If you could wave a magic wand and make all of the world's computers run on water, we would only save about 2% of the world's electricity.  While most of the media and trade press have viewed Green IT as if it is solely about reducing data centre power and turning PCs on and off, the real picture is much more complex and interesting.

The fact remains that more energy is used in making computers than in using them, and it is the energy intensive manufacturing and rapid obsolescence of hardware technology implicit in Moore's Law that is the IT industry's most important environmental challenge.  Similarly, it is the ability to use information technology to help reduce energy usage across the broader economy that is the real environmental opportunity.

We at the LEF believe that forward thinking IT leaders need to think beyond today's 2% solution, and adopt a holistic perspective on how information technology should best be integrated into a successful environmental strategy for their firm.  Looking ahead, companies will increasingly be required to monitor and verify their environmental footprints.  This will require entirely new data collection and analysis systems, tasks which Enterprise IT will be expected to address.

David Moschella
Global Research Director

That’s right.  It may be hard to believe, but during the last 30 years, electricity per capita consumption in California has been flat at around 7,000 KWh.  During that same period Western Europe rose from 4,000 to 6,000 KWh.  The US as a whole climbed from 8,000 to nearly 13,000 KWh.

This was the message that Mark Bramfitt of Pacific Gas & Electric delivered at the start of our Green IT Study Tour.  Not only is it possible to slow demand, but California has been doing it for 30 years.

The electricity market in California, as in most areas, is a highly regulated monopoly.   In most jurisdictions, utility companies engage in a variety of Green efforts, such as giving out compact fluorescent light bulbs in order to curry favour with the regulators so that they will get their rate increases approved.  However, there is not an explicit quid pro quo.  By contrast, PG&E has an extensive set of programmes, services, training, rebates and incentives.  At first glance it is hard to understand.  Why would a company actively try to get its customers to buy less of its product?

In California, the regulation is much tighter.  Explicit targets for saving energy (so-called ‘nega-watts’) are given to big electric utilities, such as PG&E, along with penalties for failing to meet them.

This quid pro quo is laid out in a 212 page document.  See http://docs.cpuc.ca.gov/efile/PD/71203.pdf

Source:  Mark Bramfitt, Principal Programme Manager for Energy Efficiency at PG&E

California has had some problems, such as the rolling black outs and fights over energy pricing, as they tried and then retreated from a fully free market based solely on the spot price for electricity.  It is also widely believed to be a unique situation.  For example, California had already achieved saturation of air conditioning by the beginning of this chart.  California also uses natural gas for heating, not electricity and heat pumps.

It is not clear if their approach would work elsewhere.  In general, the mandate of the regulators is to constrain cost.  It may be that the politics of California make it possible for the state regulatory commission to do things that increase costs, but reduce usage.

However, it does raise questions about the role of regulation in achieving Green targets.  In particular, there is some evidence that incentives from the utility may prove important in getting busy executives to stop and focus on Green opportunities.

With all of our study tours, we typically do quite a bit of research before the tour.  This helps us select sites to visit and also gives us a ‘Point of View’ that we can test during the tour.  In the case of the Green IT tour, we had a significant amount of help from Daniel Esty, Yale professor, and author of the recent book Green to Gold, and one of his students, Carola Borja, who helped us collect a wide range of articles.  Dan’s book suggested several helpful ideas. 

First was the idea that Green does not have to be an extra expense.  Dan provides many examples where companies, such as DuPont, were able to reduce the environmental impact of their business while saving money at the same time.  From an industrial engineering perspective, reducing energy use is just reducing scrap or waste.  We also liked the idea of using potential savings and profits as a way to capture the attention of innovators who could come up with new ways to deal with environmental issues.

The second important idea from Dan’s book is that environmental issues touch a much wider range of stakeholders than is typical when we look at how companies interact with the world around them.  In other words, you need to take a holistic approach to Green.  Don’t just focus narrowly.

This led David Moschella to imagine a holistic view of how IT can impact Green.  It is not just the data centres and the desktops.  IT touches supply chain, logistics, buildings, travel, collaboration, and even support for the brand.  To capture this holistic view, David created the following diagram in conjunction with Dan Esty:

Source: Leading Edge Forum/Daniel Esty 

Green IT provides leadership opportunities for IT directors who take a holistic view.  This ‘Point of View’ served us well for our study tour.  In fact, both Cisco and HP, two of the most thoughtful firms we visited, said that our request for a holistic view was the first they had received from a customer and, in fact, had caused them to stretch in their thinking. 

This theme that IT has responsibilities and opportunities beyond the data centre and the desktop is one that we kept coming back to during the study tour.

In 2003/04, when the LEF started seriously researching The Consumerization of IT, we met with considerable customer scepticism. Career IT professionals had a hard time accepting that the public Internet was increasingly becoming an alternative and even a competitor to the complex world of enterprise computing. However, over the last 12-18 months we have been observing a sea change in CIO attitudes, as forward thinking companies seek to put Web 2.0 technologies to work for their organizations. One of the great pleasures of the research business is watching what was once a bold prediction start down the long path toward conventional wisdom.

Similarly, 12-18 months ago, we started talking about the importance of ‘Green IT’ operations, and the critical role that information technology would play in supporting a company's overall environmental strategy. Once again, the scepticism was considerable, with many customers saying that direct cost factors would always trump environmental considerations. However, as with consumerization, perceptions are rapidly changing, if anything at an even faster rate. As Dan Esty argues in his influential work Green to Gold, successful environmental strategies will prove to be an important source of competitive advantage and brand development, with information technology playing an essential and pervasive role.

Thus, as with consumerization, we at the LEF will be making a long term commitment to this topic. We are particularly delighted to be working with Professor Esty and his team at Yale to identify emerging trends and practices. As I write this piece, we have just completed our first Green IT Study Tour, visiting the companies that are driving the expanding intersection between information technology and environmental stewardship. We invite you to watch this space or subscribe to this blog to keep abreast of our ongoing work in these two critical and surprisingly interrelated areas.

David Moschella
Global Research Director