Energy-Efficient IT Leadership

Nothing big happens without a leader to champion it. Whether motivated by the bottom line or concern about the planet (hopefully both), CIOs and IT managers play a critical leadership role in putting their companies on an energy diet.

We wanted to know how IT leaders can go about leading the charge to reduce corporate energy use. So we asked six experts to assess the impact IT can have on energy consumption and weigh in on best tools and techniques for capturing the value of greener computing. Our panel of technology leaders, researchers and vendors includes:

• Marv Adams, CIO, Citigroup
• John Davies, VP, Green Technology Research, AMR Research
• David Douglas, VP, Eco-Responsibility, Sun Microsystems
• David Kepler, CIO, Dow Chemical
• Kevin Klustner, CEO, Verdiem
• Jonathan Koomey, Staff Scientist, Lawrence Berkeley National Laboratory and Consulting Professor, Stanford University

The group met over e-mail during a week in May. A transcript of the conversation follows, along with links to more information you can use to build your own case for a greener, more energy-efficient company.

CIO: We recently published a story in which we said an energy-efficient data center should be a no-brainer for CIOs because it saves a lot of money. In the same issue, David Kepler noted that IT plays a big role in managing energy usage for Dow’s manufacturing plants—billions of dollars in savings there. And yet, my impression is that the vast majority of CIOs have not contemplated these opportunities with much seriousness until very recently. Why?

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Jonathan Koomey: In my view it’s an issue of organizational structure and incentives. Most IT shops don’t coordinate well with their own facilities folks, and their budgets are separate. Even if they were inclined to cooperate, they don’t see benefit to their department by doing so.

Someone needs to be focused on minimizing total cost of ownership. I think that needs to be the CFO. In addition, it’s important to create what The Uptime Institute calls Integrated Critical Environment (ICE) teams or the equivalent, so that no big decisions about data center operations or construction are made without all the relevant folks in the room at the same time.

Kevin Klustner: We see the same issue on the desktop side. Reducing electricity waste on PCs is low hanging fruit when it comes to implementing organizationwide energy-efficiency goals. However, since IT doesn’t own the plug-load, they haven’t been overly concerned about waste.

Marv Adams: One reason that CIOs are starting to pay a lot more attention to this is that board members and senior executives are focusing more on sustainability issues. Also, we are seeing IT transform rapidly into full solution providers. Our role increasingly is to orchestrate or design solutions from a large array of component technologies.

For example, as sensor technologies become sophisticated and inexpensive, they represent additional components available for designing solutions. We are going to see many control system solutions across many types of processes as a result of this technology evolution—resource consumption representing just one example. Finally, virtualization technologies are making it possible to drive asset utilization up substantially. With these technologies reaching a level of maturity for large-scale production use, IT can drive efficiency and lower energy consumption.

David Douglas: I agree with Marv, but think those are probably the least common drivers right now. Practical power and cooling issues, and cost and availability of power are the more common rationales. I’ve only talked to a dozen or so large companies who are truly making decisions based on environmental concerns—though the list is growing. The good news is that no matter which of the reasons drive you to reduce power and get more efficient, the environment wins.

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  I also very much agree with Jon’s point about needing to align energy and capital costs. The amount of energy required to power $1 worth of computing equipment has been steadily rising. Ten years ago the amount spent on energy was a small fraction of the amount spent on equipment, so it’s not a surprise that we see the spending disconnect. Today these numbers are getting closer, and if trends continue, they will pass each other sometime in the future. So the discussion about who pays has been on track to become an issue, independent of the whole green movement.

Koomey: HP has the latest published graphs on the cost of infrastructure per dollar of IT equipment, and the data shows that power and cooling infrastructure costs passed IT costs in 2004. That means that for every dollar expended on IT equipment, there’s more than one dollar spent on the infrastructure to run it.

Douglas: That’s interesting. I was pursuing a slightly different point, which was that the actual energy cost to power the systems plus the infrastructure is approaching the depreciation cost of the equipment on an annualized basis. I have some IDC data that shows the curves crossing sometime soon after 2010. [IDC is a sister company to CIO.com’s publisher.] Since this is dependent on the local price of electricity, the belief is that the curves have already crossed in some expensive locales.

John Davies: David is correct when he says there are only a few companies making decisions based on environmental concerns.

There are, however, a couple of promising trends. First is that the leaders are publicly setting environmental and energy targets and reporting their performance against them. This serves to provide guidance to companies that are new to considering the topic.

Second, the leading companies are integrating environmental and energy metrics into their supplier scorecards. By asking value chain partners to reduce environmental impact and energy intensity, it will drive their supply base to look for efficiencies and for many companies the CIO will find the low-hanging fruit.

Use Energy Efficiency Benchmarks

David Kepler: How you approach this issue is a primary function of who you are as a company. Approximately 8 percent of the world’s energy is used in the manufacturing of chemicals. Virtually all things that are manufactured require chemistry somewhere in the value chain. So energy efficiency is built into how we act and how we manage with our customers. We have had energy as part of our economic evaluation of computer equipment purchases for 25 years at least, primarily because we evaluate them the same way we evaluate other chemical manufacturing equipment.

Our IT-related energy savings are small relative to the overall company, but we have an established mind-set about reducing them. A few years ago we went to automatic configurations of monitors. We had more than 40,000 workstations in use globally. At the time, according to the announcement we posted on our intranet, we were conserving more than 45 million kilowatt-hours annually. This translated into enough energy to power 4,365 homes for a year and it saved $2.5 million in electricity costs. For those that want to do their own calculations; see the Energy Star site.

Klustner: That’s a very important point. Energy efficiency is simply a component of operational efficiency. We’ll know when green IT has reached the mainstream when IT energy efficiency is viewed as an integral requirement to reduce operational costs.

The government’s Energy Star program David refers to has been instrumental in bringing focus to the energy waste of IT devices including PC monitors. And their efforts to get PC and monitor manufacturers to integrate Energy Star settings into their devices is a fundamental advancement. However, the settings alone don’t realize energy savings. They must be enforced. This study from the Department of Energy and others indicate that upwards of 80 percent of end users disable these settings.

Meanwhile, the Energy Star settings don’t provide benchmarking and ongoing energy audits and measurement.

Adams: Obviously, measurement is critical. Citi tracks energy consumption in all of its 14,500 facilities. And we benchmark energy efficiency (by watts per square foot, watts per seat, watts per FTE) against both internal and external data, including Energy Star. We are looking for ways to measure efficiency of energy per some significant IT measure. Our data centers account for 11 percent of our overall electrical usage.

We are also looking at the relative loads on servers; putting programs in place to make sure that servers are optimally loaded and testing software that reduces energy consumption in idle PCs. While there are some technical hurdles to overcome, we are optimistic we will see a reduction of up to 80 percent when compared to current idle mode consumption.

Meanwhile, we are optimizing the power densities (measured as watts per square foot) in our data centers by consolidating into new centers that are more efficient and we are using LEED (The Leadership in Energy and Environmental Design green building rating system) as our reference model, with commitment to LEED certification for all new centers plus retrofitting some.

CIO: You mentioned LEED and EPA benchmarks. Tell us how they help you. Do you need better benchmarks?

Kepler: Energy STAR and LEED bring attention to the opportunity and provide some “How-tos.”

Koomey: But I’m not convinced that LEED as it now stands is particularly useful in the data center space. The metrics that are required are so different from those in typical commercial buildings that a LEED rating doesn’t convey much useful information for a data center.

The metrics I’ve been working on with the EPA—one for volume servers and one for infrastructure—will allow comparisons between products and between facilities, and will support goal setting and continuous improvement. Right now server purchasers and facility operators don’t have an objective way to compare servers from different manufacturers in a consistent way, or to compare a new facility’s efficiency to an existing one. Having real, consistent, and widely reported metrics will allow market forces to promote efficiency in a way that is not now possible.

Klustner: It’s almost as if we need to invent a LEED program specifically for data centers. I’m thinking a consortium along the lines of Green Grid that incorporates representatives from IT data centers (corporate CIOs, for example), cooling/thermal engineers and hardware vendors coming together to develop LEED-like standards for data centers.

I have yet to see a specific requirement from our IT customers that their vendors be green, but you can see it coming. I know PC manufacturers that we speak with are diligently designing green PCs that include more recyclable materials, more efficient power supplies and power management capabilities in anticipation of just this sort of IT green filtering.

Adams: I agree that the current LEED standards are far from perfect when it comes to developing or operating data centers. That being said, there are several threads that can be pulled from the criteria that make sense:

Install equipment that uses energy efficiently and incorporates equipment that provides a payback in a two- to four-year time frame: These facilities are typically operated for 30 years, so the lifecycle payback is more than acceptable. Optimizing the IT equipment and HVAC layout to provide flexibility to the user while providing the necessary cooling where needed is also a good approach.

Design the building shell to limit heat gain and manage impact of the elements: This lowers overall operating cost. Citi will be installing our first green roof on a data center in Europe. The expectation is that the roof will last 40 years. When compared to the 20-25 year life expectancy of other roofing systems, we believe that this is the right lifecycle decision. And, it makes sense to incorporate trees in the landscaping to provide a visual shield of the building while also benefiting the environment.

Minimize water consumption, recycle construction waste, and purchase from vendors who are within a 500-mile radius to limit transportation expense and reduce gases caused by vehicles.

Our experience is that if you start early in the design process, you can incorporate many of these features and benefits without exceeding budgets. This was the case with our data center in Europe. We’ve met our budget requirements, and our data center is designed to the LEED Gold standard. We would also be interested in working with the United States and World Green Building Council to see if they would be willing to create standards for data centers, similar to the U.S. Green Building Councils accommodation of the retail community by creating a separate LEED retail standard.

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.