Data centers are a booming business, of course, as we report on all the time at GreenerComputing. With the rise of online shopping, telecommuting, virtual meetings, and the general spread of technology through everyday business activities, more and more companies are building or expanding their computing facilities.

But at the Fortune Brainstorm Green conference happening this week, Dell made the amazing revelation that, by waffling on their data center expansion plans, the company realized they might never need to build another new data center.

Robin Johnson, Dell’s CIO, and Dane Parker, its Global Facilities Lead, took part in the virtual conference (you can attend it online through WebEx) yesterday to talk about how the greenest data center is the one you never build.

Dell surveyed its customer base about demand for new hardware and data center floor space, and found that 65 percent of its customers were out of space and considering new facilities. Despite being in the same position as their customers, Dell held off, a move Johnson described as a cost-mitigation play, buying a year’s worth of time to think the decision through while renting out a colocation facility.

“The thing that happened in that year is that, one, technology gets cheaper, smaller and more powerful year over year,” Johnson said. “And the other key was virtualization, which I describe as carpooling.”

By virtualizing their servers, Dell was able to go from an industry average 12-18 percent utilization for its servers to 42 percent utilization, a number that Parker says is still “going north.” As a result, “we’ve doubled our workload at no extra power, and no extra servers,” Johnson said.
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It wasn’t as simple as just deciding to go virtual rather than expand compute facilities — especially for an IT hardware company. But in digging into the costs that Dell’s two Austin, Texas, data centers were responsible for, and the costs to build a new data center, executives realized that there had to be another way.

“So we asked, is there something we can do to get more capacity out of that same infrastructure,” Parker explained, “and can we get efficiency savings by going to virtualization?”

As Dell kicked around the options, virtualization technology was improving in effectiveness, as technology is wont to do. That steady progress, coupled with an initiative led by Johnson to identify and remove underutilized and outdated assets, made Dell’s no-new-data-centers future possible.

“You’ve just halved the power demand I have,” Parker said, “and maybe we don’t need to build another one — now it looks like we can wait another 10, 15, 20 years to build another one.”

The process is more complex than simply virtualizing everything possible, of course. And Johnson laid out how IT hardware firms can continue to benefit from companies using ever-fewer servers.

“It wasn’t simply putting more on each box, it was putting in the latest and greatest box,” Johnson said. “Those two things are what’s driving the change.”

By replacing the oldest 25 percent of its servers every year and upgrading to the “latest and greatest” models, Dell can essentially recoup its capital expenditures every year through reduced energy costs — increased energy efficiency offsets the costs of buying new hardware on a rolling four-year refresh cycle.

Fortune is archiving and streaming at least portions of its Brainstorm Green conference online; you can watch the entire hour-long discussion from Dell’s Robin Johnson and Dane Parker, as well as much more, at Fortune-ls.WebEx.com.