Apparently most CIOs are not held responsible for energy costs, even though IT departments use colossal amounts of electricity:
Most CIOs don’t see utility bills, but eBay lumps its power bills in with its IT budget, and as a result the company has been very aggressive in cutting power consumption. Nelson said that eBay’s newest data center, a $287 million facility in Salt Lake City, was “paid for by the cost savings we’ve achieved [elsewhere] within the last two years.”
In essence, eBay’s IT department is “self-funding” new spending by being more efficient, he said.
Nelson said the IT department changed its metric for vetting technology investments from transactions per second to transactions per watt. That switch led to an increase in virtualization and a decision to move non-mission-critical applications out of Tier 4 data centers, which cost two to four times more to operate than standard data centers.
This reminded David Foster of something Peter Drucker observed at Ford:
Describing the dysfunctional management culture of Ford Motor Company during the later years of Henry Ford, Peter Drucker observed that a Ford foundry manager was not allowed to know the cost per ton of the coal being used in his furnaces. This was a function of the secretive and very controlling personality that Mr Ford had developed by this time, aided and abetted by his thuggish sidekick, Harry Bennett.
The failure to assign costs properly isn’t limited to IT:
A couple of years ago, I was at a Borders store in south Florida. Although the day was very hot, the front door was propped open for a prolonged period of time, which didn’t make the task of the air conditioning system any easier. Somehow, I suspect that the general manager of the store wasn’t being charged for power in his budget.
Shannon Love boasts that he can beat Drucker’s story — and he’s right:
Back in the early 90s Apple was under completely different management than now. Apple sold extended warranties. The VP of service came to do a communications meeting with the people who managed the warranties. Thinking they were warning the VP of a costly flaw in the system, they brought to her attention that the company was issuing warranties on machines five years old and older which was obviously a bad idea has they had entered the end of the hardware’s statistical operational lifetime. (This would be like issuing a full new car warranty on 10+ year old car with high milage.)
The VP just smiled and with no apparent consciousness of how delusional she sounded, said not to worry about it because all warranties were pure profit! After the obvious WTF response from the audience she delusionally explained that ALL the revenue, not just profits, from warranties booked to the service division whereas all the cost of warranties booked against the manufacturing division. Therefore, the all warranties were pure profit for service.
[...]
It was like a ship in which each water tight compartment was a different division and as the ship took on water the crew in the on compartment lowered their own water level not by pumping water outside the ship but instead into other compartments.