Greening the enterprise from top to bottom

Opportunities abound throughout organizations for applying green IT to cut costs and reduce waste

Green IT isn't just about more energy-efficient IT hardware, server consolidation, or setting up racks in the datacenter to reduce heat waste. Yes, those do represent ways companies can reduce their electricity bills, trim e-waste, and reduce their carbon footprints. But information technology continues to evolve in such a way that it can help companies make their operations greener from top to bottom, a key finding in a recent Forrester research report titled "The Rise of the Green Enterprise: A Primer for IT Leadership's Involvement."

Before we look at some of the approaches companies are taking to make their operations greener, let's pause to reflect on the incentive behind it. In these tough economic times, a prudent CXO might be wary of sinking money into new technology for the sake of CSR (corporate social responsibility). But the fact remains that many investments in green technology have clear, measurable ROIs as they can help companies streamline operations and reduce costly waste. As noted by the Forrester report, "According to the Economist Intelligence Unit's February 2008 survey of more than 1,200 business executives, companies that rated their green efforts most highly over the past three years 'saw annual average profit increases of 16 percent and share price growth of 45 percent, whereas those that ranked themselves worst reported growth of 7 percent and 12 percent respectively.'"

[ Other research has similarly found a link between green business practices and corporate profitability. Read more here. ]

So then, beyond the datacenter and the desktop, where do opportunities lie for companies adopt green IT in their operations? Forester cites several areas.

Among them, there's technological development, "the array of technologies used to improve products, services, and business processes (e.g., R&D, design, communications)." Forrester cites the efforts of sportswear apparel and equipment giant Nike here. The company developed a desktop application that calculates the environmental costs of making shoes, called the Considered Index. "Designers can enter a shoe's specifications into the program, which then calculates a rating in the Considered Index on how well the model passes tests for reducing toxic adhesives, using greener materials like recycled polyester, or curbing waste."

Green IT can also be applied to the area of inbound logistics, the report notes, referring to "relationships with suppliers, including activities required to receive, store, and disseminate inputs." As an example, shipping company Maersk Logistics developed a Web-based carbon footprint calculator to estimate the CO2 emissions of a customer's international supply chain from pickup to final delivery, according to Forrester.

Then there's outbound logistics, "activities required to collect, store, and distribute products or services." One example here is UPS: The organization has a flow software program that helps delivery trucks eliminate left-hand turns from their routes. "In 2007, it saved 3 million gallons of gas -- equivalent to $8.4 million (using the 2007 average retail price of gasoline of $2.80 per gallon) and 32,000 tons of CO2 emissions."

[ Learn how the U.S. Postal Service reduced its transportation costs and fuel consumption using optimization software. Welch's has enjoyed similar benefits using business intelligence software. ]

Speaking of UPS, the company also found a technological solution to saving paper and boosting efficiency in its operations (another area cited by Forrester that can benefit from green tech): The company uses Handheld sp400 All-in-One to print handling instructions directly on packages. "Coupled with wireless communication capabilities, UPS can eliminate the inefficient system of moving trolleys loaded with thermal printers, PCs, monitors, and keyboards to accomplish the same objective," Forrester notes. This approach is expected to save UPS 1,338 tons of paper per year and reduce operating costs by $18.8 million by 2013; it will also help UPS avoid $11.8 million in capital costs.

Another business operation that can benefit from green IT, according to Forrester, is HR management by replacing travel with tools for virtual work, such as IM and teleconferencing. Accenture has certainly realized the benefits of these technologies, both in terms of boosting efficiency and reducing costly, eco-unfriendly international flights.

Forrester also cites marketing and sales opportunities, such as offering "financial incentives to encourage customers to take advantage of paperless billing and payments."

All in all, companies have a host of opportunities to leverage information technology to streamline operations, cut costly waste, and reduce their impact on the environment. Although knowing what types of products and practices are out there is a good start, the Forrester report notes, challenges remain in developing your company's own green agenda, choosing the right technology, and getting everyone on board.

I've just skimmed the surface of the Forrester report "The Rise of the Green Enterprise: A Primer for IT Leadership's Involvement." The report is available for purchase for $279.