CNBC Business | RUNNING OUT OF EXCUSES

RUNNING OUT OF EXCUSES

Threats of far higher energy bills plus government pressure may finally turn the IT sector green. Trevor Huggins reports

Green IT is surely the misnomer of the new century. The global business built on metals, plastics, toxic chemicals and three-year product cycles is now reinventing itself as a saviour of the planet. An unlikely recruit in the battle against climate change perhaps, but green IT is set to change the way computer power is delivered in the future and its exponents believe it could also radically affect the way companies do business. Put simply, this is not just about swapping old boxes for new in the computer room, it’s about survival in the new energy age. For what’s really driving green IT is a simple, inconvenient truth about the future of energy bills: they’re going to be horrible.

“The unit cost of energy is only going to go up, and a long way ahead of inflation,” warns Simon Mingay, vice-president of research at IT consultants Gartner. “There will also be specific carbon legislation and we will all be paying for carbon in some form within the next three years in the developed countries.”

IT has an unhealthy appetite for energy and accounts for an estimated 2% of greenhouse gas emissions, the same level as the much-maligned aviation industry. In developed countries, that figure is even higher. A 2008 European Commission study predicted that by 2020, IT could account for 10% of Europe’s energy consumption and 4% of its carbon emissions. At that rate, when future carbon taxes start to bite, they are likely to hurt. Such taxes are so far only partially applied across Europe but the lead taken by Scandinavian countries will soon be followed elsewhere, notably with France and Ireland set to introduce them in 2010, when the UK will target the energy usage of 5,000 of its largest organisations with its Carbon Reduction Commitment.

Clearly, it’s not difficult to gauge which way the wind is blowing, and the direction has not been lost on hardware manufacturers. Ostensibly doing their bit to save the planet, suppliers are doing good business with newer, more power-efficient PCs and monitors, along with “virtualisation” technologies, which allow the same number of applications to be consolidated on fewer machines and the data saved on fewer storage systems. Less power-hungry printers, which print both sides and can double as fax machines and scanners, offer further efficiencies. Taken together, Forrester Research has predicted that green IT spending worth $500m in 2008 will grow 60% a year to reach a whopping $4.8bn (€2.8bn) in 2013.

Current interest is also reflected in the emergence of energy-conscious groups, such as the Climate Savers Computing Initiative. Launched in 2007 by more than 30 organisations including Google, Intel, HP, Microsoft and the WWF, its aim is to promote the use of more energy-efficient desktop PCs and data centre servers. Today, it has over 500 members spread between suppliers, corporate and government IT users, and environmental groups. Its executive director Pat Tiernan, a former HP executive, does not dispute the market potential offered by green IT. “It is an opportunity,” he says, “But you also have this perfect storm brewing in the data centre. There’s a higher realisation that a significant monetary return can be made by focusing on energy, so it’s largely been borne out of customer requests.”

It’s certainly hard to argue against having more cost-effective hardware, particularly as the return on green IT can only improve as carbon taxes loom. Una Du Noyer, head of technology consulting at Capgemini UK, cites the case of a primary care trust in Britain which is overhauling its major systems. “We calculated that data centre consolidation would save €1m a year on system power and cooling,”she says. “But we also reckon that carbon emissions could be reduced from 850 metric tonnes to 70 metric tonnes a year. So, if you think that a carbon tax could be introduced, you’d be able to bank both the cost savings and the carbon savings as well.”

So far, so good. However, green IT at this level is still fairly limited in scope and is more about the computer industry cleaning up its act. More ambitious organisations are using technology to replace old working practices with new ones, such as replacing business trips with videoconferences. In a project led from its IT operation in Germany, Vodafone rolled out a videoconferencing system across Europe that enabled the company to cut business travel by 25% from January 2006 to April 2008, generating savings in millions of euros. In one year alone, CO2 savings were estimated at 17,000 tonnes. “If IT in the 20th century was mainly about labour productivity, I think that in the 21st it will be focused on energy and material efficiency,” says Mingay. “There are going to be a lot of opportunities for IT intervention into value chains to take out large chunks of energy and carbon.”

One area that could do with trimming in Europe is the paper trail left by invoicing, an issue which particularly strikes a chord in France. The French are still heavily addicted to paper and only 3% of the estimated 2.5 billion invoices sent each year between companies are handled electronically. Since carmaker Renault started offering a free paperless invoicing service to customers of its DIAC rental business in 2007, the trend has been promising, up to a point. From one million a year, it is now down to posting 400,000 paper invoices. However, that is still a lot of paper and a big opportunity for IT to extend a green, helping hand.

Office space, and when it’s used, is another area with potential for greener IT to save energy. Smart buildings are combining sensors, networking equipment and PCs to direct heating, air conditioning and lighting to only those areas where it’s needed. Office space and energy bills can also be reduced by enabling some staff to work a day or two a week from a laptop at home, thereby saving them time and money, and, for car-users, reducing their carbon footprint. To succeed, though, people’s attitudes also need to evolve.

“Changing behaviours, looking at the processes and how people work in conjunction with looking at the IT, is a much richer thing to mine than just the IT itself,” says Du Noyer, citing the example of two UK government departments that tried to save on electricity bills using a desktop power-off system that automatically put PCs to sleep if they had not been used for a while. One made major savings, the other made none. Not surprisingly, there was consternation at the latter. “They couldn’t understand it,” says Du Noyer. “But it turned out that two months earlier a green champion had gone round putting stickers on their desktop systems which read: ‘Please switch off before you go home”. The savings had already been made – by changing people’s behaviour.”

With videoconferencing, teleworking and more-efficient office space, green IT can clearly make existing processes more efficient. However, a yet more tantalising prospect is to replace the entire process altogether, and it’s here that many believe the biggest savings can be made. An example of such a disruptive technology is printing on demand (POD) in the publishing industry. In today’s book market, it’s common for European publishers to have books printed in China – which incidentally imports most of its wood pulp – and then have them flown or shipped back to Europe, loaded onto trucks and taken to warehouses, with a percentage taken by van to bookshops. The unsold items are, of course, pulped.

“If you look at that from a cost lens, you have to say it makes a huge amount of sense,” says Mingay. “If you look at it from a carbon energy lens, it’s a completely insane value chain. It’s so inefficient. It can happen because the true cost is not reflected in the price; carbon is free, and energy has been disproportionately cheap for a long time. Now that’s going to change.”

With POD, a printer in the distributor’s warehouse, or bookshop, will produce a book when it is ordered. No more planes, no pulped books and much less CO2. And as technology improves, POD will get faster and cheaper. “That’s where the opportunities from IT will lie, and it’s not just looking inside your four walls,” adds Mingay. “It’s also looking at how you can disrupt those value chains when you look at things from a carbon perspective.”

There is nothing wrong with seeing green IT as a simple return-on-investment issue that can also help combat global warming. Thanks to initiatives such as Climate Savers Computing, Tiernan reckons the power consumption of the most efficient PCs shipped in 2010 will be 50% lower than those built in 1997. However, the green IT story should not end with just a slimmer, smarter box that makes less of a hum. “Don’t look at this just in terms of incrementalism,” says Mingay. “This is not just about doing the same things with a little less energy and a little less carbon. This is not just about doing things differently. It’s about doing different things.”