Green IT and the Bottom Line

Transcription

1 1 Green IT and the Bottom Line IT Advisory Green IT and the Bottom Line Enhancing Enterprise-Wide Economic, Environmental, and Social Sustainability KPMG LLP

2 2 Green IT and the Bottom Line

3 Exponential growth in energy consumption and costs, mounting concern over greenhouse gases and toxic waste disposal, and the major capital investment needed to expand limited data center facilities are driving increased interest and efforts around Green IT operations. Many large organizations already see Green IT as more than just a technology issue, acknowledging that it is in fact a fundamental business challenge with a key technology component. And while information technology (IT) operations face significant challenges in reducing their environmental impact, the value proposition for implementing a green strategy is also significant. Linking Green IT initiatives to those shaped by corporate social responsibility frameworks can make IT a valued business partner on the journey to a greener business and provide organizations with an unprecedented opportunity to align environmental management initiatives with broader sustainability initiatives. Indeed, with an appropriate business-oriented approach, the greening of IT operations can support the three crucial aspects of sustainability for an organization economic, environmental, and social the so-called triple bottom line.

4 2 Green IT and the Bottom Line It Can Pay to Go Green Energy costs related to IT are expected to continue to climb, affecting IT equipment such as servers, switches, and storage as well as critical infrastructure components such as power and cooling systems. These costs are prompting many organizations to recognize the business value to be derived from a focus on green. Consider these statistics: Most large enterprise IT organizations spend at least 5 percent of their total IT budgets on energy, and this cost could rise two to three times within the next five years. Gartner, Why Going Green Will Become Essential for Data Centers, October 2006 It costs nearly as much to power a server for three years the typical lifespan as it does to buy the hardware. Dallas Morning News, Technology Industry is Going Green to Cut Costs, February 22, 2008 Data center energy consumption in 2006 [was] estimated to be two times the consumption levels in 2000 Under current efficiency trends, national energy consumption by servers and data centers could nearly double again by Environmental Protection Agency Report to Congress on Server and Data Center Energy Efficiency, August 2007 Momentum for greenhouse gas (GHG) legislation is building. As of December 2007, lawmakers had introduced more than 165 bills, resolutions, or amendments specifically addressing global climate change and GHG emissions up from 30 pieces of legislation five years ago. KPMG research on GHG actions in the 106th to 110th Congresses

5 Green IT and the Bottom Line 3 KPMG s Approach for Realizing Green IT Benefits KPMG understands that developing and executing a Green IT strategy and realizing full value from the effort requires a combination of business and technology skills and experience. Our approach addresses the technology, process, and change management issues that require broad organizational cooperation across multiple functions, such as corporate real estate, IT, tax, facilities, and environmental health and safety. Plan Assess and Strategize KPMG s Green IT Approach Design and Implement KPMG s Coordinated, Sustainable IT Framework Technology/Facilities/Process/Tax/Energy/Change/Risk Monitor Our Green IT approach can help organizations: Bottom-Line Benefits Environmental Economic Social Reduce energy consumption, water consumption, and waste generation through adoption of industry leading practices and emerging practices and technology, including identifying consolidation and virtualization opportunities Reduce energy, water, and waste costs through third-party contract management, identifying cost-effective tariff and rate structures, provisioning systems into advantageous markets, and adopting leading energy-management practices Identify and capture available tax and utility incentives to help offset the cost of planned investments Define measurement and reporting frameworks, establish key performance indicators (KPIs) and baseline measurements, and create a monitoring program to drive continuous improvement Identify and comply with existing and emerging standards and regulations. KPMG s Green IT approach addresses the complete implementation life cycle. Beginning with a detailed project plan that articulates your goals, we assess your organization s unique operations and circumstances to quantify the potential benefits of a Green IT strategy and develop a sub-project road map. Our experienced technical and process professionals support your organizational efforts with project management assistance and change management guidance during the design and implementation phase. To enhance sustainability, we create an ongoing monitoring program by defining and establishing key performance indicators and baseline measurements.

6 4 Green IT and the Bottom Line A top-down, holistic approach can provide a broader perspective and enable an organization to focus on the bottom line economic, environmental, and social benefits. We leverage widely accepted corporate social responsibility frameworks at the strategic and tactical levels as well as leading practices, benchmarks, and KPIs at the operational level. Economic, environmental, and social benefits may include: Reduced IT complexity, including lower costs, improved quality, and increased availability Delayed or avoided capital investment for facility and infrastructure capacity upgrades or new builds Recordable and reportable green savings that support sustainability reporting initiatives and help prepare for likely future legislation or regulation Preparation for possible greenhouse gas legislative or regulatory impacts. STRATEGIC TACTICAL OPERATIONAL Green Frameworks GRI G3 CDP Dow Jones Sustainability Index AA1000 FTSE4Good SA8000 ISO LEED EnergyStar ISO and IT Leading Practices IT Benchmarks IT KPIs KPMG s Green IT Framework Approach Plan Assess and Strategize Design and Implement Monitor Potential Benefits Economic Reduced energy costs; optimized data center footprint Environmental Reduced carbon footprint, GHGs, toxic waste; easier global reporting Social Improvement in quality-of-life issues A More Comprehensive Approach Can Equal More Comprehensive Benefits

7 Green IT and the Bottom Line 5 The Greening of IT Operations: Case Studies Fortune 50 Company A Fortune 50 company with a sizable IT organization wanted to develop a strategy to reduce the environmental impact, or carbon footprint, of its data center operations without increasing costs to the business. Previous efforts to improve the organization s environmental impact focused on internal programs and performance reporting; these efforts were disjointed and had not achieved measurable or sustainable improvements. KPMG leveraged a multi-functional project team of IT, tax, and utilities professionals to assist the company in developing a strategy that mapped to its environmental and business-specific objectives. The effort included a plan to manage pending risks and ambiguity by monitoring key trends, such as energy prices and potential legislation, and to adjust strategies based on the changing landscape. KPMG then worked with the company to develop a one-, three-, and five-year prioritized implementation road map that highlighted consumption and cost savings, environmental benefits, and level of effort required of company resources. Benefits to the Organization Opportunities were identified to reduce waste and the consumption and cost of energy and water as well as to capture tax and utility incentives related to road map improvement opportunities. Additionally, the company was able to anchor its IT operations around a single environmental program that considered the entire IT life cycle and could be used to prioritize and orchestrate discrete project initiatives now and in the future. Further, through identified operational-level KPIs and a reporting dashboard linked to the strategy-level sustainability framework, the company was able to baseline, measure, and report improvement efforts. Finally, communication channels and critical dependencies between the IT organization and other business units (such as real estate, facilities management, and environmental health and safety) were established, facilitating an enterprise-wide view of the business challenge and potential areas for future collaboration.

8 6 Green IT and the Bottom Line Large Federal Government Agency The organization was interested in assessing the effectiveness of current initiatives including energy reduction and Leadership in Energy & Environmental Design (LEED) certification in reducing the environmental impact of IT and data center operations. It also sought to identify opportunities to reduce the environmental impact of IT operations while maintaining a high level of IT reliability, availability, and customer satisfaction as well as alignment with overall organizational sustainability efforts. After evaluating the organization s current initiatives and alignment with its other sustainability efforts, KPMG s multi-functional project team worked with the organization s leaders to identify opportunities for continued reductions in energy and water use through the adoption of industry leading practices and emerging technologies as well as reductions in energy and water costs by managing third-party contracts and leveraging cost-effective tariff and rate structures. We also identified tax and utility incentives to offset costs of planned green investments. Finally, we defined measurement and reporting frameworks and provided recommendations for establishing a monitoring program to drive continuous improvement. The result was a prioritized implementation road map highlighting consumption and cost savings, environmental benefits, and level of effort required. Benefits to the Organization Opportunities for reducing energy and water consumption within IT and data center operations as well as organizational energy and water costs were identified. Additionally, existing IT initiatives to reduce the environmental impact of IT and data center operations were communicated to the broader organization to improve the alignment of IT initiatives with overall sustainability initiatives, such as LEED certification, and to establish an enterprise-wide view of the business challenge and potential areas for future collaboration.

9 Green IT and the Bottom Line 7 KPMG LLP IT leadership wanted to reduce identified IT risks and related IT operating costs as well as improve energy efficiency an effort that involved the relocation of KPMG s major U.S. data center. IT leadership also wanted to support KPMG s Global Green Initiative, designed to reduce member firms combined carbon footprint by 25 percent by the year 2010 through emissions reduction programs and the use of renewable energy, while simultaneously leveraging KPMG s Green IT approach. The firm adopted many Green IT leading practices, including server and storage consolidation and virtualization, power management enablement, and use of highefficiency uninterruptible power supplies. To date, 450 server environments have been reduced by 20 percent with a goal of reaching a 40 percent reduction. Green efforts are also part of the construction plans for the data center: building materials include recycled concrete, metal, and wood as well as paint with low volatile organic content (VOC) and a more efficient category of cabling. Improved waste management efforts were also undertaken. In addition, the relocated data center will be just the second such facility to use a state-of-the-art, natural-gas-powered micro-turbine. Benefits to the Organization The firm aligned the green initiatives of its IT organization with its enterprise-wide Global Green Initiative and positioned IT as a key contributor to the success of that effort. KPMG is earning credits toward LEED certification of the data center. It has lowered costs significantly and has improved the overall power requirements and energy efficiency of the new data center through consolidated IT infrastructure and energy-efficient IT and data center architecture.

10 8 Green IT and the Bottom Line Why KPMG? We help chief information officers enhance their impact on overall business goals. KPMG s IT Advisory professionals understand that Green IT is a key component in an enterprise-wide sustainability effort. We can help you align your information technology efforts with the organization s strategic and financial objectives and realize improved performance from your IT investments. We work hand in hand with members of senior management as they seek to make the right choices, at the right time, at the right cost. Our professionals possess the critical attributes you require in an IT adviser: A deep understanding of the IT life cycle and other business processes and how they connect More than 15 years of sustainability experience in Green IT and in implementing and auditing sustainability measurement and reporting programs through KPMG s Global Sustainability Services network Deep tax and regulatory knowledge and experience Coordinated project team approach that engages professionals with specific experience in information technology, tax, utilities, corporate social responsibility reporting, and carbon credit certification and trading Objectivity and impartiality Global breadth, local knowledge Experience serving market-leading clients across industries Contact Us Matt Bishop Principal, Advisory Services mbishop@kpmg.com Brad Fisher Partner, Advisory Services bfisher@kpmg.com Mark Forman Principal, Advisory Services mforman@kpmg.com Steve Hasty National Partner in Charge, IT Advisory Services shastyjr@kpmg.com Lance Morton Senior Manager, Advisory Services lmorton@kpmg.com

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