Under pressure: 10 sources pushing CIOs to go green

CEOs, lawmakers, employees, and even energy utilities are all pushing for greener, more efficient datacenters

Until recently, many CIOs didn't know how much electricity their IT equipment used, and they didn't care.

The electric bill was someone else's responsibility -- usually the head of facilities -- so they didn't track it, and they weren't motivated to reduce it. They didn't factor energy efficiency into their IT purchasing decisions, either.

Now, with a stagnating U.S. economy, CIOs need to squeeze every penny out of their IT operations, and that means choosing the most efficient servers and desktops, as well as datacenter power supplies and air conditioning systems.

CIOs are being hit from all sides to become environmentally savvy, not just because it sounds good but because it cuts costs, drives profitability and improves competitiveness.

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We've put together a list of the Top 10 people who are pressuring CIOs to green up their IT practices.

1. CFOs

Pressure gauge reading: 10

The No. 1 reason CIOs are greening up their IT operations is to save money.

By reducing the amount of electricity or chilled water used in their data center operations, CIOs can contribute money straight to the company's bottom line, and that's what the CFO wants to see.

"The whole notion of being green is associated with making some sort of a sacrifice ... one less shower, driving a smaller car, changing out light bulbs," says Albert Esser, vice president of power and infrastructure solutions at Dell. "For green IT, that is just not true. Anything you can do to be green in IT will help your bottom line, will help your operations, and will help your service-level agreements....With green IT, there's no sacrifice involved."

Esser says CIOs can't afford not to be green. Dell, for example, has saved $1.8 million and reduced its carbon emissions by 11,000 tons in one year by requiring 50,000 employees to put their desktop computers into sleep mode each night.

"Companies that are embracing green IT practices today will have stronger balance sheets in five to 10 years than ones that don't," Esser adds. Green IT "contributes to the bottom line and allows you as a company to be a more responsible citizen in the corporate world."

Cimarex Energy, a Denver oil and gas exploration company, recently bought two American Power Conversion (APC) InRow cooling solutions because the units allow Cimarex to pack more IT equipment into the floor space of a datacenter located on the 11th floor of a high-rise building in Tulsa, Okla. The APC units use 50 percent less chilled water and produce more cool air in a datacenter expansion than Leibert units in the original data center space.

"In our old room, we have 600 square feet, and we can rack 35 servers because of the Leibert units," says Rodney McPhearson, project manager for Cimarex' enterprise infrastructure team. "Our new space is about 300 square feet, and with the APC units we can populate 112 servers."

McPhearson says his primary driver for selecting the APC units was to save floor space, but he's benefiting from savings in chilled water, too. Electricity costs for the APC and Leibert systems are about the same.

"Our new room runs about $1,000 a month for chilled water. Our old room runs around $2,300 a month for chilled water," McPhearson says.

McPherson says Cimarex is taking other steps to improve the efficiency of its datacenter operations, including consolidating and virtualizing servers.

"I get a lot of budget pressure," McPhearson says. "Efficiency is very important to me because I have to make a good business case. I'm focused on my ongoing operating costs."

Jim Smith, vice president of engineering with datacenter operator Digital Realty Trust, says reducing capital expenses is as important as reducing operating expenses when it comes to green IT.

"If you can design more efficient datacenters, you can reduce the operating budget and you can reduce the capital costs," Smith says. "We're huge proponents of that.... The big money is going to be made in reducing capital expenses."

2. Electric utilities

Pressure gauge reading: 10

IT operations come to a screeching halt without electricity, and in some parts of the world, the availability of reliable power is the main driver for improving the energy efficiency of corporate IT operations.

In London, Mumbai, Tokyo, and New York City, datacenter operators can't get more power to their sites. If they want to add new servers, they need to retire older ones. They can't plan on datacenter expansion; instead, they need to eke the most amount of processing power out of the datacenters they have.

"Datacenters are reaching their capacity in electricity," says Simon Mingay, research vice president at Gartner. "As organizations go to more dense, power-consuming technologies like blade servers, datacenters are reaching their limits.... Squeezing more watts out of the datacenter is absolutely what CIOs care about."

The lack of available power from utilities is why corporate IT buyers are starting to look at new metrics like performance per watt of servers and desktops. It's also why datacenter operators are consolidating facilities and driving up their watts per square foot.

"One in four datacenters around the globe is going to have an outage due to power over a five-year horizon," predicts Brian Brouillette, vice president of datacenter services at HP. "As companies are in growth mode and they are figuring out how to consolidate datacenters, the issue that everybody is talking about now is cost. But the availability of power is a close second."

Over the last 36 months, HP has consolidated 85 datacenters down to six, two each in Austin, Texas, Houston, and Atlanta. Key to HP's strategy was making sure the remaining six datacenters are as energy efficient as possible.

"If IT is fundamental to the way you run the business and you want to grow the business, you need more capacity online faster," Brouillette says. "If the CIO can't do more with its datacenters, he can't meet the CEO's needs."

Companies that can't squeeze enough power out of their existing datacenters are stuck building new ones at a significant capital investment or outsourcing to providers like Savvis and RackSpace.

"The number of new datacenter builds because there's no power at the existing datacenter is phenomenal," says Shally Bansal Stanley, managing director of Acumen Solutions, an IT consulting firm. "You can't get power generators. They're on back order.... We're consuming the datacenter utility faster than it can be created."

Some electric utilities -- particularly California's PG&E -- offer rebates to corporate customers if they improve energy efficiency. Around 20 electric utilities offer such rebates, according to Climate Savers, an IT industry group that promotes energy savings that can be gained from purchasing the most efficient desktop computers and turning them off at night.

"In order to get some of the rebates, you have to give back the excess power," Stanley says. "You have to show that you reduced it and not redeployed it. Most of our customers are redeploying it. They're optimizing it so they can use it."

The scarcity of electric power in some locations is driving up the cost, so the two go hand-in-hand in driving CIOs to go green.

"We have a customer -- a financial services institution -- that was paying $6 million a year to the electric company for a datacenter. The electric utility told him that over the next 12 months, that cost was going to be $2.1 million higher," Brouillette says. "Nobody is giving him that extra money. This becomes a really big problem, really fast."

3. CEOs

Pressure gauge reading: 8

CEOs are under increasing pressure to use natural resources -- energy, water, land -- in a more responsible, sustainable way. Urged on by outside directors and shareholders, CEOs are expected to understand their carbon footprint and start taking steps to reduce it.

For CIOs, C-suite pressure means not only reducing the amount of electricity they consume but switching their IT operations to locations with greener sources of power. That's why more datacenters are being built using hydro in the Pacific Northwest, nuclear in Chicago, and geothermal in Iceland.

CEOs "have to have a sustainability strategy that meets or exceeds the expectations of customers and shareholders," says John Skinner, marketing director for eco-technology at Intel. "One of the first people the CEO turns to is the CIO because the CEO understands that technology is an enabler of efficiency ... CEOs are turning to CIOs as allies to help identify how technology -- not just computers, but air conditioning -- can improve the efficiency of the entire corporation."

European CIOs are ahead when it comes to measuring their carbon footprint and understanding the trade-offs in how their IT equipment purchases and management decisions affect this metric.

"The cost in energy around the world varies, but the trend in unit cost per kilowatt hour is going up, and it's going up way ahead of inflation. That's pretty universal, and it's increasingly a point of contention," Gartner's Mingay says. "In the U.S., [cost of energy] is the most important driver. It's maybe 80/20, cost savings or cost avoidance vs. carbon footprint. In Europe, it's 60 percent about cost savings and 40 percent about carbon reduction."

How much pressure CIOs are under to reduce their carbon footprint depends on their industry. In a manufacturing business, where IT might count for 1 percent of total carbon emissions, there's not as much pressure as there is on a Web portal where IT is the business.

"For knowledge industries, like financial services, banking, pharmaceuticals, and the public sector, IT is going to be a much bigger portion of carbon footprint and more of a focus of attention," Mingay says. "We think the need for action on climate change will increase significantly in the U.S. over the next two to three years. This will be a pressure on CIOs to be contributing toward carbon reduction."

Acumen's Stanley says the pressure on CIOs to reduce their carbon footprint because of a CEO-initiated green initiative is less than the pressure to maximize their data center footprint and keep electricity costs down.

"The biggest pressure on IT executives is datacenter footprint. That's No. 1," Stanley says. "Cost savings and energy efficiency is No. 2, particularly from a hardware perspective. Being green is a distant third as far as motivation is concerned."

For now, "the green that they are focused on the IT side of the house is the color of money," Stanley adds.

4. Lawmakers

Pressure gauge reading: 5

In Europe, with its cap-and-trade program for greenhouse gases, the pressure on CIOs to measure and reduce their carbon footprint is real. But in the United States, the regulatory pressure on CIOs is considerably less because comparable legislation doesn't exist here.

"Based on potential changes in Congress, there may be some form of regulation," says Erik Teetzel, renewable energy manager at Google. "The fact that this administration is ending may encourage people to start taking inventory of their emissions" before regulation passes.

Teetzel says most CIOs don't feel pressure to adopt green IT practices created by lawmakers yet. But forward-looking companies like Google are identifying areas where they can cut back on their carbon footprint whether or not legislation is passed.

"People will get ready for action" related to regulatory compliance, Teetzel adds.

"Some organizations are looking at this in terms of acting now so that if and when there should be any regulation, they are in a better position to respond," Gartner's Mingay says. "Since there's no mandate, this is more of a risk avoidance than an actual pressure."

CIOs in some leading-edge industries, such as Internet services, feel the need to self-regulate before any carbon footprint-related legislation passes.

"In the U.K., I will have to be reporting my carbon footprint based on regulations in the U.K and EU," Digital Realty's Smith says. "Those same processes and reporting structures will impact my U.S. operations."

Some state and local environmental regulations already affect CIOs. In California, Title 24 dictates energy-efficiency standards for buildings including datacenters. King County, Wash., requires outdoor-air cooling for datacenters.

"Title 24 impacts our California designs in a meaningful way," Smith says. "You'll find little [regulations] like this regionally. This type of pressure is growing."

As far as federal legislation is concerned, most observers expect it to be in the form of a cap-and-trade program or a tax that acts as a financial incentive to companies to reduce their carbon footprint.

"The big question is, how much will carbon be?" Gartner's Mingay asks. "If it's $120 a ton, then everybody will care a lot.... The balance of probability is that companies will be paying for carbon in some shape or size. The $60 billion question is in what format."

"Legislative pressure is inevitable but probably not immediate," Skinner says. "A lot of companies are doing the baselining and benchmarking to see how they stack up, not only for carbon legislation but also for increased competitiveness."

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