Pure Green IT Strategies Are Dead, Says Analyst

Green IT strategies are of little use on their own, but a company-wide approach to sustainability can bring financial benefits, according to an analyst’s report.

The old Green IT movement was a fad, which was killed by the 2009 receession, says Stuart Neumann, an industry analyst at green specialists Verdantix. However, a new sustainability movement has emerged, backed by offerings from large service providers, which take in technologies beyond IT-centric issues such as data centre efficiency and turning off PCs.

Green IT Has To Branch Out

The new sustainability movement has to think more broadly, says Neumann in a report, Green Quadrant: Sustainable Technology Services 2011. “Our research found that large multi-nationals and city leaders want IT support for new sustainability initiatives such as electric vehicle infrastructure, offshore wind farms and global carbon management systems,” he said. “Technology investment in these new areas is much larger than spend on green IT projects like data centre energy efficiency and PC power management.”

The report looked at 15 services firms with combined revenues of £200 billion. As well as talking to suppliers, the study spoke with buyers whose organisations have purchasing power of £100 billion, asking what they would like to see form service providers.

Deloitte, IBM and Logica lead the global market for sustainable technology services, according to the report, which positions service suppliers in a Green Quadrant, according to the buyers’ views and the suppliers’ responses to a 49-point questionnaire and in-depth interviews.

“Business benefit is the key driver and carbon savings have to add financial benefits because companies will not invest in sustainability initiatives if it means they will lose money,” said Neumann.

Government policies, such as the CRC Energy Efficiency Scheme which became a “green tax” in the Comprehensive Spending Review instigated last October, are making companies look more seriously at sustainability. The penalties and benefits of the regulations affect the bottom line of many companies and that is proving an effective way of focusing attention.

Neumann predicts that, between 2012 and 2015, organisations will set up sustainable technology business units. These will take a broader view than just green IT initiatives, driven by projects such as the British Gas and Vodafone smart meter roll out and city-wide electric vehicle (EV) infrastructure plans.

There is already a move beyond the carbon energy efficiencies of data centre hardware. Companies like IBM and Deloitte are beefing up their carbon consultancies and branching out into environmental services involving water, transport, energy and the smart grid.

It has often been said that “what you can’t measure, you can’t manage”, so service providers combining with software developers to produce more sophisticated carbon accounting software, said Neumann. Also in the software realm, there is an interest in application efficiency within the data centre to optimise the carbon efficiency of software running on the servers.

Rise Of The CSO

Neumann sees a change in the management of sustainability-aware companies through the rise of chief sustainability officers (CSOs), sometimes referred to as “energy Tsars“. These new roles will help govern strategy and purchase decisions.

“Providers will establish separate profit and loss accounting for sustainable technologies and global sustainability practices will be universally established offering an integrated set of solutions,” he said. “For the first time, projects will be enterprise-wide. More centralised budgets owned by Chief Sustainability Officers (CSOs) will facilitate purchase decisions.”

This is indicative of a basic “do-it-yourself” when it comes to implementations. One of the key sections of the report reveals that the buyers questioned reckoned that advice was more important than assistance.

“For each sustainable technology solution, no more than two out of the 15 person customer panel will work with technology service providers on implementation projects over the next two years,” said Neumann. “For water management, data centre energy efficiency, utility smart grid and intelligent transport IT systems, not a single customer will work with a provider on implementation.”

For each of the four initiatives mentioned, at least three customers within each category said that they planned to implement their projects over the next two years.

Neumann claims that green IT was a fashion, brought to an end by the 2009 recession, which was often based on nothing more than implementing best practices for data centre management.

Green IT was new wine in old bottles

“Tech services firms must understand that the revenue opportunities created by technology-enabling sustainable business projects are vastly bigger than the highly competitive ‘new wine in old bottles’ green IT market. Shifting perception of the opportunity internally requires a broader more stimulating vision of sustainable business.”

The service suppliers examined by the study comprise: Accenture, Atos Origin, BT Global Services, Capgemini, CSC, Deloitte, Fujitsu Services, Hitachi Consulting, HP, IBM GBS, Infosys, Logica, Orange Business Services, TCS and Wipro.