Energy-Efficient IT Leadership

How CIOs can become champions of environmental sustainability. And the business case for why they should.

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We have a real commitment to energy optimization at Citi. Sustainability is one of my major platforms as CIO. I also believe these issues of social and environmental responsibility are emerging from every corner, not just IT. Citigroup recently announced that it is investing $50 billion to address global climate change. It is part of Citi’s pledge to reduce our environmental footprint by bringing greenhouse gas (GHG) emissions down 10 percent by 2011. The range of the investment is diverse, including everything from financing clean energy to encouraging clients to sign up for paperless statements. So there’s a lot of movement around these issues, and I think there is a real opportunity for IT to take the lead.

Get Employees and Customers to Act Green

CIO: So it sounds like IT has a big role to play beyond the data center. With paperless statements, Citi is trying to use IT to drive customer behavior. What about employee behavior?

Adams: Even small things make a difference, like asking employees to power down their computers or bring personal mugs to work, and creating programs to support telecommuting. Just last year in Asia, we saw energy consumption drop by 5 percent simply through educating and engaging employees on this issue. The program has been so successful that we’re launching it globally this year.

For companies our size, there’s a real opportunity here to make an impact. With our large employee population, even educating employees on how they can reduce energy consumption in their homes (and their electric bills with it) can make a positive difference that goes above and beyond business practices.

Douglas: Through our telecommuting program, OpenWork, our employees can opt to give up their permanent office in exchange for shared office space, home equipment and infrastructure subsidies (such as for DSL and power). Our IT team supports employees wherever they are. We currently have over 18,000 employees, or over 56 percent, in the program. In the last five years we have cut our office space by one-sixth, have saved over $60 million a year on space and power, and we have saved an estimated 29,000 tons of CO2 per year due to reduced employee commuting.

Generally we try to measure everything by dollars and environmental impact (in this case CO2 is a good measure). In addition, we measure employee retention rates and job satisfaction. It’s higher among people in OpenWork. Productivity is tougher [to measure], but we are doing some studies there.

Finding the Right Metrics

CIO: Can you actually measure the energy savings of letting people work at home, or printing fewer documents?

Douglas: Absolutely, though it may take some work to get a very accurate answer. In most cases, however, you can get a good approximation fairly easily.

Step 1 in any energy-efficiency program is to measure where you are at and to set goals. We’ve found out interesting things in every building and data center we’ve measured in detail. Something jumps out that makes you go, Huh? And when you dig into it, you usually find out that you can save some power with a very simple change.

Klustner: We always recommend that IT organizations do an energy audit for each particular energy-efficiency measure they initiate. Measurement and verification (M&V) becomes critical to evaluate the efficacy of the efficiency program over time. It allows the organization to highlight results with employees, shareholders and the press. And, most importantly, it provides a way for IT to continue to optimize energy efficiency over time, by pointing out areas where additional energy savings can be realized.

M&V will take on heightened importance as “cap and trade” legislation establishes a carbon trading market. While this is still an evolving area in the U.S., it is happening today in Europe. It’s only a matter of time before states such as California, or Congress, pass such legislation. When that does occur, organizations are going to want to get credit for their direct and indirect reduction of CO2 emissions. Certifiable M&V is the only way to realize this.

Koomey: On the telecommuting side of things, the potential is quite large, and as Dave points out, it’s not just energy and emissions savings. It also saves on office space. The AT&T folks have done excellent work on M&V on of their telecommuting programs. Here’s the abstract to a peer-reviewed paper on the effects of these programs.

I also strongly agree about the likelihood of “Aha!” moments when conducting simple audits and inventories of emissions and energy use. Typically people within companies will keep doing whatever has worked for awhile and not evaluate whether there are ways to do things better until there is a crisis or there is a directive from higher management. Doing these audits regularly will break through that stagnation and opportunities will become obvious.

These evaluations of opportunities should be periodic and ongoing. Some companies use Six Sigma in this way. The trick is to create cross-cutting teams of people who report to someone high up in management—not to individual department heads—whose sole job it is to identify opportunities. M&V is also critical for these folks—they should be evaluated not just on the opportunities they identify but on the successful capture of those opportunities and a retrospective look at what happened. Did the financial, energy and environmental savings measure up to the initial estimates?

Having high-level management attention is crucial. When Shell and BP set up their internal emissions trading systems for greenhouse gas emissions, one of the most important changes was making the leaders of each business unit report on their units’ progress in achieving the environmental goal when they were giving their annual briefing to the CEO.

Adams: I agree that every time you peel the energy-efficiency "onion," you discover more opportunities. At one of our smaller facilities we are conducting a test of software that sits on top of building-automation programs to optimize air flow. I am sure that measure will lead to another idea for potential savings.

Another example is our Flexible Work Program. We launched it two years ago, to boost employee morale. Employees could request compressed work weeks and telecommuting arrangements. Now, we’re taking it to the next level and looking at it much more from a business perspective, in terms of office space reduction. This isn’t about Friday telecommuting, it’s about analyzing roles within organizations and making decisions about the type of employee who can be set up in a home office, supported by IT.

Our real estate group is on the forefront of this initiative, and they are targeting to have a significant number of their employees in the program by the end of this year. We envision savings in office space, reduced energy consumption and increases in productivity and service delivery.

Effective Leadership

CIO: What’s the most effective leadership approach you’ve seen to getting energy usage issues on the table and acted upon?

Douglas: Make the cost and use of energy explicit and make people account for it in their projects. You have to deal with real data and real dollars. This is not about leading, as in “Let’s get people to do something they didn’t want to.” It’s about leading, as in “Lets help get people more data and tools so that they’ll make better decisions on their own.”

Koomey: It’s the C-suite that must set real emissions goals and publicly and privately promote them. One individual must be assigned responsibility for achieving the GHG emissions targets and that person must be given enough staff, resources and authority so they can really get the job done. And managers must be questioned at their annual review about their progress in meeting emissions and cost reduction goals.

Davies: Many of the VPs of sustainability we’ve talked with have lean staffs for the function but direct and regular (at least weekly) communication with the CEO and board. They set the metrics, but the results need to be owned by business units or functions throughout the organization. They are also looking for better ways to coordinate the efforts of roles to gain leverage, and that is one of the big challenges today.

Adams: It’s also not just top-down. The most effective leadership approach involves encouraging a bottoms-up initiative that is fully supported by a champion from senior management. Stating the problem as one that is solvable and getting everyone involved has a galvanizing impact on organizations. Setting a goal and creating a vision of success that, if achieved, will be good for employees, profit and the planet is essential.

Regular feedback on progress and recognition of behavior that goes above and beyond are really important. Creating a compelling business case that includes risk management (of reputation or compliance, for example), expense reduction, staff satisfaction and, if possible, revenue opportunities will get the attention of management and accelerate action.

It’s also important to make sustainability understandable at a personal level. People generally want to be a part of something bigger than themselves, something they believe matters. IT professionals are uniquely positioned to help fight global warming because technologies of many types (such as sensors, electronic replacements for paper, control system software, server virtualization, telecommuting) can be implemented as elements of a broad array of solutions that make our companies more environmentally friendly. Almost everyone in the organization can get excited about these types of projects. Our challenge as leaders is to create the conditions that channel this energy in a positive way.

CIO: Kevin mentioned the emergence of carbon limits and carbon trading. What do IT organizations need to do to prepare to operate in an environment where carbon emissions are capped?

Douglas: Any government-led management scheme designed to drive down carbon will involve limits or taxes of some kind. In either case it’s hard to imagine a scenario where end-user energy prices don’t rise. Electricity prices rose 30 percent to 60 percent in Germany following the institution of a CO2 cap and trade system. What that means is that people have to start paying attention to where their data centers are, what their power options are in those locations, and what the CO2 content of those options is. Generally, the higher the CO2 content of your electricity, the more exposed you are to cost increases due to future CO2 reduction schemes.

Adams: The key to consistency in the way energy and carbon are tracked and reported will be the creation of one set of standards by the federal government. In the best of all worlds there would be alignment of industry, government, researchers, vendors and non-governmental organizations as the standards are being created.

CIO: Finally, what are the next steps organizations need to take to get energy efficiency to the next level?

Douglas: Whoever you are, the place to start is to understand where your current energy use is, and start to look for cost-effective ways to reduce it. There are a lot more elegant and advanced things to do, but this first step is never a bad idea.

Koomey: Many new technologies can enable emissions and cost savings, but implementing those innovations will require both technological and institutional innovation. For example, cross-functional teams with high-level authority (like some companies create as part of their Six Sigma implementations) can often cut through departmental hurdles and identify, implement and track cost- and emission-saving innovations more effectively than people within specific departments can. Most companies don’t have such cross-departmental teams, but teams of this type can facilitate the adoption of new cost- and emission-saving technologies and processes.

Sometimes perverse incentives get in the way of minimizing total costs. Then companies need to be reorganized. For example, when IT budgets and facility budgets are separate, data centers are vastly less efficient than they could be, and total costs of ownership cannot be minimized effectively. The CFO needs to demand financial accountability from all parts of the organization so costs can be reduced, and that accountability will likely require reorganization.

Society is just now mobilizing to confront the climate challenge, and I’m confident that the world is more innovative and flexible than it’s ever been. IT professionals, because of their technical expertise and innovative spirit, will play a critical role in the societal innovations that lie ahead. There are vast opportunities for cost-effective emissions reductions that we have only just begun to tap.

Copyright © 2007 IDG Communications, Inc.

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