Cost Accounting
Bayer’s sustainability efforts

In order to stay competitive in today’s world, sustainability has increasingly become increasingly unavoidable. What used to be a trend that would bring a firm good publicity is now an integral part of the concept of operational effectiveness. One of the reasons for this paradigm shift is the near constant rise of the cost of energy. In the case of a large company like Bayer, one of the most significant energy cost is linked to the use of its data center. Because Bayer is a company whose success depends on the preservation of its intellectual property, they absolutely must keep their privileged information in their own data center and this data needs to have a high level of redundancy to make it reliable (Smith, 2011). A global analysis of the costs of running Intel based data centers, which is the dominant company used in the field, has shown a rise of 400% of the costs linked to cooling and power. This modern dilemma brings forth a brand new kind of trade-off, save costs without sacrificing reliability. This situation can be easily understood when you know that: “93% of companies that lost access to their corporate data centre for ten days or more due to a disaster filed for bankruptcy within one year of the disaster; with 50% of businesses that found themselves without data management for this same time period filed also filed for bankruptcy” (Smith, 2011). This situation is sadly not easily avoidable, research has shown that in 2011, 70% of the data centers experienced disruption related to power usage at enormous costs in productivity loss and technical support (Hengst, 2008). One of the reasons we have chosen Bayer for our study is that it is a proven trailblazer when it comes to improving its processes and efficiently using new technologies to create green data centres. “A green data centre may be thought of as one that is designed and operated with considerations of maximum energy efficiency and minimum negative environmental impact.” (Smith, 2011) This concept ties in to every aspect of the design and the operating of the data centres and not only the servers. The lightning and security for example also have to be considered. In the United States, the Obama administration has also put in place incentives to make sustainability and the use of greener energy sources more unescapable for companies when they conduct their cost-benefit analysis. As previously mentioned, Bayer understood early on these concepts and acted on recommendations it received from the Uptime Institute (UP) whose goal is to create standards that address the reliability/energy efficiency trade-off. As a responsible company, Bayer did not blindly accept every single recommendation made by UP, some were discarded for cost reasons, other for lack of empirical evidence proving their utility and other recommendations were rejected because of the landscape and the weather surrounding their Pittsburgh based data center. What Bayer focused on instead is a rigorous control of electrical and coolant wastes. We could actually make a case that waste management is more important to the operations of a date centre then it is to a production line since reducing waste does not only help controlling the costs of a data center but it also improves its overall reliability. UP showed Bayer that their past activities electrical waste was within the industry average for data centers but that it could be reduced by around 66%. Bayer then did trial runs with the virtual server technology and then implemented it aggressively when it showed positive outcomes. Then they isolated above floor components to increase the pressure underneath where the air that cools down the servers circulates to waste less cold air. Bayer then analysed its air conditioners in charge of supplying the cold air for the computers and found out they were running at a 38% efficiency level. After a reorganization of its layout, they were able to remove 8 of their 17 air conditioning units and to use the balance more efficiently. This round of simple measures was able to make the data center around 16% more efficient and to save Bayer $130,000 per year. At the time the research on Bayer was released they were also working on an additional measure to improve its Uninterruptible Power Supplies (UPS) which store electricity in case of power failures which will save them an additional $75,000 per year and improve their reliability. It should be understood that Bayer’s data center still consumes more energy than a new data center that would be designed with sustainability would. However, it still manages to prove that carefully analysing wastes can be profitable for a company’s image and still increase the shareholders returns with very modest investments.