A Microsoft-sponsored analysis released today reaffirms what many tech companies have long been saying: computing is more efficient when it's concentrated in the "cloud" at giant data centers.

The range of savings from having hosted vs. on-premise IT infrastructure is between 30 percent and 90 percent, according to the study, which was conducted by Accenture and sustainability consulting company WSP Energy & Environment.

The greatest energy and greenhouse reductions can be achieved by small businesses with fewer than 100 users. The study was designed around a comparison of three Microsoft applications--SharePoint, Exchange, and Dynamics CRM--in an on-premise mode or using the online versions.

The reasons for the lower energy use go to the nature of cloud computing, where large corporations, such as Microsoft, Google, and Amazon, run very large data centers and deliver software over the Internet. These companies specialize in running computing infrastructure and have a financial interest in adapting energy-saving technology, such as virtualization and dynamically provisioned software.

Three products' on-premise and cloud-based services compared. (Click for larger version.)

"Cloud providers spend a significant share of their company's operational expense on IT--much more than an average corporation with its own IT department," according to the report. "This circumstance leads to an increased focus on cost and efficiency improvement, driving optimization of data center and application performance beyond what many businesses can achieve on their own."

Intuitively, a shared infrastructure for computing is going to be more efficient than corporate IT data centers, which have traditionally dedicated specific servers and storage to separate applications in order to ensure reliability. But with a state-of-the art data center design and focus on reducing energy consumption, corporate data centers could be run very efficiently.

For applications where large amounts of data need to transported, it's better to have on-premise computing from an energy perspective, according to Earth2Tech, which says that the University of Melbourne will release a report to that effect next week.

Researcher Jonathan Koomey, an expert on efficiency and cloud computing, argues that there are inherent cost advantages to centralized computing in the cloud. His research has found that everything from online business applications to downloadable music results in energy reductions.

"There are powerful economic factors pushing us towards cloud computing," Koomey said at the Uptime Institute Symposium earlier this year, according to a report at Data Center Knowledge. "One of the major reasons is the more efficient use of power by cloud computing providers."

Beyond the cloud Underlying the discussion about energy efficiency and IT is the growing understanding that more and more pollution is coming from computing. According to the EPA, data centers in the U.S. consumed 1.5 percent of total electricity in 2006.

But as more people rely on cloud-based services, energy consumption is projected to grow at a rate of 9 percent per year this decade, according to reports. (See PDF of Greenpeace study from earlier this year).

Groups such as Greenpeace are applying more public pressure to cloud providers, such as Facebook and Google, and, to some extent, they are responding.

When it comes to cloud computing and energy, though, few companies appear willing to publish their total energy consumption or emissions, perhaps for competitive reasons. One way to be more transparent about cloud computing energy use would be for these companies to publish the efficiency of their data centers and disclose any plans to lower them.