By Arne Josefsberg and Mike Manos, January 23, 2009
As you might have read in Microsoft’s Q2 FY09 earnings release yesterday, the company has announced cost management initiatives due to the global economic downturn. And with the earnings release back in October, Microsoft announced a reduction of projected capital expenditures by $300 million to our data centers. You might be thinking that the data center team is pulling our hair out trying to figure out how to meet our goals given the new constraints. After all, we need to continue supporting a growing base of more than 400 million Hotmail users and over a billion Live Search queries each day, plus 250 other services for Microsoft, including a fast-growing online services business for enterprise companies and the new Azure platform that software developers are beginning to use to create new services.
But we’ve been preparing for lean times for a while. This recession is the ideal backdrop to implement small changes that target big needs. Frugality drives innovation, and limited resources are just another forcing function to develop creative solutions to infrastructure needs. For our industry, this means more reasons to identify the small tweaks to products or operational approaches that can unlock big opportunities.
If you’ve been reading our blogs, you know that a major focus of our team (for a couple of years now) has been on smart growth and making gains in power optimization, server utilization, and efficiencies that will enable us to do more with less. And we have been a proponent of the industry, as a whole, to start measuring PUE in their data center facilities. This provides a great foundation on how to manage and view your operations.
We measure everything in our data center operations to the point of obsession, and continually analyze our measurements to identify areas where we can improve efficiency and increase ROI. Of course we’re doubling down on those efforts in light of the new budgets constraints, but we’ve already been moving in that direction for quite some time. A big part of our efficiency efforts involve increasing the utilization of our servers—an area where our industry is now beginning to raise the bar. We’re working on a multitude of fronts in this area and we are making real progress. One way is through virtualization, where we’re beginning to run multiple service tasks on the same machine. Another is by working closely with our internal customers, providing them real-time data about their utilization to help them identify extra capacity they already have so they don’t need to order more servers. And our research and engineering teams have developed some interesting and innovative approaches to increasing power densities that help us get more capacity out of our existing resources.
Thanks to the efficiencies we’ve gained through these ongoing efforts, we will be able to delay the construction and opening of some of our facilities, which will save Microsoft and its shareholders significant operating expenses, going a long way towards meeting the goals that Microsoft announced this week. For instance we’re postponing construction of the data center in Iowa that we recently purchased land for. We are still continuing construction of our facilities in Chicago and Dublin, and are planning to open them as customer demand warrants. But given the current economic climate we’re going to do the right thing for our business and shareholders and revisit our plans on a quarter-by-quarter basis. On other fronts, we are expanding existing capacity and making improvements for our other co-location facilities, like Amsterdam, that strengthen our global footprint and help us meet growing demand for online services for businesses.
The bottom line is that despite the problems the economy is going through, our online services businesses are growing. We expect that more companies will turn to our services to save money – by allowing them to decrease overhead costs – and that software developers will increasingly use the flexibility and low cost of entry of our new Azure platform.
We have been busy “building a better mouse trap” for these type of scenarios and are now turning up the dial on our efficiency efforts. Thanks to a lot of hard work and innovation by our team in recent years, we are prepared to address market changes – without requiring Microsoft to skip a beat in moving its Online, Cloud, and Live service businesses forward.
Be sure to visit our team blog next week when Christian Belady, our power and cooling architect, will be sharing more information on our efficiency best practices.
Arne Josefsberg, general manager of infrastructure services, Global Foundation Services, Microsoft
Michael Manos, general manager of data centers, Global Foundation Services, Microsoft