New study shows mid-sized companies invest in IT initiatives that save money and reduce environmental effects.

A new Info-Tech Research Group study, sponsored by IBM, reports that mid-size companies seek cost-savings in their IT infrastructures, with more than 80 percent of companies already having adopted or planning to adopt what IBM categorizes as "green IT" initiatives in the near future.  According to IBM, "Green IT is comprised of initiatives and strategies that reduce the environmental footprint of technology." According to Rich Lechner, IBM's VP of energy and the environment, IT accounts for 2.5 percent of energy use and carbon dioxide emissions worldwide and is growing 12 times faster than overall energy use. So it's natural for companies to look at how they can reduce costs through less energy use.

Logically, one major focus for cost reduction is server rooms. Efforts include consolidation, upgrades/rebuilds of server rooms, and virtualization of server infrastructures. While such initiatives generally provide long-term improvements in environmental effects of computers, lower costs drive these decisions in most cases. The big attraction for making server room changes is reduced electricity consumption. However, only half the companies surveyed by Info-Tech have ways to measure IT energy consumption. Decreasing the use of consumables also influences the decisions to modify server infrastructures, according to the study. Other ways companies save money on IT while reducing environmental effects include reducing travel and recycling IT equipment.

According to IDC, there was a 13 percent increase in energy requirements in data centers between 2006 and 2007. IDC also says the cost to power and cool servers has doubled since 2000, and IDC predicts those annual costs to approach $40 billion by 2012. This is against a backdrop of reduced budgets. For example, an AFCOM member survey in November 2008 showed that 15.2 percent of respondents were being asked to cut their data center budgets. In the same survey, 86.2 percent said they expected to increase their use of virtualization in hopes of reducing what they spend on new servers. (AFCOM is an association for data center professionals.)

So it follows that server virtualization remains a favored method for saving costs in a difficult economic environment. In the Info-Tech study, the respondents showed an average implementation rate of 48 percent. Furthermore, more than 70 percent of virtualization projects successfully realize important benefits, including decreased future investment needed for storage, increased storage capacity, and decreased space needs.

Also, according to the study, over two-thirds of server room projects successfully realize important benefits. Organizations in India and Brazil are particularly willing to modify their server rooms to be more energy-efficient, even building new energy-efficient server rooms, perhaps because of less existing infrastructure and more positive economic environments than elsewhere. Reflecting the economic differences in India, according to a report from AMI-Partners, Indian SMBs forecast 8.5 percent growth in IT spending over last year, almost twice the average 4.5 percent growth for the Asia-Pacific region.

Hardware recycling is yet another area with potential for improvement in mid-size companies, with 56 percent recognizing that need in the Info-Tech study, saying they revamped or will revamp such programs. Another 23 percent said they will address the issue during the next 12 months.

In what many might consider to be a surprise finding, in 65 percent of the implementations surveyed, projects met or exceeded initial environmental goals. In a world in which many IT initiatives fail or deliver less than promised, this finding deserves attention. It is unclear whether companies typically underestimate environmental improvements or whether something else is going on here. Perhaps a lack of general knowledge of environmental factors related to IT going into such projects means unexpected benefits when complete.

Another IT casualty of the weak economy is travel. However, the reduction varies by geography, with  50-60 percent of North American, British, Indian, and Brazilian businesses using telecommuting and virtual conferencing capabilities, while Germany, France, and the Nordic countries are slower to adopt those approaches.

Despite the potential for savings and benefits to the environment tied to greener IT practices, much of the infrastructure in question remains difficult to change in the typical mid-size business. Besides the replacement costs, there are business disruption concerns as well as staffing challenges associated with such changes. Furthermore, benefits are often longer-term in nature, making it difficult for cash-strapped firms to jump at the chance to go green right now or even this year.  Thus, as the study finds, "the most commonly adopted initiatives involve major cost savings up-front, with fewer major investments required." Amongst respondents, storage consolidation, remote conferencing, and telecommuting are the most popular initiatives, and when implemented correctly, they all have potential for immediate cost reduction.

Despite the growing hype around green IT, some are skeptical. The advisory firm Forrester Research, for example, suggests that before spending anything, firms set expectations by measuring their "green IT baseline," which is an annual estimate of the energy consumption, carbon dioxide (CO2) emissions, and financial costs of operating IT. According to Forrester, not only will this data offer a practical green IT starting point by exposing the most environmentally taxing assets, but without it organizations cannot accurately quantify and report the benefits of their greening efforts to senior management. Forrester offers an "Online Green IT Baseline Calculator" in order to help businesses identify savings opportunities.

Another advisory firm, Ovum, flatly states that companies will go green only if it saves them money. "Going green is good, but it costs money to go green--like paying extra for organic produce or free-range eggs. CIOs certainly like to talk green these days in front of a camera. But walking the talk is a lot different. Although many enterprise IT departments these days like to think they are more eco-friendly, they are primarily going down that path because of the cost savings" writes Madan Sheina, principal analyst at Ovum.

According to published reports, McKinsey & Co. recommends moving accountability for IT facilities operations to the CIO. It also promotes the idea of appointing an energy "czar" to help focus on the true costs of the data center. McKinsey offers three primary recommendations to improve corporate energy management:

1.Improve and integrate asset management capabilities in the data center.

2.Include the true total cost of ownership in business-case justifications for adding facilities or applications to the data center.

3.Formally move accountability for data center facilities and operations expenses to the CIO. Appoint internal energy czars with mandates to double IT energy efficiency by 2012.

SMBs looking to control costs should consider initiatives promising cost savings as well as reduction in environmental effects. However, there are costs involved in saving energy and each IT department needs to calculate its potential costs and savings according to its specific environment and requirements. While organizations might want to be environmentally friendly, it is business factors that motivate decisions, and the study reflects that, finding a 60:40 split favoring business motivators over environmental benefits. While virtualization and other server initiatives can provide improvements, enterprises should view vendor claims with a healthy skepticism and determine their path based on solid analysis of their particular situations. Should they decide to proceed, IBM and others offer companies assistance in developing green IT initiatives.

Ron Exler is a senior product manager at Arbitron, the media ratings company. Previously, he was an independent analyst and consultant. He was formerly Vice President and Research Fellow for Robert Frances Group (RFG), a provider of advisory services for information technology (IT) executives and vendors. Mr. Exler has worked with executives from some of the world's largest enterprises, so he understands how business executives make decisions. He also writes a blog (http://www.thegeofactor.com/) and was named one of the top English-language analyst bloggers by Technobabble 2.0. Mr. Exler has had more than 125 articles and technical papers published.

 

Prior to RFG, Mr. Exler worked for several enterprise software companies, including Landmark Systems (now ASG) and Intersolv (now Serena Software). He held positions in marketing, product management, research, sales support, software development, and training. He has an M.S. from the University of Wisconsin, Madison and also earned a B.S. from Oregon State University.

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