Tech's Looming Battle Against Rising Energy Costs
IT has gotten a bad rap when it comes to energy consumption. Walk into any datacenter, and you can almost feel the carbon emissions leaking into the atmosphere. However, research shows that the datacenter actually accounts for a very small percentage of a company's overall energy usage. And businesses are missing the other significant opportunities where they could cut energy usages -- and costs. Ironically, the same IT department that is reducing energy usage in the datacenter could lead the energy-savings initiatives across the enterprise.
According to the U.S. Department of Energy, the price of energy will continue to rise over the next 25 years, as global demand is poised to grow by 57 percent while the energy supply dwindles. As a result, businesses will find their profits reduced due to higher operating costs -- unless they do something about that energy usage.
Businesses' energy-saving initiatives often aim for the datacenter because it's a visible, easy target. "The datacenter is an absolute factory burning electricity, blowing freezing air, with storage service gear humming away 24/7. Naturally, the first place targeted for energy reduction is the datacenter," says Christopher Mines, a Forrester Research analyst.
Many IT shops have already reduced energy usage by switching to Energy Star-rated products, installing more efficient hardware, and maximizing the efficiency of their cooling system. But these efforts, while important, are just a drop in the bucket compared to the overall reductions that will be necessary to keep your company profitable.
In the coming years, IT could take the lead on saving energy, using its vast knowledge of the company's networks, equipment, work processes, and facilities. IT shops that have embraced the green-tech religion can transform that passion into something that will resonate, and pick up support, where it counts: in the executive boardroom. Energy-smart IT leadership can ensure the company remains in the black for the long term.
IT's Big Opportunity: Lead the Energy-Savings Charge
Focusing on managing the power consumption of the datacenter and IT functions misses the full opportunity, says Glen Hobbs, a technology advisor with PricewaterhouseCoopers. IT has a much bigger role to play in improving business sustainability and identifying cost savings by enabling different ways of doing business, he adds.
"To achieve a commercially realistic advantage, organizations should consider more than just computing device efficiency," Hobbs said. "IT's contribution to an organization's sustainability should not just look inward to the operation of the IT function but outward through the IT supply chain to the operation and use of technology across the whole business."
"The truth is, most companies use and waste as much energy outside the datacenter as inside," says Forrester's Mines. According to Forrester Research, IT is directly responsible for 5 to 50 percent of an organization's energy consumption, depending on the type of business. Gartner's research shows that IT accounts for a mere 2 percent of global carbon emissions, much of which comes from energy consumption.
"True, there is a lot IT can do to fix its own 2 percent and make it more efficient, but the big opportunity for IT is to take a leadership role in tackling that other 98 percent across the business," says Simon Mingay, a Gartner analyst.
"Reducing energy consumption really represents an opportunity for IT to change their relationships with the rest of the business," Mines says. "Now, IT can pull their chair up to the table of strategy making for the firm, becoming an enabler at a strategic level for the company."
There are several areas where IT can lead the charge, including applying energy-savings lessons from the datacenter to the entire corporate facilities, enabling effective telework and virtual meetings, and reducing the need for and helping to make more efficient physical product delivery.
However a company decides to address its energy costs, IT will be involved to a significant extent. Whether tackling the initiative on its own or partnering with departments such as facilities, real estate, and human resources, IT has an opportunity to improve the company's bottom line by helping decrease energy expenditures.
Reduce Energy Usage Through Telework and Virtual Meetings
According to Skip Laitner, economic analysis director for the American Council for an Energy Efficient Economy, the most immediate opportunity for reducing energy costs comes from telecommuting. Today, 4 million workers regularly telecommute, saving 840 million gallons of gasoline, he points out, citing a study by the Consumer Electronics Association.
"If we grew that to 40 million telecommuters, we would be saving 8.4 billion gallons of gas," Laitner said. "How big is that? I estimate enough to become equivalent of 500,000 barrels of oil, or about 2.5 percent of current consumption." While such savings clearly reduce employees' out-of-pocket costs for commuting, they also reduce businesses' costs in two areas: electricity and real estate.
Sun Microsystems, for example, reduces its annual energy usage by about 2,500 kilowatt-hours for every day per week that employees work at home -- that's about 500kWh per day an employee is not on the office. With nearly 20,000 employees working at home (56 percent of the workforce) at least one day per week, that translates into significant energy savings for Sun, says Ann Bamesberger, Sun's vice president of Open Work, its decade-old telecommuting program. Sun also needs less space, so it spends less on building leases, she adds.
IT can help companies see where telecommuting has the greatest impact on energy costs, Bamesberger says. "By tracking [employee] badge data, or writing scripts to see if wireless devices are being used, IT can paint a picture of the company's mobility pattern," she says. That analysis may show that a specific building is used only two-thirds of the time, making it a prime candidate for a deliberate telecommuting plan -- and for reconfiguration so less space needs to be leased, heated, and powered. Often, management doesn't realize how much informal telecommuting actually goes on, so it overspends on space and the associated energy costs, she notes.
"The IT function is absolutely critical to facilitating telecommuting, and there is a terrific opportunity for IT functions to be proactive and show the company how they can reduce energy costs," Bamesberger says.
Reducing business travel also helps cut businesses' energy costs, not just its carbon emissions, notes Forrester analyst Mines. It's now possible to replace much travel with videoconferencing, he says, because that technology has come a long way in the last decade. Today's high-definition videoconferencing and telepresence systems create an immersive experience in which participants often quickly forget that they are not in the same room, let alone on the same continent.
Such systems are by no means cheap, often costing several hundred thousand dollars per room. But Mines says that some early adopters pay for those costs just by the savings in avoided airfare, hotel, and car costs. "Companies can break even from a cost perspective, and even realize some measurable gain," he says.
"Moving to videoconferencing or telepresence is an operational policy decision made by business leaders of a firm, but IT is the enabler, and it can do the arithmetic to develop the business case for why this practice will make sense for the business," Mines says.
Lower Energy Costs with "Intelligent" Building Technology
Activities such as telework can indeed save energy costs, Gartner's Mingay says, but businesses will still need facilities for their people. "If you just displace people a few days a week, and they still have a desk at home and a desk in the office, then you don't save very much," he says.
What IT can help their companies do is reduce the energy used in their buildings when employees are not there. "True, it is better for the world if you stay home to work, but it is better for business if you stay home and don't heat, cool, and light your office at work," says Greg Turner, director of global offerings at Honeywell Building Solutions.
IT is well positioned to enable "intelligent" building technologies that turn off unneeded lights, air conditioning, and so on to save energy. "IT provides the network required to have pervasive sensing and control throughout the building, which can help a company achieve better energy performance," Turner says. "It wouldn't be realistic to install sensing equipment [just to save energy] if it weren't for the fact that IT already reaches out and connects all parts of the building, including warehouses and outbuildings, with wired and wireless infrastructure."
IT already has direct control of major energy-using devices: printers, copiers, multifunction devices, monitors, and desktop PCs. Even when this equipment goes into hibernation or energy-saving mode, it still consumes power. "IT, which has connectivity to almost all those devices, can reach across the building and turn off all the equipment, reducing the 'parasitic' load by 12 to 15 percent," Turner says. "IT can help tie this functionality to LDAP data. For instance, if no one in a department has logged on all day, no one is printing, and the printer doesn't need to be turned on."
Enterprises can take this idea one step further by using the LDAP structure to control lighting, heating, and cooling in the workspace. "Half of the time, employees are in meetings or in other places," Turner notes. "Using the IT infrastructure, companies can understand how a space is being used, forecast likely loads in building, control big mechanical equipment, and make climate decisions, including whether to heat and cool a space or not. When the last person logs off, we know the building is not occupied, and we can reduce energy by 30 percent."
The savings from such efficiencies can be enormous. Bank of America, for example, expects to cut as much as half its energy usage in 3,300 branches using "intelligent" building automation technology.
"Buildings consume 40 percent of the energy we use in the United States today, and 30 percent of that is wasted through inefficient systems, which include poor lighting control and practices such as running heat and air conditioning at night when no one is in the building," says Brandi McManus, global business development manager of energy services for Swedish building automation provider TAC.
Telenor, a Norwegian wireless provider, worked with TAC to reduce its electricity usage from 300kWh per square meter to 100kWh. TAC designed a system where roughly 1,100 workplaces are individually controlled, and only areas that are in use and active are heated. Rooms are regulated with 600 multifunctional office nodes with sensors, while 900 valves control heating and ventilation. Sometimes, only a low-tech approach is needed, McManus says: "We saw one case where there was a small server room next to an office, and they were using the same AC ducts. Doing a bit of duct work saved energy, and the people in the office were more comfortable, as well."
Removing Energy Costs from the Entire Supply Chain
Manufacturing, storing, and shipping goods take a lot of energy. IT can reduce the energy needed at each of these supply-chain phases, says Gartner's Mingay. Many logistics firms, such as the U.S. Postal Service, already invest in IT to create the most fuel-efficient delivery schedules possible. And the use of electronic signatures can save a ton of fuel when sending documents around, as Fidelity Investments has found. But IT can help even earlier in the process, by reducing the amount of items to be stored and delivered, Mingay says.
"There are many more opportunities to dematerialize [reduce materials used] and even [eliminate physical] content in a product or service," he says. For example, the shift away from CDs to MP3 files dispensed with huge energy costs, as will the move away from DVDs to downloaded or Internet-streamed video that Mingay sees coming soon. And Hewlett-Packard has reduced its laptop packing material by 65 percent, cutting down on fuel consumed for delivery, as well as lowering warehousing energy costs by packaging the notebooks in a messenger bag in which buyers can tote their laptops.
Another such opportunity is for IT to enable print-on-demand services and advanced materials manufacturing, Mingay says. "Print-on-demand will enable you to go to a local bookstore, tell them which book you want, and they will print it and bind it right then and there," Mingay says. "There is no waste, and you remove a huge amount of energy and carbon that comes from shipping books around the world." That lowers publishers' energy costs.
But the same approach can also reduce the costs in almost any company that uses printed materials, Mingay notes. IT can help the company save big by using print-on-demand internally, so only the necessary documents are printed. IT can enable this simply by providing the infrastructure for a library of PDF documents that users print locally when needed or contracting with online service providers of such electronic documents. This approach reduces the need for warehousing, which in turn reduces the need for energy-sapping climate control systems to preserve the paper. Delivery costs from the warehouse are also eliminated.
In the longer term, emerging technologies such as digital instant manufacturing machines can apply the print-on-demand concept to other goods, notes Laitner of the American Council for an Energy Efficient Economy. These machines, which look like a large-scale ink-jet printer, deposit finely powdered droplets by micronozzles, then fuse them together, layer by layer, into a 3D object.
"You can make anything from cell phone covers to bone replacement for medical use," Laitner said. "Because you can make a product on demand, people are able to pick it up closer to where it is produced instead of wasting money transporting it between coasts."