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PG&E to revamp virtual server consolidation rebate program

Almost a year into its virtual server consolidation program, PG&E gets little traction, but resellers say it has great potential and helps them close deals.

Almost a year after Pacific Gas and Electric Co. (PG&E) launched a program to reward customers that save on electricity use through virtual server consolidation projects, executives admit to a lackluster response and say they'll make changes in the hope of attracting both customers and resellers.

The program -- introduced with much fanfare at VMworld 2006 -- offers rebates based on the amount of energy savings a customer achieves by consolidating real servers into virtual servers in the data center.

At the time, San Francisco-based PG&E said customers could earn up to $4 million per project site.

However, to date, PG&E has approved and paid rewards for only four virtual server consolidations -- one large customer and three small to midsized firms -- for a total of $34,108.

"If you wish to characterize it as poor performance of the program, you're right," said Mark Bramfitt, principal program manager for PG&E. "I'm not sure how popular virtualization as a technology is. We are catching it at a very early stage."

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Among the changes PG&E is considering, according to Bramfitt, are raising the incentive level for successful virtual server consolidations, reducing the amount of paperwork required to apply for the program and increasing marketing efforts to IT professionals and CIOs.

"I don't have an announcement to make at this time, but it's imminent," Bramfitt said.

"I don't think people have come to us because of the program," said Steve Kaplan, president of Sacramento, Calif.-based reseller AccessFlow Inc. "But it does help to close deals, because having a utility company agree to give a rebate back on energy savings helps validate the concept of virtualization."

Since PG&E began the program, other utility companies have developed similar programs to encourage virtual server consolidation, including San Diego Gas and Electric Co. and Southern California Edison. While these programs are nascent, several resellers say there are many reasons to believe the programs help them win over customers.

"We can close business a lot easier when we say we've got somebody else to help pay for your upgrade," said Rich Baldwin, president of San Diego-based Nth Generation Computing Inc. "We now do analysis where part of our consolidation and assessment and capacity planning study is to show customers what their potential power savings would be, and then also show them what their potential rebate could be," Baldwin added.

One of Nth Generation's customers is San Diego-based Mitchell International Inc., a company that provides information products, software and e-business solutions for the insurance, collision repair, medical claims and glass replacement industries. The company is currently replacing 600 servers in a three-year virtual server consolidation project that it says it will completed by 2010. At that time, the company estimates it will receive about $300,000 in power savings credits from San Diego Gas and Electric, which is 10% of the cost of the project.

"That kind of money can go a far way to pay for a whole data center refresh," Baldwin said.

"It's an additional return on investment," said Kiran Sanghi, Mitchell International's vice president of information systems, who advised resellers to promote the program. "It's free money that customers can get after a server virtualization project," he said.

"Companies are looking at micromanaging their finances," said Bing Magpayo, business development manager for virtualization opportunities at Insight Enterprises Inc., a Tempe, Ariz.-based reseller that has been working with PG&E since January to market the virtual server consolidation program to customers.

Magpayo said that eight customers have signed on for a virtual server consolidation assessment so far, and each customer has between 100 and 1,000 servers. He also said customers return calls three times as fast now that he's pitching the utility rebate program.

"During our courtship with these companies, we actually position the program saying we are here to assist you in looking at getting some money from PG&E, your utility company," Magpayo said. "In this time of uncertainty, experiencing a soft market, I'm getting a better reaction from key accounts when I talk about PG&E server consolidation and the rebate program," he added.

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