a profit center. By measuring the cost of a transaction in the old world of retail – warehousing, spoilage, transportation, etc., it’s clear that the digital way is better. But thanks in part to the New York Times and similar popularization of the data center as a latter-day factory with hidden smokestacks, that’s not the perception among the masses or the politicians. And that invites all sorts of meddling that may not be warranted. If Digital Services Efficiency be correlated with Non-Digital Service Efficiency.

The Bottom Line – We All Have Homework

eBay has cracked the door. Now let’s swing it wide open. Let’s start building DSE for every industry, share experiences, and build cross-functional efficiency teams where for once the data center is the hub of the movement as opposed to the low man on the totem pole. Let’s start thinking about overall Service Efficiency and defend the industry from unwarranted challenges while highlighting the laggards that are genuinely wasteful.

Download the DSE Data Sheet

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