Green IT: Roadmap for IT Consultants

Team Name: Ecotechies Institute: Indian Institute of Management, Ahmedabad Team Members & Contact Details Member 1: Abhiram G Nair Email: 7abhiramg@iimahd.ernet.in Phone: 079-66327826 Member 2: Suresh K Email: 7sureshk@iimahd.ernet.in Phone: 079-66326501

Green IT: Roadmap for IT consultants

Table of Contents 1 2 3 4 5 6 7 8 9 10 11 12 Abstract. 3 Introduction... 4 Market for Green IT.. 5 Developing Green IT management strategy. Opportunity for IT services providers.. 5 6

Potential clients. 6 Green IT services needed by the clients... Ways of providing Green IT solutions. 7 9

Conclusions............... 10 Recommendations. 11 Exhibits. 13

References. 20

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Green IT: Roadmap for IT consultants

Abstract Enterprises around the world are looking at implementing green IT strategies to improve their energy savings and reduce their carbon emission footprint. The main drivers for enterprises to adopt environmentally sustainable practices are cost savings imperatives, corporate green initiatives, technology refresh opportunities, impending regulations by the government and increasing social pressures. This thrust towards implementing a green IT strategy by enterprises offers a golden opportunity for IT consulting firms. According to a report by Forrester Research, the Green IT services market is projected to grow from USD 500 million in 2008 to USD 4.8 billion in 2013 with an average annual growth rate of 60%. In this article we attempt to find out the potential clients and early adopters of green IT solutions, the green IT services that will be needed by these clients and the different strategies that IT services providers can use to adapt their service delivery to the clients needs. Based on our research we found that the early adopters of green IT solutions would be government agencies, energy and resources companies, IT sensitive sectors, big consumer brands and retailers. The green IT services that will be needed by the potential clients will vary from IT infrastructure and data-center management solutions to solutions that enable IT to support greener business practices in all aspects of a clients business such as supply chain management and building\facility management. Therefore as the market for green IT grows, the best positioned IT services providers will be the ones that provide a holistic set of green IT solutions that address the efficiency and environmental impact of all the aspects of a clients business. In the end we provide a set of conclusions and recommendations to help green IT consultants make most of this business opportunity.

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Green IT: Roadmap for IT consultants

Introduction: Green IT The term Green IT refers to the efforts that are directed towards reducing the impact of greenhouse gases and energy consumption as a result of ever expanding use of Information Technology. The ICT sector contributes to about 2% of the global emissions1. The estimated distribution of global Carbon Dioxide emissions from ICT is shown in Exhibit 1. The concept has gained importance recently as more companies have become hugely dependant on IT systems, for their operations as well as to increase the productivity, thereby pushing up the demand for power. The main drivers for enterprises to adopt green IT practices include: a. Cost savings imperatives b. Corporate green initiatives c. Technology refresh opportunities d. Impending regulations by government e. Increasing social pressures Although the concept would gain much wider recognition in the next decade when the Kyoto Protocol expires, the IT services providers are trying to get into the act as early as possible to gain competitive advantage. New technologies and solutions are being developed to meet the demands of the industry. This has given rise to a market called as Green IT Services which could be defined as: Services, products or processes that help enterprises increase the efficiency of their computing resources thereby reducing the environmental impact. The services include assessing, planning, and implementing initiatives that make the procurement, operation, and disposal of IT assets more environmentally responsible.

Simon Mingay. Green IT: A New Industry Shock Wave. Retrieved October 30, 2008 from http://nl.sun.com/oversun/evenementen/superpowered/Gartner_on_Green_IT.pdf

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Green IT: Roadmap for IT consultants

Currently this market is in a nascent stage with only a few players. However various IT services providers are rapidly building resources and forming alliances to capture this market which is poised to peak around the year 2013. Market for Green IT According to a report by Forrester, the Green IT services market is projected to grow from USD 500 million in 2008 to USD 4.8 billion in 2013 with an average annual growth rate of 60%. The market would decline after 2013 as most of the enterprises would have completed their Green IT implementation by then. Although the market is small when compared to the overall IT consulting business, the strategic importance of going Green makes it a high-profile consulting and the IT services providers are bound to compete for such high-profile projects. The enterprises in Europe are most likely to adopt Green IT quickly and spend heavily as compared to their US and Asia- Pacific counterparts as the perception of business disruption due to the global climate change is highest in Europe. The market in Europe is estimated to grow to USD 2.1 billion in 2013 while maintaining a lead over the US throughout. The spending by US companies is likely to touch an all time high of USD 2.2 billion in 2014 (Exhibit 2). The market in Asia-Pacific is expected to touch USD 760 million in 2014 and would continue to grow to reach a peak around 2016. Developing Green IT management strategy As with the development of management strategy for any business, clear goals must be established to ensure that all efforts add quantifiable value to the business. In the case of enterprises planning to implement green IT strategy, these goals would be to cut down on power consumption, increase operational efficiency, reduce costs, reduce carbon footprint and ensure regulatory compliance. The scope of these goals (number of units of power to be decreased, etc) should be specified which would be helpful in arriving at the return on investment at any point. By setting the measurements to be monitored, the success of the implementation can be deduced thereby helping to reach a conclusion regarding the appropriate Green IT solution.

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Gartner has identified and classified Green IT issues into immediate, mid-term and the long-term issues to help enterprises prioritize their requirements (Exhibit 3). Immediate issues Data centre cooling, Virtualization, Server efficiency and Energy management.

Mid-term issues Green IT procurement, Environmental labeling, Encouraging behavioral change (e.g. turning off machines when not in use) and Video-conferencing. Long-term issues Carbon offsetting, Heat recycling, Software efficiency, Green building design and Green legislation. Opportunity for IT services providers The rapid growth in the market for green IT services provides an attractive opportunity for IT services providers as most of the companies planning to implement green IT practices do not have the in-house capability to assess, plan and implement an efficient green IT strategy. The IT services providers should find out about the potential clients and the services that will be needed by these clients so that they can adapt their service delivery to the clients needs and exploit the opportunities provided by green IT. Potential clients It is difficult to predict the potential clients as the green IT concept is still in its emergent stage. However the interviews conducted by the Forrester Research with various vendors indicate that some of the early adopters of the green IT could be:1) Government agencies: - Government agencies are one of the largest users of IT services in the world. Hundreds of thousands of government employees use computers to do

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various tasks more efficiently. Governments across the world are increasingly becoming aware of the need to implement green IT to reduce their carbon footprint and to increase the energy savings. Accenture and British Telecom, among other suppliers, are seeing demand from the local and national agencies in UK while EDS is seeing demand from the government clients in Australia and New Zealand (Christopher Mines, 2008). 2) Energy and resources companies: - Oil and gas companies and Utility providers such as electricity providers emit a significant amount of carbon from their direct operations. These companies participate very actively in carbon emission regulation and policy and they are looking at green IT to reduce their carbon emissions further. 3) IT-sensitive sectors: - The data centers used by the IT departments of companies occupy a large amount of space and consume a lot of electricity. Some of the IT-sensitive sectors such as telecom, financial services and pharma face constraints to their expansion plans due to power provisioning, costs and space constraints. Therefore such companies are looking at green IT to improve the efficiency of their data centers so that they consume less power and do more processing. This will also eliminate the need for additional data centers thereby eliminating the need for more space. 4) Big consumer brands and retailers: - These companies are looking at green IT to reduce carbon emissions for improving their corporate social responsibility credentials and thereby to enhance their brand image. Green IT services needed by the clients The green IT services needed by the clients can be broadly divided into two categories:1) IT infrastructure/ Data-center focused services: - These are services aimed at improving the efficiency and reducing the adverse environmental impact of the IT infrastructure and data centers. Low-power consuming processors and data centers could be installed to achieve the goals of improved efficiency and carbon footprint reduction.

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Effective strategies that can be used in reducing the carbon footprint and improving efficiency are virtualization, consolidation, utilization management, power management, decommissioning unused systems and increasing the use of thin clients (EMA White Paper, 2008). According to the interviews conducted by Forrester Research every IT services supplier they interviewed had capabilities to help their clients improve the efficiency of their current data centers and to design new ones. Even though this is a crowded market, there will be plenty of opportunities as more and more companies start implementing green IT. The IT infrastructure of companies outside the datacenters such as desktop and PC systems and peripheral devices such as printers consume as much power as the data centers. However currently there are not many IT services providers who have expertise in providing green IT solutions in improving the efficiency of devices other than the data centers. For instance, the interviews conducted by Forrester show that managed print services is offered by fewer than half of the IT services suppliers they interviewed. Therefore providing green IT solutions to enhance the efficiency of IT infrastructure outside the data centers should be a major focus area for IT consulting companies as it has tremendous revenue potential when enterprises across the world increasingly start adopting green IT to improve the efficiency of their IT infrastructure in order to reduce costs and carbon emissions. IT infrastructure management software is another area that has been neglected so far by the IT services providers. However the demand for such software will increase as there is a growing need for integrating the information from the rising number of virtualization, consolidation, power management and utilization management systems. Therefore IT services providers should focus on providing IT infrastructure management software solutions. Tying these IT capabilities to broader software systems for building management and carbon measuring and reporting, and linking these to mainstream corporate ERP, is another frontier for the services providers in green IT (Christopher Mines, 2008).

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2) Corporate sustainability focused services: - These services extend beyond IT infrastructure\data-center focused services to include organizational changes, procurement and recycling policies and positioning IT to support greener business practices in areas like supply chain management and building automation. The procurement and recycling of IT assets are expected to become greener as enterprises start intensifying their efforts to reduce their environmental footprint. In the future, enterprises will prefer to procure their IT assets from suppliers who sell energy efficient and reusable equipments. Companies will strive to make their products and their packaging recyclable so as to reduce their adverse environmental impact. IT operations of organizations will be looking at ways to improve their wastage disposal processes by recycling all possible wastes (including e-waste). There will be a huge demand for green IT solutions in supply chain management, workforce management, wastage disposal and recycling management, collaboration and building\facility management as enterprises attempt to reduce the environmental footprint of their supply chains, operations and buildings. Currently only a few of the IT consulting companies have expertise to provide green IT solutions in these corporate sustainability focused services. Therefore this presents a significant opportunity for IT services providers in the future. The IT consulting companies need to look at various ways of providing the IT infrastructure\ data-center focused and corporate sustainability focused green IT services to their clients in a cost-effective manner. Ways of providing Green IT solutions IT services providers can offer green IT solutions to their clients in the following ways:1) Provide IT infrastructure\data-center focused services:- IT services providers can offer the hardware and software required for making the IT infrastructure and the data centers of clients more energy efficient and environment friendly. Since the software required for this purpose is tightly tied to the underlying hardware used to offer such

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green IT services, hardware manufacturers such as Intel and HP are better positioned to offer IT infrastructure\data-center focused services. 2) Provide data-center outsourcing services: - IT services providers can offer data-center outsourcing services to their clients. The data of the clients will be stored in the data centers of the IT services vendors. These data centers will be highly energy efficient and environment friendly. Getronics, Wipro, CSC and EDS provide such outsourcing services. 3) Provide holistic green IT solutions: - The IT consulting companies can offer green IT solutions that focus on corporate sustainability and corporate social responsibility. These services extend beyond the IT infrastructure focused services to use IT to enable greener business practices in all the aspects of a clients business. IT consulting companies such as Accenture, IBM and Deloitte are better positioned to provide holistic green IT solutions to their clients. A green IT consulting project can be divided into the assessment phase, the planning phase and the implementation phase as shown in Exhibit 4. Forrester Research has positioned the various IT services vendors along a spectrum between two poles for the assessment, planning and implementation phases (Exhibit 5, 6 and 7) in order to asses the capability of each service provider in providing various green IT services. As the market for green IT grows the best positioned IT services providers will be the ones that provide a holistic perspective on ITs role in corporate sustainability (Christopher Mines, 2008). Conclusions Based on our analysis in the report we have reached the following conclusions:1) The market for green IT is in its nascent stage. It is expected to grow significantly in the next 5-6 years and then decline. Some of the early adopters of green IT solutions would

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be government agencies, energy and resources companies, IT sensitive sectors, big consumer brands and retailers. 2) The various green IT services that will be demanded by the clients are the following:a. Data-center management solutions b. IT infrastructure management solutions c. Power and Utility management solutions d. Procurement, wastage disposal and recycling management solutions e. Building\Facility management solutions f. Workforce management solutions g. Green IT Performance management solutions h. Software Applications Performance management solutions i. Green Supply Chain Management solutions j. Thin client and web-enabled business solutions k. Operations management solutions l. Green IT cost management solutions m. Carbon trading and carbon emission management solutions 3) The potential demand for these green IT solutions offers a significant opportunity for IT services providers. The best positioned IT services vendors to exploit this opportunity will be the ones that provide a holistic perspective on ITs role in corporate sustainability. Recommendations Based on the conclusions, our recommendations for the IT services providers are the following:1) Identify the green IT needs of the clients precisely: - Market surveys and focus group studies can be conducted to identify the green IT needs of the clients. IT services providers can then adapt their service delivery to the clients needs.

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Green IT: Roadmap for IT consultants

2) Promote awareness of the green IT service offerings to potential clients: - This will put the IT services providers in an advantageous position to capture the green IT market when the potential clients start formulating and implementing green IT strategy. 3) Create a hybrid organizational structure: - Most IT services providers are trying to decide whether to build a dedicated green practice or infuse green expertise across their mainstream IT practices. The best approach for the next several years will be to do both, build a small nucleus of green expertise that links to other practices like data center, supply chain, and procurement (Christopher Mines, 2008). 4) Provide holistic green IT services: - IT services vendors should provide holistic green IT services and improve their expertise in the various aspects of providing green IT solutions. IT services providers can also look at acquisitions and forming alliances with other service providers in order to fill the expertise gap if they lack the necessary expertise in a certain area. 5) Improve their own green IT credibility: - IT services providers should incorporate green IT in their own businesses so as to enhance their credibility in the eyes of their potential clients. IT services providers should strengthen their efforts in obtaining Government agencies as clients as the presence of government agencies in the clients list of a service provider enhances the credibility of the provider.

Word count excluding abstract: 2500

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Green IT: Roadmap for IT consultants

Exhibits Exhibit 1: Estimated distribution of global Carbon Dioxide emissions from ICT

Extracted from: Gartner Research, 2007. Conceptualizing 'Green' IT and Data Center Power and Cooling Issues.

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Exhibit 2: Forecast: Global Green IT Services Spending by geography for the years from 2008 to 2014

Extracted from: Forrester Research, 2008. The Dawn of Green IT Services: A Market Overview of Sustainability Consulting for IT Organizations.

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Exhibit 3: Conceptualizing the Green IT issues

Extracted from: Gartner Research, 2007. Conceptualizing 'Green' IT and Data Center Power and Cooling Issues.

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Exhibit 4: The three phases of Green IT Services Engagement

Extracted from: Forrester Research, 2008. The Dawn of Green IT Services: A Market Overview of Sustainability Consulting for IT Organizations.

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Exhibit 5: Capabilities chart of various IT services providers for the Assessment phase of a green IT consulting project

Extracted from: Forrester Research, 2008. The Dawn of Green IT Services: A Market Overview of Sustainability Consulting for IT Organizations.

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Exhibit 6: Capabilities chart of various IT services providers for the Planning phase of a green IT consulting project

Extracted from: Forrester Research, 2008. The Dawn of Green IT Services: A Market Overview of Sustainability Consulting for IT Organizations.

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Exhibit 7: Capabilities chart of various IT services providers for the Implementation phase of a green IT consulting project

Extracted from: Forrester Research, 2008. The Dawn of Green IT Services: A Market Overview of Sustainability Consulting for IT Organizations.

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References: 1. Christopher Mines. Forrester Research, Inc. March 2008. The Dawn of Green IT Services: A Market Overview of Sustainability Consulting for IT Organizations. Retrieved October 27, 2008 from http://www.accenture.com/NR/rdonlyres/24ABF590558E-42E6-B78B-143AFCF81A23/0/TheDawnOfGreenITServices.pdf 2. Climate Change Action Programme. Green IT Progress Report No. 1. Retrieved October 30, 2008 from http://www.derby.gov.uk/NR/rdonlyres/4DBCF185-7391-4FEFA11E-CB27B2588B32/0/GreenITProgressReport1.pdf 3. EMA White Paper. Going Green: A Strategic Guide to Green IT Management (Sep 2008). Retrieved October 30, 2008 from http://ca.com/files/IndustryAnalystReports/going_green_a_strategic_guide.pdf 4. EMC Green IT Services. Build a greener, more efficient IT infrastructure. Retrieved October 30, 2008 from http://www.emc.com/collateral/services/consulting/h2513-energyefficiency-ss.pdf 5. Rakesh Kumar & Lars Mieritz. Gartner Research. 2007. Conceptualizing 'Green' IT and Data Center Power and Cooling Issues. Retrieved October 30, 2008 from http://www.scribd.com/doc/3252810/Gartner-Group-Conceptualizing-Green-IT 6. Simon Mingay. Gartner Research. 2007. 10 Key Elements of a 'Green IT' Strategy. Retrieved October 30, 2008 from http://www.onsitelasermedic.com/pdf/10_key_elements_greenIT.pdf 7. Simon Mingay. Green IT: A New Industry Shock Wave. Retrieved October 30, 2008 from http://nl.sun.com/oversun/evenementen/superpowered/Gartner_on_Green_IT.pdf 8. Stephen Nunn. Green IT: Beyond the data centre. How IT can contribute to the environmental agenda across and beyond the business. Retrieved October 30, 2008 from http://www.accenture.com/NR/rdonlyres/AEC58219-8121-4CE8-9D3BBCFBAB45D3A3/0/126677_ATC_GreenIt_USUK_8_A4.pdf

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