Weighing the benefits of green IT

October 2006 heralded something of a green epiphany for business. Swathes of hitherto sceptical organisations began to realise their environmental strategies were no longer sustainable

October 2006 heralded something of a green epiphany for business. Swathes of hitherto sceptical organisations began to realise their environmental strategies - which for many, amounted to little more than recycling paper and issuing statements about their "commitment to corporate social responsibility" - were no longer (to borrow a buzzword) sustainable.

The catalyst was the publication of the Stern Review on the economics of climate change. It proved stern reading indeed: an independent government report from a respected mainstream economist confirming climate change was man-made and predicting it would have catastrophic effects on both the environment and the economy unless massive, urgent, global efforts were put in place to curb temperature rises.

The IT profession had to come to terms with its particular culpability a little later, when reports began to surface that IT was, after the airline industry, the world's biggest polluter. In May 2008, a McKinsey study suggested that by 2020 the world's datacentres would surpass even aviation to become the biggest global contributor to CO2 emissions. Not surprisingly, the issue of "green IT" rose up the industry's (and CIOs') list of priorities.

But following the financial crash at the end of 2008, green talk faded noticeably. Steve Nunn, head of Accenture's green IT programme, says, "Eighteen months ago, the green agenda was on everyone's mind, but with the current economic situation, cost and financial issues are dominating most industries."

All talk, no action?

Tim Cray, co-founder of IT consultancy Vitrium, agrees. "Companies still consider environmental issues important, but because most are cash-strapped, in the past 18 months there has been more talk than action," he says. "When I ask CIOs if sustainability is part of their agenda, they say absolutely. But when I ask what they're doing about it, it rarely turns out to be much more than a bit of posturing."

While December's Copenhagen Summit failed to produce any significant, legally binding global deal on emissions, most people understand the imperative for action and want their organisations to help tackle the challenge, binding targets or not. Privately, many CIOs admit the problem is the mechanisms companies put in place to measure return on investment often do not give adequate weighting to the environmental benefits of IT projects, even if they also pay off financially for the wider business.

Cray says, "Most CIOs don't even see the energy bill. It's picked up by the premises people, who have no jurisdiction over the choice of IT. So there's a disconnection between those who pay for and those who use the energy. You might get the odd CIO who says they are virtualising and they're going to save money on power, but that's just a nice added by-product. If it was just about saving power, it wouldn't justify the project costs."

Indeed, IT industry efforts to brand virtualisation as a green panacea, and some CIOs' seeming willingness to echo their pronouncements, may be counterproductive. Ian Cohen, CIO at risk and insurance consultancy Jardine Lloyd Thompson, says, "Virtualisation is primarily about speed to market and reduced cost, not energy savings. CIOs don't have a great reputation when it comes to communicating clearly and credibly with our colleagues. So if we are party to the misrepresentation of technology, shame on us."

Andy Lawrence, research director for eco-efficient IT at analyst 451 Group, does position virtualisation as a green technology, but he thinks it's important to understand there are different types of green IT.

"Virtualisation is rarely done for energy-saving reasons, though it gives quite a good return in that area. Clearly, though, there are some technologies that fall squarely under the green banner - for example, power management products for reducing energy consumption. Then there are those like teleconferencing and home working, which generally aren't introduced for environmental reasons, but clearly have a societal benefit in terms of reducing carbon emissions. You need to approach each technology differently," he says.

Cohen agrees there's never a one-size-fits-all answer to the green question. "You have to align what you buy and what you measure with the organisation's position around sustainability and social responsibility. It's just like any portfolio of work - you pursue a blend of projects that includes both 'quick wins' and those where you take a longer-term view," he says.

Financial justification

Lawrence thinks in the current climate many CIOs will be particularly keen to find those quick wins. "We've got to be realistic. Businesses will rarely invest in products, technologies or initiatives that bear a heavy cost, regardless of the impact on society. 451 sees four reasons for buying: financial benefit, compliance, corporate social responsibility and operational benefits. But clearly financial benefits are at the top of the list at the moment. And many technologies, such as power management, can be justified on that alone," he says.

Of course, if CIOs are to implement technologies that help the wider business to go green rather than just those that make IT systems more energy-efficient, there has to be a serious top-down commitment from management to ending the disconnection between what your organisation says it believes, and the actions it takes to back this up. If you're committed to green (or other socially responsible) practices, an important step is understanding the impact your business policies and systems are having.

Tom Raftery, who leads the GreenMonk sustainability practice at industry analyst RedMonk, says IT can help here, too. "It's worth looking at sustainability performance management applications, which are now coming out from suppliers like SAP and SAS. They assess your performance across a whole range of issues - not just carbon accounting, but everything from HR and labour relations through to ethical sourcing. They can be based around number of sustainability standards and typically ship with 300 to 400 key performance indicators, which you can edit or add to," he says.

But for those organisations where management is less committed to sustainability, or where cost pressures means there is currently little room for manoeuvre, CIOs wanting to push the green agenda generally have to justify projects on financial benefits alone. Fortunately, this is likely to get easier. The market itself is beginning to quantify the financial impact of anti-environmental practices, seen for example in rising energy costs and the fact that insurers are starting to factor the risks of climate change into their premiums.

But the biggest impact is likely to come from any future government incentives that make polluters pay more or give tax breaks for green investments. Indeed, many CIOs would welcome such moves.

As Cohen says, "While I'm not a supporter of heavy-handed legislation, which I believe drives 'tick-box' behaviour rather than the right outcomes, I absolutely support targeted incentives. In most cases, investing in green is a good thing to do commercially, so you'd do it anyway. But at times when budgets are stretched, encouraging organisations to do the right thing through the tax system is what will give this real traction."


Energy stars: who's good at greening IT? 

While green inertia is still a problem for many, where there is a top-down commitment to sustainability combined with passionate management and staff, notable progress is being made. The public sector is strong in this area, thanks to the overarching government commitment to sustainable practices. The IT industry also has some bright stars, as does the retail sector.

Les Taylor, director of business development and IS at the pan-government Disposal Services Authority, puts sustainability at the heart of everything he does. The organisation won an eGovernment National Award in 2008 for its eDisposals website. This has in effect created an eBay-type market for the recycling and green disposal of hazardous materials such as clinical waste and decommissioned military hardware. Taylor believes more businesses need to think about creative green solutions.

"There has been too much emphasis on energy efficiency in IT and not enough thinking about ways to achieve it across the business and beyond. For example, I think the idea of encouraging shorter commuting distances by looking at using virtual offices, local to staff but shared by various employers, is one everyone should be exploring."

Fujitsu is another company with an overarching commitment to reducing CO2 emissions. "Environmental considerations are one of our top three priorities and this is actively endorsed and supported by our president in Tokyo," says Fujitsu UK's CIO, David Smith. He adds that assessing and communicating the indirect green benefits of what you are doing is also important if you want to promote a green culture.

"We don't have a formal process for this, but we regularly survey employees on our environmental activities to assess their value. We also highlight our green activities across the organisation regularly because we realise our environmental credentials are important to many employees," he says.

Other green stars include Marks & Spencer, whose widely publicised green Plan A includes a commitment to cut company energy usage by about 25%. This has spurred the retailer's IT department to push through its virtualisation plans, as well as piloting other green initiatives such as sensor systems that turn out lights in aisles when there are no shoppers present.

Andy Lawrence, research director for eco-efficient IT at analyst 451 Group, highlights other green examplars, including Tesco, BT and John Lewis. "These organisations have started to make the connection between an overall sustainability statement and how they organise and measure their energy consumption. It's not rocket science; it means looking in detail at your datacentres and applying as many energy-saving initiatives as you can."


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