By 2020, large U.S. companies that use cloud computing can achieve annual energy savings of $12.3 billion and annual carbon reductions equivalent to 200 million barrels of oil-enough to power 5.7 million cars for one year.

This is according to a new study by the Carbon Disclosure Project (CDP), "Cloud Computing: The IT Solution for the 21st Century," conducted by independent analyst research firm Verdantix and sponsored by AT&T.

According to the study, companies plan to accelerate their adoption of cloud computing from 10 to 69 percent of their information technology spend by 2020.

The report finds that a company that adopts cloud computing can reduce its energy consumption, lower its carbon emissions and decrease its capital expenditure on IT resources while improving operational efficiency.

Stuart Neumann, senior manager at Verdantix, commented: "The study also analyzed the business impacts of transferring an essential business application-human resources-to the cloud and shows such an investment could give a payback in under one year."

In addition to a predicted aggregate, annual carbon reduction of 85.7 million metric tons by large U.S. companies, cloud computing can:
  • Help users avoid costly up-front capital investments in infrastructure
  • Improve time-to-market as a new server can be created or brought online in minutes
  • Provide greater flexibility as clouds allow firms to pay for excess capacity only when they need it
  • Avoid the continual maintenance of excess capacity needed to handle spikes
  • Improve automation that helps drive process efficiencies
"The study results make a powerful case for businesses to continue to explore and adopt secure and flexible cloud computing solutions," said John Potter, vice president, As-a-Service Solutions, AT&T.

Andrew Winston, leading expert on sustainable business and author of Green to Gold and Green Recovery, said: "Finding providers and partners that can take some of your energy-using operations to scale, and manage them in a shared capacity, is good for both business' carbon footprint and its bottom line."

The study suggests that significant non-monetary benefits can be achieved with cloud computing, including business process efficiency and increased organizational flexibility. Paul Stemmler from Citigroup commented: "Carbon reduction is one driver, but not the primary driver. The primary driver is time to market. Developers used to take 45 days to get new servers, but in the internal cloud infrastructure that we operate in our own private network, it takes just a couple of minutes."

Verdantix conducted in-depth interviews with multi-national firms-including Aviva, Boeing, Citigroup and Juniper Networks-in diverse sectors. All study participants had adopted cloud services for at least two years. Many of the firms interviewed reported cost savings as a primary motivator, with anticipated cost reductions as high as 40 to 50 percent.

Luis Neves, chairman of the Global e-Sustainability Initiative (GeSI) commented on the report: "We are delighted to lend our methodology to this valuable and fascinating new insight into the financial and sustainability benefits of cloud computing."

Paul Dickinson, executive chairman of CDP, welcomed the ICT sector's leadership in driving sustainability: "A large percentage of global GDP is reliant on ICT-this is a critical issue as we strive to decouple economic growth from emissions growth. The carbon emissions-reducing potential of cloud computing is a thrilling breakthrough, allowing companies to maximize performance, drive down costs, reduce inefficiency and minimize energy use-and therefore carbon emissions-all at the same time."

This study follows the release of a recent paper, "Building a 21st Century Communications Economy." Tying these studies together, Dickinson commented: "The communications economy of the 21st century has the potential to generate more economic value with less environmental impact, and ICT companies will lead the way."

The full cloud computing report can be downloaded at https://www.cdproject.net/en-US/WhatWeDo/Pages/Cloud-Computing.aspx.