How IT departments can prove their value in the wake of increased regulation

Find out how the Carbon Reduction Commitment can enable an IT department to turn government legislation into cost savings.

The recession has actually taught IT departments some important lessons. One was an increased understanding that reducing costs and becoming more environmentally friendly are not mutually exclusive. The introduction of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme gives many organisations an opportunity to become more cost and energy efficient, particularly in their data centres. By reducing the power consumption of data centres, IT departments can play a major part in helping their employers benefit from the CRC.

Currently, those organisations that are subject to the CRC have to be using more than 6,000 megawatts of energy, which equates to around £38,000 in CRC tariffs and £500,000 in energy costs. From this, it is clear that organisations can clearly benefit from reducing power consumption, and in doing so, improve their CRC position.

How to slash power consumption
One way to help slash power consumption is through data centre optimisation, coupled with infrastructure consolidation and virtualisation. For instance, through refreshing, virtualising and consolidating its server environment, one leading bank has been able to extend its data centre's life by at least two to three years. Even more impressively, power usage has been reduced enough to provide £1.5m of annual savings in energy costs, along with a CO2 emissions reduction of 6,500 tonnes per year.

What prevents many organisations from following this path is that IT functions have not owned the energy budget, meaning that cost savings can't be recognised in their business cases. A 2010 research project from Vanson Bourne revealed that 70% of UK businesses were unaware of how much power their IT department uses, even though 56% had set targets for reducing energy use.

Without a way to measure their energy consumption, IT departments, and businesses as a whole, cannot effectively develop strategies for reducing energy usage. Setting targets, measuring against them and then billing individual departments for their energy consumption will increase accountability and encourage departments to become more energy efficient. The CRC places the responsibility on IT departments to become more proactive about the ownership of energy usage and the potential associated savings.

Assuming that the correct measures are taken, the benefits of reducing power consumption in line with the CRC are not just financial. Organisations can also stand to improve their reputational standing through their position in the annual CRC league table, alongside core illustrations as to their commitment to carbon reduction. To facilitate this, it is important to point out that the league table is not just about absolute energy use. It also takes into account an organisation's relative business growth as well as measures taken, prior to the CRC, to reduce energy efficiency.

Secure a high-ranking position in the league tables
As the league table will effectively measure an organisation's ranking compared to its competitors, those organisations that have been the most proactive have an opportunity to scoop up the plaudits and positive media attention that a high placing will attract.

Currently, those organisations subject to the CRC have to be using more than 6,000 megawatts of energy, which equates to around £38,000 in CRC tariffs and £500,000 in energy costs.

Brian Murray, principal consultant, Morse,

Organisations looking to be compliant with the CRC need to fully understand how the league table metrics will work and ensure that they are targeting the appropriate rewards and bonuses. This will be even more important in the future, as starting in 2012 cap and trade mechanisms that limit the number of carbon allowances available and introduce carbon auctions will kick in; this will certainly change the league performance metrics. At the same time, it is also highly likely that the cost per tonne of CO2 emissions will continue to rise, necessitating even closer inspection.

The CRC is unlikely to stand still; it will probably expand to affect even more organisations, mostly by reducing the 6,000 megawatts energy use threshold. As a result, IT departments of any organisation should be aware of the potential impact.

If they take just one lesson from the CRC, it should be this: know, control and own your IT infrastructure. By intelligently optimising their IT functions and owning energy budgets, IT departments won't just be placing themselves above reproach for their environmental credentials; they will also be turning government legislation into an IT cost savings.

Brian Murray is the principal consultant at UK integrator Morse and a Contributor to

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