Under pressure: 10 sources pushing CIOs to go green
- 08 July, 2008 09:48
Until recently, many CIOs didn't know how much electricity their IT equipment used, and they didn't care.
The electric bill was someone else's responsibility -- usually the head of facilities -- so they didn't track it, and they weren't motivated to reduce it. They didn't factor energy efficiency into their IT purchasing decisions, either.
Now, with a stagnating US economy, CIOs need to squeeze every penny out of their IT operations, and that means choosing the most efficient servers and desktops, as well as data center power supplies and air conditioning systems.
CIOs are being hit from all sides to become environmentally savvy, not just because it sounds good but because it cuts costs, drives profitability and improves competitiveness.
We've put together a list of the Top 10 people who are pressuring CIOs to green up their IT practices.
1. CFOsPressure gauge reading: 10
The No. 1 reason CIOs are greening up their IT operations is to save money.
By reducing the amount of electricity or chilled water used in their data center operations, CIOs can contribute money straight to the company's bottom line, and that's what the CFO wants to see.
"The whole notion of being green is associated with making some sort of a sacrifice ...one less shower, driving a smaller car, changing out light bulbs," says Albert Esser, vice president of power and infrastructure solutions at Dell. "For green IT, that is just not true. Anything you can do to be green in IT will help your bottom line, will help your operations and will help your service-level agreements...With green IT, there's no sacrifice involved."
Esser says CIOs can't afford not to be green. Dell, for example, has saved US$1.8 million and reduced its carbon emissions by 11,000 tons in one year by requiring 50,000 employees to put their desktop computers into sleep mode each night.
"Companies that are embracing green IT practices today will have stronger balance sheets in five to 10 years than ones that don't," Esser adds. Green IT "contributes to the bottom line and allows you as a company to be a more responsible citizen in the corporate world."
Cimarex Energy, a Denver oil and gas exploration company, recently bought two American Power Conversion (APC) InRow cooling solutions because the units allow Cimarex to pack more IT equipment into the floor space of a data center located on the 11th floor of a high-rise building in Oklahoma. The APC units use 50 per cent less chilled water and produce more cool air in a data center expansion than Leibert units in the original data center space.
"In our old room, we have 600 square feet and we can rack 35 servers because of the Leibert units," says Rodney McPhearson, project manager for Cimarex' enterprise infrastructure team. "Our new space is about 300 square feet, and with the APC units we can populate 112 servers."
McPhearson says his primary driver for selecting the APC units was to save floor space, but he's benefiting from savings in chilled water, too. Electricity costs for the APC and Leibert systems are about the same.
"Our new room runs about $1,000 a month for chilled water. Our old room runs around $2,300 a month for chilled water," McPhearson says.
McPherson says Cimarex is taking other steps to improve the efficiency of its data center operations, including consolidating and virtualizing servers.
"I get a lot of budget pressure," McPhearson says. "Efficiency is very important to me because I have to make a good business case. I'm focused on my ongoing operating costs."
Jim Smith, vice president of engineering with data center operator Digital Realty Trust, says reducing capital expenses is as important as reducing operating expenses when it comes to green IT.
"If you can design more efficient data centers, you can reduce the operating budget and you can reduce the capital costs," Smith says. "We're huge proponents of that...The big money is going to be made in reducing capital expenses."
2. Electric utilitiesPressure gauge reading: 10
IT operations come to a screeching halt without electricity; and in some parts of the world, the availability of reliable power is the main driver for improving the energy efficiency of corporate IT operations.
In London, Mumbai, Tokyo and New York City, data center operators can't get more power to their sites. If they want to add new servers, they need to retire older ones. They can't plan on data center expansion; instead, they need to eke the most amount of processing power out of the data centers they have.
"Data centers are reaching their capacity in electricity," says Simon Mingay, research vice president at Gartner. "As organizations go to more dense, power-consuming technologies like blade servers, data centers are reaching their limits...Squeezing more watts out of the data center is absolutely what CIOs care about."
The lack of available power from utilities is why corporate IT buyers are starting to look at new metrics such as performance per watt of servers and desktops. It's also why data center operators are consolidating facilities and driving up their watts per square foot.
"One in four data centers around the globe is going to have an outage due to power over a five-year horizon," predicts Brian Brouillette, vice president of data center services at HP. "As companies are in growth mode and they are figuring out how to consolidate data centers, the issue that everybody is talking about now is cost. But the availability of power is a close second."
Over the last 36 months, HP has consolidated 85 data centers down to six, two each in Austin, Texas, Houston and Atlanta. Key to HP's strategy was making sure the remaining six data centers are as energy efficient as possible.
"If IT is fundamental to the way you run the business and you want to grow the business, you need more capacity online faster," Brouillette says. "If the CIO can't do more with its data centers, he can't meet the CEO's needs."
Companies that can't squeeze enough power out of their existing data centers are stuck building new ones at a significant capital investment or outsourcing to providers like Savvis and RackSpace.
"The number of new data center builds because there's no power at the existing data center is phenomenal," says Shally Bansal Stanley, managing director of Acumen Solutions, an IT consulting firm. "You can't get power generators. They're on back order. ... We're consuming the data center utility faster than it can be created."
Some electric utilities -- particularly California's PG&E -- offer rebates to corporate customers if they improve energy efficiency. Around 20 electric utilities offer such rebates, according to Climate Savers, an IT industry group that promotes energy savings that can be gained from purchasing the most efficient desktop computers and turning them off at night.
"In order to get some of the rebates, you have to give back the excess power," Stanley says. "You have to show that you reduced it and not redeployed it. Most of our customers are redeploying it. They're optimizing it so they can use it."
The scarcity of electric power in some locations is driving up the cost, so the two go hand-in-hand in driving CIOs to go green.
"We have a customer -- a financial services institution -- that was paying $6 million a year to the electric company for a data center. The electric utility told him that over the next 12 months, that cost was going to be $2.1 million higher," Brouillette says. "Nobody is giving him that extra money. This becomes a really big problem, really fast."
3. CEOsPressure gauge reading: 8
CEOs are under increasing pressure to use natural resources -- energy, water, land -- in a more responsible, sustainable way. Urged on by outside directors and shareholders, CEOs are expected to understand their carbon footprint and start taking steps to reduce it.
For CIOs, C-suite pressure means not only reducing the amount of electricity they consume but switching their IT operations to locations with greener sources of power. That's why more data centers are being built using hydro in the Pacific Northwest, nuclear in Chicago and geothermal in Iceland.
CEOs "have to have a sustainability strategy that meets or exceeds the expectations of customers and shareholders," says John Skinner, marketing director for eco-technology at Intel. "One of the first people the CEO turns to is the CIO, because the CEO understands that technology is an enabler of efficiency...CEOs are turning to CIOs as allies to help identify how technology -- not just computers, but air conditioning -- can improve the efficiency of the entire corporation."
European CIOs are ahead when it comes to measuring their carbon footprint and understanding the trade-offs in how their IT equipment purchases and management decisions affect this metric.
"The cost in energy around the world varies, but the trend in unit cost per kilowatt hour is going up, and it's going up way ahead of inflation. That's pretty universal, and it's increasingly a point of contention," Gartner's Mingay says. "In the US, [cost of energy] is the most important driver. It's maybe 80/20, cost savings or cost avoidance vs. carbon footprint. In Europe, it's 60 per cent about cost savings and 40 per cent about carbon reduction."
How much pressure CIOs are under to reduce their carbon footprint depends on their industry. In a manufacturing business, where IT might count for 1 per cent of total carbon emissions, there's not as much pressure as there is on a Web portal where IT is the business.
"For knowledge industries, like financial services, banking, pharmaceuticals and the public sector, IT is going to be a much bigger portion of carbon footprint and more of a focus of attention," Mingay says. "We think the need for action on climate change will increase significantly in the US over the next two to three years. This will be a pressure on CIOs to be contributing toward carbon reduction."
Acumen's Stanley says the pressure on CIOs to reduce their carbon footprint because of a CEO-initiated green initiative is less than the pressure to maximize their data center footprint and keep electricity costs down.
"The biggest pressure on IT executives is data center footprint. That's No. 1," Stanley says. "Cost savings and energy efficiency is No. 2, particularly from a hardware perspective. Being green is a distant third as far as motivation is concerned."
For now, "the green that they are focused on the IT side of the house is the color of money," Stanley adds.
4. LawmakersPressure gauge reading: 5
In Europe, with its cap-and-trade program for greenhouse gases, the pressure on CIOs to measure and reduce their carbon footprint is real. But in the United States, the regulatory pressure on CIOs is considerably less because comparable legislation doesn't exist here.
"Based on potential changes in Congress, there may be some form of regulation," says Erik Teetzel, renewable energy manager at Google. "The fact that this administration is ending may encourage people to start taking inventory of their emissions" before regulation passes.
Teetzel says most CIOs don't feel pressure to adopt green IT practices created by lawmakers yet. But forward-looking companies such as Google are identifying areas where they can cut back on their carbon footprint whether or not legislation is passed.
"People will get ready for action" related to regulatory compliance, Teetzel adds.
"Some organizations are looking at this in terms of acting now so that if and when there should be any regulation, they are in a better position to respond," Gartner's Mingay says. "Since there's no mandate, this is more of a risk avoidance than an actual pressure."
CIOs in some leading-edge industries, such as Internet services feel the need to self-regulate before any carbon footprint-related legislation passes.
"In the UK, I will have to be reporting my carbon footprint based on regulations in the UK and EU," Digital Realty's Smith says. "Those same processes and reporting structures will impact my US operations."
Some state and local environmental regulations already affect CIOs. In California, Title 24 dictates energy-efficiency standards for buildings including data centers. King County, Washington, requires outdoor-air cooling for data centers.
"Title 24 impacts our California designs in a meaningful way," Smith says. "You'll find little [regulations] like this regionally. This type of pressure is growing."
As far as federal legislation is concerned, most observers expect it to be in the form of a cap-and-trade program or a tax that acts as a financial incentive to companies to reduce their carbon footprint.
"The big question is, how much will carbon be?" Gartner's Mingay asks. "If it's $120 a ton, then everybody will care a lot. ...The balance of probability is that companies will be paying for carbon in some shape or size. The $60 billion question is in what format."
"Legislative pressure is inevitable but probably not immediate," Skinner says. "A lot of companies are doing the baselining and benchmarking to see how they stack up, not only for carbon legislation but also for increased competitiveness."
Industry observers expect there will be an increase in legislative pressure on CIOs to go green. For example, in June the Lieberman-Warner Climate Act, which would have enacted a carbon tax, was voted down by the Senate. Many more similar bills are expected.
"There's all sorts of rumbling in the industry about a carbon tax. There's rumbling about the cap-and-trade initiatives and are we going to see that happen as an industry. Even if we don't think it's going to happen, it behooves us as an industry to start to measure carbon and get a good benchmark to use," says John Tuccillo, vice president of industry alliances for APC.
5. IT vendorsPressure gauge reading: 5
Green IT is one of those movements where vendors have been ahead of most CIOs and IT buyers. That means IT buyers are seeing a lot of hype from hardware and software manufacturers about why they need to go green.
Vendors are "painting everything green," Mingay says. "Some of it is credible. In some cases it's just plain green washing."
"There is an arms race among the server vendors to get the most efficient server that will operate in the widest range of temperature and humidity ranges, the one that provides the biggest bang for the buck," Smith says.
Green IT initiatives such as Climate Savers and The Green Grid are being driven by manufacturers including Intel, Google, Dell, IBM, HP, Microsoft and others.
APC's Tuccillo says one of the key areas where IT vendors are applying pressure is in the development of metrics that CIOs can use to measure IT and data center energy efficiency.
"The near-term fixes are going to be in the areas of increasing the energy efficiency of existing data centers. The first step is to measure what we're doing," Tuccillo says. "It's through groups like The Green Grid and others that we're able to gather that data and compare it against peers."
IT industry groups also are providing operational best practices for IT departments.
"The IT vendor community recognized this was a challenge that could not be met by any one entity," Tuccillo says. "We recognized that this tidal wave was coming, and we decided we'd better work together as an industry to start solving the problem. There's still an opportunity for differentiation for IT vendors, but there's also room for commonality in terms of standard metrics and a common lexicon."
Industry officials involved with groups such as Climate Savers and The Green Grid say they are trying to involve more IT buyers in their activities.
"This can't just be the tech industry pushing," Intel's Skinner says. "We're also working on the demand side of this...A key pillar of what we're trying to do is raise awareness of computer buyers and work the demand side of it so they will make more purchases that are energy efficient."
Still, IT industry observers say most CIOs are not yet choosing servers, desktops or other IT gear based on how environmentally friendly it is.
"I don't think CIOs are buying stuff because it's green. That's not their primary focus. It's an afterthought," Acumen's Stanley says. "The decision criteria from a computing perspective is: Does it get the job done and is it cost-effective?"
6. The mediaPressure gauge reading: 5
Going hand-in-hand with the pressure that CIOs feel from lawmakers and the IT industry is pressure from the media, which informs CIOs about what's going on in these areas.
The mainstream media, trade journals and bloggers have all focused on the connection between data centers, computing and energy use.
"The media as well as bloggers play a critical role in building awareness and communication," Google's Teetzel says. "Ten years ago, people wouldn't be able to quote their parts per million in C02. Today people who are not environmental scientists can. The media has been a big impetus of the climate change debate."
The media not only raises the climate change issue, but fosters debate and encourages investment in environmental technologies.
"Awareness is the first step," Teetzel says. "Once you start getting people to look at this issue, a lot of the steps they need to take are fairly straightforward."
"The media is way ahead of where most IT organizations are at," Mingay says. "The media keeps referring to possible regulation and legislation. One of the most common questions we get from CIOs is about regulation."
The media also offers CIOs an opportunity to tell their stories about the improvements they make in energy efficiency.
"Money is the primary driver for a lot of this [green IT movement], but there are also some very good benefits from PR and good press," Teetzel says. "A lot of companies try to tout their environmental and sustainable practices, and there's obviously a lot of benefit there for their brands."
In the future, CIOs may be under more pressure from negative press if they don't make environmentally sound choices.
CIOs "have to be cautious not to make an anti-green decision," Stanley says. "If they make a decision that's clearly not green, I think they'll come under a tremendous amount of scrutiny...It's one thing to have a legacy that's not green, and it's another thing to make a new business decision that's not aware."
7. CompetitorsPressure gauge reading: 5
Companies always feel pressure about what their direct competitors are doing, and green IT is no exception.
"A lot of companies are reactionary to what their competitors do, so that's a big pressure," Teetzel says. "Microsoft, Google and Yahoo -- all three have declared plans for carbon neutrality...Now we're jockeying for position as to who is going to be the greenest company out there."
Teetzel says he sees the same trend among retailers, with Wal-Mart leading the way. The same holds true in the airline and auto industries. "There's been a radical transition in the auto industry. A lot of companies were producing hybrids grudgingly, but the competitive pressure is a big deal," Teetzel adds.
Teetzel says that competitive pressure regarding energy efficiency and carbon-footprint reduction will rise because the most aggressive companies in these areas will be the most profitable.
"This is not just about a reduction of C02," Teetzel says. "It's about freeing up capital that goes into energy and is wasted [and putting it] into other areas of the business. It's about making businesses more efficient not just from an energy standpoint but in other areas. It's very good for the economy...In the next five to 10 years, you're going to see businesses that are streamlined and more efficient."
Already, IT vendors are reporting competitiveness among CIOs regarding the energy efficiency of the new data centers they are building.
"Those folks who are designing data centers say they want to design the most energy efficient data center in their space," APC's Tuccillo says. "That's pretty much the mind-set."
Companies are also seeing pressure from their customers or potential customers to improve their energy efficiency.
"We're beginning to see a trend where the CEOs of some companies are being asked by some of their customers, like Wal-Mart and others, to adhere to environmental codes of conduct," Intel's Skinner says. "We're just starting to see companies audit carbon footprint, measure it and take steps to reduce it. Then CEOs turn to CIOs and ask the IT department to be an enabler to carbon-footprint reduction. Teleconferencing, telepresence and enabling employees to telecommute help reduce carbon."
8. Generation YPressure gauge reading: 3
Teens and 20-somethings are fired up about environmentalism, and that is increasingly putting pressure on companies to green their operations.
Many CIOs are parents, too, and their kids are learning about global climate change at school. Kids are pushing recycling, switching out light bulbs, and unplugging computers and other electronic devices at night.
CIOs not only feel the pressure from their own kids but from the college graduates they are trying to recruit and the Millennials on their staff.
"College grads who can be selective are selecting their employers by the reputation of the company and how committed it is to environmental practices," Skinner says. "Demographics are on the side of this issue, and IT managers who are on the front lines of hiring out of college will be seeing that."
This is a pressure that CIOs can expect to rise over the next few years.
"When I do recruiting at local universities, I'm usually the most popular guy," Teetzel says. "There's a huge amount of interest in solving the [climate-change] problem. There's a kind of buzz in the next generation."
9. EmployeesPressure gauge reading: 2
C-suite executives are just beginning to see bottom-up efforts from employees to make their companies more environmentally friendly.
Whether they are launching recycling programs or turning off lights at night, employees can exert peer pressure on each other to change wasteful behavior at work.
"What we're observing is a lot of grassroots efforts by employees to create green teams or green IT communities and adopt green practices," Skinner says. "Increasingly, eco-minded employees are taking on initiatives and putting pressure up the leadership chain...Increasingly, the C-suite is being pressured from below."
Teetzel says this phenomenon has occurred at Google, where employees have organized into green teams.
There's more to employee efforts than "just putting stickers on desktop computers left on all night that say, 'Thanks for wasting electricity,'" Teetzel says. "Employees have a lot of debate and discussion...related to climate change."
One way that employees are driving action is through carbon-reduction competitions such as Carbon Rally.
Employees have "the potential to have the largest impact," Smith says. "Like all corporate processes, it's when you push them as far down into the field as possible that you get all these incredible results."
Smith says Digital Realty's employees are driving the company's efforts to have its data center buildings certified as green through the Leadership in Energy and Environmental Design (LEED) process.
"Once I explained LEED to our operations and construction teams, they took it from there. They are finding LEED points from other parts of the business," Smith says. "It's the same thing with consumption, performance and metering. We're trying to push that as far out into the field as possible."
10. The communityPressure gauge reading: 2
Community leaders are starting to apply pressure to local corporations to improve their sustainability. Although that's not a big pressure on CIOs today, these efforts are likely to increase.
"Cities, churches, nonprofits -- I do think that is a growing source of pressure with respect to people thinking a bit more about this topic," Teetzel says.
For example, the Climate Savers computing initiative has signed up the US states of Oregon, Colorado and Minnesota for energy efficiency collaborations. Under the terms of these agreements, the states will improve the energy efficiency of their own IT operations but they also will promote such concepts as buying Energy Star equipment and turning it off at night to the companies doing business in their states.
In fact, the US National Governors' Association partnered with Climate Savers last November to encourage the deployment of energy efficient computers and IT practices in US state government offices.