Companies Find Ways toBy Edward Cone | Posted 07-11-2006
The Greening of the CIO
Andrea Moffat interacts with lots of people in her job as director of corporate outreach for Ceres, a Boston-based network of investment funds and public-interest groups that promotes environmentally conscious policies in the business world. It might be the chief executive who discusses "green" issues with Moffat at one company, the head of investor relations at another, and the vice president of corporate responsibility at a third.
One senior position, though, remains something of a mystery to her. "I don't think I've ever sat down with a CIO," she says. "Do most large companies have one?"
Forgive Moffat her ignorance of the corporate chief information officer. At a time when environmental concerns loom large in popular culture, politics and business, many CIOs have yet to make being green a strategic priority. It's not that these issues aren't relevant to information technology executives; in fact, trends such as power consumption and high energy prices, as well as stricter regulations on device disposal and recycling, have real implications for both IT performance and bottom-line results. But so far, those problems have largely been left to the folks toiling further down the org chart, or in areas such as operations and compliance.
"A lot of people are living this stuff, but at lower levels," says Dave Douglas, the newly appointed vice president of "Eco Responsibility" at Santa Clara, Calif.-based Sun Microsystems Inc. Sun, like many companies that sell technology to corporations, is very focused on green issues. So is Hewlett-Packard Co., which Ceres recently cited for its diligence on environmental issues. Says Moffat, "The vendors definitely get it."
But CIOs? Not so much.
Even companies that actively tout their green initiatives don't link those efforts directly to their IT strategy. Consider Wal-Mart Stores Inc., which is on a major eco-marketing push that includes naming a vice president of corporate strategy and sustainability in 2005, changing the packaging of its products, and announcing that it will start selling organic produce. When asked about CIO-level initiatives on environmental issues, however, Wal-Mart said it wasn't there yet.
Ditto Recreational Equipment Inc. (REI), the self-consciously crunchy outdoor-gear chain based in Kent, Wash. Feel-good green message? Check. Press release on the company's commitment to purchase 20 percent of its electricity needs from producers using alternative generation such as solar and hydro power? Check. Environmental programs led by IT? An REI spokeswoman said the $1 billion cooperative venture couldn't come up with much to add to this article.
This kind of disconnect is not going to be sustainable, to borrow a phrase from the environmental movement. Green issues have an impact on everything from product marketing to employee morale to profit margins, and many of them are closely interwoven with the everyday work of IT organizations.
"We are right on the cusp of change," says Adam Braunstein, a senior research analyst with the Robert Frances Group, a Westport, Conn.-based IT consulting firm. "If you look at things that are already concerns today, like waste disposal or power consumptionheating and cooling issuesand you consider the impact on the ways companies manage their technology, well, it's going to be a very different world for CIOs in the near future."
Think of environmental consciousness as the next level of alignment, an enterprise-wide phenomenon that IT must support and sometimes lead. Eco-friendly IT may not be a strategic priority at your company, but it probably will be soon. The financial impact of energy costs, the legal liability surrounding device disposal, and the possible marketing benefits of being seen as a socially-conscious company are all drivers of this new reality. Plus, you know, saving the planet. The era of the Green CIO is almost upon us.
Energy Crisis in the
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Energy Crisis in the Data Center
Energy is expensive, in both dollars and environmental impact. And as energy costs have risen in recent yearscrude oil prices have more than doubled since 2004, and electricity prices increased almost 11 percent from early 2005 to early 2006IT operations have been demanding more and more of it. Web servers and the facilities that house them are power hogs, in part because the machines run hot and the buildings need extensive air-conditioning. Yet a CIO Insight survey conducted in May showed that only 28 percent of companies measure the energy consumption of their servers at least once a year.
That's the kind of costly oversight that businesses can't afford, and a prime example of the Green CIO's priorities. Using less power may help slow global warming, bring peace to the planet and make everyone involved feel good about themselvesbut it is also, without doubt, good for profit margins.
Nowhere is this power problem more relevant than at big data centers. You could power a city of 40,000 people with the amount of electricity needed to run a single large data center, and, according to Braunstein, up to 40 percent of the operating cost of the building that houses the data center could be power and cooling-related expenses. "The costs are outlandish, inconceivable, out of control," he says. "Blade servers are the devil. They are great from a performance standpoint, but they produce more heat and suck up more power than their predecessors."
All those hot servers require extensive cooling systems, which add to the power bill and the environmental impact. Seventy percent of the total lifetime cost of a server goes to operations, including power and cooling costs, and just 30 percent to the expense of the actual hardware, says IDC analyst John Humphreys. One way of dealing with the problem of energy costs is to move your data centers close to relatively inexpensive sources of power and cut bulk-rate deals with the electric companies. That approach, taken by Web giants Yahoo! Inc. and Microsoft Corp., makes some sense when small savings in electric rates can reduce costs by millions of dollars a year. But in the long run, it's not a very green solution to simply chase lower prices without addressing the fundamentals of power-consumption levels the way more efficient machines and data centers can do.
This need for more efficient devices and facilities is a big focus of the technology industry. A group called The Green Grid, organized by vendors including Dell Inc., IBM Corp. and H-P, promotes energy efficiency through conferences and publications. And energy efficiency is becoming as vital a measure of performance as speed and capacity have been in the past. "One big reason that AMD is eating Intel's lunch is power consumption," says Braunstein. "Don't tell me how fast it is, tell me the performance per watt of power. Intel is coming out with new stuff of its own, but they have lost market share for that reason." In April, Advanced Micro Devices Inc. announced that its Opteron chips hold 22 percent of the x86 server processor market, up 16 percent in the fourth quarter of 2005 and up over 250 percent compared to the first quarter of 2005. AMD now has designs on the desktop as well.
Yet Brent Kerby, the product manager at AMD for the Opteron line, says he discusses power issues much more frequently with data-center operations people than with information technology leaders. "The IT guys, aren't necessarily too concerned about energy bills. With them it's more about doing the job and fitting new equipment in with stuff they've already got," he says. "The operations guys are the ones saying, 'We have this huge power bill; what can we do?' Only recently are we seeing the operations guys working with IT, because people are seeing energy costs going way up. It's in your face."
Companies Find Ways to
Companies Find Ways to Conserve
Another way of managing server resources involves software. Just as gas-guzzling SUVs ferry lone drivers around town, many corporate computers operate well below capacity. The average server running the most common processors uses only about 10 percent of its capability, says IDC's Humphreys, the firm's program director of virtualization software. "They are being powered on and sucking energy."
Using virtualization programs that partition servers into multiple "virtual" machines can vastly increase the efficiency of operations by allowing one server to do the work of many machines. So far, a relatively small number of companies use virtualization software, but those that do tend to use it heavily. Humphreys says that up to 50 percent of the server environment at some companies will soon be virtualized, and that vendors are marketing the energy benefits of virtualization. "The energy message behind those numbers has become more prevalent in the past year, and especially in the past six months," says Humphreys. "Companies are waking up to the costs of data centers, and they would much rather squeeze a couple more years out of what they have now by making virtualization pay off. The IT folks are so concerned about keeping the level of service up that they have been behind the curve on the environmental aspect, but I think it is becoming more explicit."
As prices rise, companies are considering other ways to cut energy use. At Sun, says Douglas, energy conservation is "an issue of operations that is fueled by IT." Nearly half of Sun employees work outside the company on a regular basis, which cuts down on fuel use and, presumably, helps mitigate global warming via reduced automobile emissions. "The ability to make people effective wherever they are is a job for IT," says Douglas. "Technology has to be underneath a lot of that."
Corporate users are also saving power by rolling out LcD monitors instead of the familiar CRT technology (giving a whole new meaning to the old "green screen" moniker). LcD monitors use about 50 percent less power than their older counterparts, says NEC. Making the switch may not make much difference in a small shop (though if you want to save the planet, every little bit helps). But for a company running thousands or tens of thousands of machines, the numbers add up. According to NEC, operating 100 flat-screen monitors for four years could be $7,500 cheaper than running 100 CRTs.
Still, for all the progress U.S. companies are making in environmental areas, Humphreys says they lag their European counterparts. "I have not seen U.S. companies proclaim that they are pursuing green IT, but I do think it is coming," he says. "Meanwhile, the energy awareness is just good business practice."
Safe Disposal Saves
Safe Disposal Saves Money
Negotiating a bargain price on a new desktop computer doesn't do you much good if you end up paying a $25,000 fine for improperly disposing of the thing, or if you lose critical data after someone scavenges the hard-drive from a recycled machine in the city dump. Careful disposal and recycling of computers and components can help protect the environment from nasty stuff like lead, mercury and cadmium. And it definitely will protect a company from some serious financial and information-security liabilities.
Regulators across the U.S. are making end-of-device-life planning a serious issue for corporate IT managers. In Califonia, individuals can face penalties of up to $25,000 per violation if the units are not disposed of in accordance with environmental standards, and the state has extended its current rules on collection and disposal of monitors to notebook and laptop computers. Other states are following California's lead, although the patchwork of state laws makes it hard to know what the standards are at any given moment.
"Nobody knows what new laws will be passed next, or where," says Richard Atanus, vice president of product development and customer service for monitor-maker NEC Display Solutions. But the trend is clear: "We expect the costs of recycling to increase 15 percent to 25 percent for displays, computers and notebooks in the next few years."
And yet many CIOs are MIA on disposal issues. "It's kind of sad, but a lot of large corporations have no awareness," says Atanus. "We are the ones educating our customers." NEC markets its monitors under the logo of the Environmental Protection Agency's Energy Star program, which denotes energy efficiency, and the company has been working with the federal government and other companies to create a new voluntary standard called EPEAT that certifies the amount of hazardous materials and recycled materials in a product, along with its energy usage and end-of-life program. But the education process can be difficult.
"IT groups are looking to make this year's budget, and end-of-life issues become the responsibility of different divisions, even individuals," Atanus says. "We put environmental and disposal issues in the context of total cost of ownership, including disposing of the product in three to five years, and that helps get people to start paying attention." An NEC spokesman says progress is being made in some quarters: Environmental concerns have jumped from the bottom to the middle of a 12-item list of topics and issues that play a role in purchasing decisions at large companies.
Many companies, meanwhile, think they are doing just fine on disposal issues. More than 95 percent of companies responding to a recent CIO Insight survey said they recycled old PCs, with the same percentage reporting that they also donate used computers to charity. Almost 60 percent said they do the same with old mobile phones.
But as with other environmental issues, says Braunstein, compliance often lacks the force of a mandate from the CIO. "With e-waste, people do a request for proposal and then go with the lowest price. Once they have the lowest price, out comes their checklist of disposal criteria, and their due diligence is just a guy saying, 'Yeah, we do this,' and it gets checked off. That's the level of risk mitigation going on today, and it will not hold. In the next year to 18 months, someone is going to get hammered."
If a company outsources e-waste disposal to a firm that disposes of it in an improper manner, hazardous materials that end up in the public landfill may be traceable to the original firmand that company will be responsible for it. "Today it seems like everyone wants to be in the computer disposal business," says Kory Bostwick of PCdisposal.com, an Olathe, Kan., company that counts Time Warner Inc. and OfficeMax Inc. among its customers. "It's easy to say you are doing it right, but a lot of people who say they will dispose of your equipment according to standards probably won't."
Proper disposal, including recycling, isn't just about keeping the bad chemicals from poisoning little bunnies. It's also a matter of information security. Wiping disks clean or destroying them is a critical part of the job. "Securing data is as important to a company as being EPA compliant," says Bostwick. PCdisposal.com has started shipping its clients lockable carts that hold more than 50 PCs in order to ensure that computers and their contents don't disappear in transit. "If a piece of equipment still works, there is nothing better for the environment than putting it in the hands of someone who will use it. But if your data is still on it, you could be in serious trouble," he adds.
IBM's recycling program takes in about 22,000 used machines a week, from PCs to high-end servers. The business began with IBM's huge leasing business, in which product lifecycle is an inherent concern, and expanded to include equipment owned outright by companies when customers began asking for the service. Last year, only 1.4 percent of the "end-of-life product" taken in by IBM made it to the landfill. "There is a huge opportunity to recycle and resell, but when things do reach the end of their useful lives, you need to have processing capabilities," says Dan Ransdell, head of IBM's recycling program. The company has 60 sites around the world that dispose of used equipmentafter extracting any precious metals from them.
"There is social value to recycling and reuse, but in most of my conversations with customers there is no economic credit given for social values," Ransdell says. "It makes good business sense to properly dispose of these widgets." Such practical issues, along with some measure of environmental consciousness, will change the way IT executives approach their jobs, he adds. "I think the green ideas will come into IT and will become a higher and higher priority for CIOs, and a lot of it will be driven by legislation and compliance. Manufacturers are being driven that way already, and CIOs will follow."
Braunstein says the Green CIO is coming soon. "Vendors are increasingly designing their products with end-of-life in mind," he says. "Standards are coming for things like the time it takes for the casing on a piece of cable to biodegrade: the more biodegradable, and the easier to pull apart at end of life, the more cost efficient. You'll be hearing CEOs get up at shareholder meetings and talk about this stuff. The CIOs will catch on as this stuff goes mainstream."