The Greening of IT

Green is good—and good for business. Our exclusive survey shows just how IT leaders are balancing the twin imperatives of running a profitable business and a cleaner one.

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IT is turning greenish.

That's right. Many technology leaders shrug their shoulders at the mention of climate change in conversation, or they pass on conference panels that use the "green" terminology. But in fact, according to exclusive CIO research, they are beginning to think green. Stricter government regulations, rising energy costs and the growing awareness that sustainability is a real business concern are pushing companies to strategize how they will meet future energy demands and calls for carbon emissions data. Green IT is making inroads in the data center; CIOs are also starting to realize that's only the beginning. Fifty-four percent of IT leaders responding to a CIO magazine survey about Green IT report that their organizations have environmental sustainability goals­ for information technology. In other words, they are trying to reduce IT's impact on the planet.

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They are motivated almost equally by social responsibility and business benefits. Thirty-eight percent say they're going green because it's the right thing to do; 37 percent say doing the right thing for the planet also helps them reduce operational costs by, for example, cutting energy consumption. A handful—only 5 percent—see sustainable IT as a competitive advantage.

For IT departments, a focus on costs—and energy costs in particular—is a logical place to start. If you pay attention to the news, you know that addressing climate change depends on rethinking energy use. Electricity is "more and more part of my overall bill that I pay as a CIO," says Patricia Lawicki, senior VP and CIO with Pacific Gas & Electric. Reducing the electric bill cuts costs and frees up funds for additional IT investments.

Few IT organizations have gone much further. Though there's plenty of media attention to calculating carbon footprints (and a few high profile companies, like Dell and British retailer Marks & Spencer, have declared their intentions to become carbon neutral), IT leaders as a rule are not grappling with the question of their—or their companies'—carbon emissions. Among 280 IT leaders surveyed, 61 percent said they were not measuring their corporate carbon footprints right now, though 16 percent said they were preparing to do it. Only 11 percent of respondents said that their companies are not just conscious of their carbon output, but that IT is part of the calculation.

That is likely to change. Nations are negotiating a follow-up agreement to the Kyoto Protocol, which establishes global emissions limits. (The process began last December in Bali). Although the United States isn't a signatory to the original agreement, U.S. officials are participating in the new talks. Meanwhile, a 2006 California law mandates a 25 percent reduction in greenhouse gas emissions by 2020. Regional alliances of states are also developing emissions limits. And Congress is crafting national carbon regulations; many political observers consider these inevitable. Although these regulations and proposals generally target major emitters, such as power plants, they are likely to affect other businesses through higher electricity prices.

"Unless the science behind climate change develops a more optimistic view of the problem, or progress in technology development and adoption, along with behavioral changes, unfolds more quickly than expected, enterprises should anticipate that they will be motivated and forced to make significant improvements to energy and material efficiency," warns Gartner analyst Simon Mingay in a recent report.

Andrea Moffat is director of corporate programs with Ceres, a network of investors, environmental advocates and public interest organizations. She envisions that once companies begin grappling with their overall climate impact, there will be a role for IT beyond simply greening the data center. Exactly what it will be depends on the company and its industry. Some business operations will be harder to make green than others. Citi, the global financial service company, developed a business intelligence application to manage energy usage in its office buildings; greening a supply chain isn't so straightforward (see "Can You Build A Carbon-Efficient Supply Chain?"). And many companies, Moffat says, still need to get a good handle on how much energy they use—an important step if organizations are to choose the environmental projects with the greatest benefit to both the Earth and the bottom line.

Whether they've been required to or have chosen to, both PG&E and Citi are working to do business in a more environmentally friendly way. In the process, they're learning how to use IT to balance the twin imperatives of running a profitable business and a greener one.

Beyond Greener Data Centers

Thanks to the explosion in demand for processing power, most CIOs have noticed by now that they need more energy-efficient servers. There are limits to how much electric power a given facility can sustain.

Although 56 percent of respondents to our survey said they don't monitor IT-related energy spending, 64 percent are reducing, or have plans to reduce, the energy consumption of their servers. Almost as many say that at least occasionally they will purchase IT products that are energy-efficient or that are manufactured and distributed in a sustainable way. For PG&E's Lawicki, the push to reduce data center energy consumption is motivated not only by cost—her electricity bill is growing with her data center processing capacity—but also by emissions regulations.

The largest utility in California, PG&E has a mixed environmental record. A decade ago, its $333 million settlement with residents of Hinkley, Calif., who accused the company of contaminating local groundwater was the basis for the movie Erin Brockovich. Today, though the company still has critics, PG&E has worked hard to position itself as a leader in low-emissions power distribution (over 50 percent of its power comes from non-CO2 emitting sources, including nuclear and hydroelectric). PG&E also set a goal to make its offices, service centers, and other buildings "climate neutral" by 2009.

The company has also launched several programs designed to help customers reduce their energy consumption, including a rebate for businesses that install energy efficient equipment in their data centers and a "smart meter" program to measure patterns of residential power consumption (see, "The 2008 State of the CIO: The Imperative to Be Customer-Centric IT Leaders"). Prior to a recent server consolidation project Lawicki had her team measure the power consumption for each class server to obtain a benchmark. They measured their data center power consumption with a robotic dynamic thermal monitoring system that detects hot spots in the data center at different times of day. "This is how detailed you need to get in order to ensure you're doing it the right way," she says.

Lawicki also sees untapped potential for IT to reduce emissions by revamping PG&E's business operations, but she's still waiting for a groundswell of demand. "We're just waiting for these lines of business to come running in and say I want to be more green," she says. PG&E's business units can use IT to optimize anything from truck routes to the wire they buy for its environmental impact.

It's not necessarily easy. "We're going to have to do a lot of work," Lawicki adds. She anticipates, for instance, that PG&E's supply chain group will ask for IT tools that will help them analyze supply decisions "based on the carbon footprint we're leaving." That means going to software providers such as TKand asking for new features that support the additional data collection and analysis.

Analysts point to supply chain management, enterprise asset management and manufacturing systems controls as the top software categories that must evolve to meet the emerging demand for energy management and carbon emissions data. Meanwhile, according to Gartner, eight technologies are going to become critical to companies' sustainability efforts. These include applications for optimizing service and repair calls, as well as telecommunication and collaboration technologies that allow employees to work at home or reduce their travel.

Technology Tools for Cutting Carbon

Some companies have developed their own tools to track and manage their carbon output. When Citi Realty Services established goals for reducing its greenhouse gas emissions, it decided to look at how it could manage energy consumption more efficiently in its buildings. The initiative started as a way to go green, but it ends up saving money, too.

Citi is part of the Climate Leaders Initiative, whose members volunteer to disclose their greenhouse gas emission. When the initiative began more than six years ago, there wasn't any software that could collect and analyze energy consumption data on a global basis. So Citi built its own business intelligence tool. Today, the company collects energy data from its suppliers (including electric utilities, gas, steam and fuel oil) for more than 16,000 properties it owns or leases worldwide. It also gathers information on water consumption, recycling and waste production. The numbers are crunched to create a report on Citi's carbon emissions using conversion formulas from the World Resources Institute. But they're also analyzed according to such metrics as kilowatts per square foot and building occupancy; the company's real estate managers then look for ways to reduce their energy use.

"If we have a region that operates at a very low consumption rate, we'll want to find out what they're doing, how they're doing it and share across other regions so we can begin to find best practices," says Chris Magliano, senior vice president of the Global Sustainability Group, within Citi Realty Services. For instance, "We're looking at a specific lighting retrofit project that was completed in a building and the impact of that on the facility's energy consumption." Other Citi facilities are preparing to pilot alternate energy sources. The data also suggests smaller fixes, most of which don't cost anything, says Magliano. At one point, Citi cut several hundred kilowatts of electricity usage by getting staff in a Manhattan facility to give up space heaters under their desks. The office thermostat was set to keep computer equipment on one of its trading floors cool, but workers' feet were freezing. Property managers adjusted the building's climate control systems so the machines wouldn't heat up, but employees could be comfortable—a counterintuitive choice that wouldn't have made sense without the data to back it up. "The tool let us go back and verify the effect of changes that we made," says Magliano.

Citi does not report how much money it saves from its energy-efficiency initiatives. Lois Grobert, Sustainable Real Estate Operations Manager, Citi Realty Services, says there's no business reason to convert local savings to dollars. Energy expenses are also hard to define because they're often embedded in building rental charges, says Magliano. Nevertheless, says Grobert, "there's no downside to saving energy."

Citi has promised to cut its greenhouse gas emissions 10 percent from 2005 levels by 2011. But interpreting its progress isn't completely straightforward. In the first two years Citi reported its emissions—2005 and 2006—the company's total energy consumption and its carbon emissions increased. Energy consumed per building occupant—a way to measure the rate of energy use—declined less than 1 percent, while carbon emissions per occupant remained the same.

Grobert says Citi has made progress, but that different numbers tell different stories. For instance, she explains, energy consumption rose during the year because the company opened more offices.

"We cut this data many different ways to see where our progress and where are challenges are," she says.

How Do You Know When You're Really Green?

As the initiatives at both PG&E and Citigroup suggest, it makes a difference whether sustainability goals have corporate backing. Too often, CIOs who think green get neither credit for saving money when they cut energy costs, nor points for meeting environmental goals.

"It's definitely a big dilemma," says Ceres' Moffat. In fact, 80 percent of survey respondents say they have no metrics to measure progress toward greening IT.

Moffat notes disconnects between IT and facilities managers, travel managers and other business leaders that make it challenging to assess the results of any environment-related technology investment. "You need to gather the folks that are procuring the technology with the folks that are paying for the energy bill."

Serious change also depends on more energy efficient hardware and software, along with metrics to judge whether they are worth the investment. Though major hardware vendors continue to introduce products from servers to power supplies that they say are more efficient, the metrics to measure their impact are immature.

Larry Vertal is senior strategist with chip-maker AMD and a director of The Green Grid, a global consortium dedicated to advancing energy efficiency in data centers and business computing ecosystems. Vertal observes that many CIOs are doing "basic housekeeping." But he thinks they're holding back on new investments to avoid becoming locked-in to any one vendor's solution. "There is a bit of wait and see and it's largely dependent on metrics CIOs feel they can be confident in." "There's a trend to put a green label on something," says Lawicki. "What we're trying to get to is where we can actually measure the stuff. What did you really save? And what does it really mean?"

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Copyright © 2008 IDG Communications, Inc.

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