Carbon Price - Reason enough to consider offshore IT infrastructure?
With the Australian Government’s announcement of the new Carbon Price scheme on 10 July 2011, focus in the IT infrastructure services arena has turned to the likely flow-on effects for Australian-based data centres and their customers.
Headlines boldly announce that the Carbon Price will increase electricity prices by around 10%, increasing the operating costs of power-hungry data centres, with customers ultimately likely to foot the bill.
Higher electricity prices are not new in Australia – prices have been steadily increasing over the last few years. For this reason, data centres in Australia have already had a focus on achieving greater energy efficiency, and are facing pressure from their customers and potential customers to do so. In reality, data centre service providers should have been incorporating carbon reduction processes into their technology cycles and costing arrangements for some time.
In any event, with the high level of public debate and discussion about what the Carbon Price will mean for Australians and Australian businesses, customers of Australian data centres may be considering whether use of an offshore data centre or cloud offerings may now be more attractive from a cost perspective.
Learn more about the impact of the Carbon Price:
- Passing on the cost – what does your service agreement allow for?
- Cost-benefit analysis – what are the risks associated with using offshore IT infrastructure and services?
- Carbon Pricing & your IT Infrastructure - what to do now?
It’s only natural with the announcement of the New Carbon Price Scheme that Australian businesses are going to be looking for ways to avoid the cost increases that will come with that Scheme.
In the area of IT Infrastructure in data centres, these data centres are power hungry and are likely to face increased electricity charges which they’ll then be trying to pass on to their customers, so as an Australian-based customer here you may be considering an off-shore option as a really cost-effective alternative but before you do rush to consider an off-shore option there are a couple of key issues to consider and the first of these is, does your services agreement with your provider actually allow them to pass on increased costs that arise out of the Carbon Price Scheme? And another key issues is, can you actually realistically send your data in your systems off-shore depending on the information that is in them. There are regulatory legal compliance issues to consider particularly in the area of privacy and data security.
So if we look at the services agreement aspect first, data centre providers may well come to you and say carbon price scheme its a new tax, a new law, we have a provision in our agreement which allow us to pass on those increased costs to you. Don’t necessarily take that as being correct. It’s very important to have a look their services agreement. Depending on how the actual provision is drafted it may or may not allow the data centre to pass on these costs to you as a customer so its very important to check the contract before you accept what the data centre provider tells you.
So once you’ve had a look at your services agreement, even if you are thinking that the off-shore option is going to be a cost-effective alternative think about data security and privacy issues. Here in Australia we have the Privacy Act which requires Australian businesses not to send data off-shore, personal information off-shore unless they have the person’s consent, unless they have taken steps to make sure that the recipient of that information overseas will properly protect it or that the jurisdiction that it is being sent to has an equivalent privacy regime. That’s a compliance issue that needs to be considered. The Australian Government has announced that it is taking a risk-based approach to off-shoring and cloud offerings and it wants to see these issues of data security and privacy resolved before its sends critical government services off-shore and if you are thinking of off-shoring there are foreign laws that will apply to your data if it is stored off-shore in another jurisdiction so all of these issues can actually add to your own operational costs and the off-shore option may not be the cost-saving alternative that you think it might be.
So, going forward, whilst we wait for this scheme to come into place its really important to have a look at your existing services agreement. If you’re considering negotiating a new agreement its only natural with the announcement of the new Carbon Price Scheme that Australian businesses are going to be looking for ways to avoid the cost increases that will come with that scheme.
With broad reaching legal and economic implications, the carbon price will create unprecedented risks as well as opportunities. Our experts identify the big issues and discuss long-term strategies for tackling the carbon price.Back to topic index