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 / Winter 2008 /Issue 53(originally published by Booz & Company)


The Eco IT Solution

IT departments can generate understanding of the impact of products on the environment.

Let’s face it: Few large companies doing business in a highly competitive world are willing to invest in reducing environmental impact without short-term competitive benefits. But consumers are forcing them to pay more attention to the planet. People are more eco-conscious than ever, and are demanding that the products they buy be more environmentally friendly. Indeed, according to a 2008 survey conducted by market researchers Information Re­sources Inc., more than half of U.S. consumers take into account at least one sustainability factor, such as whether a product is organic or packaged in an environmentally friendly way, when shopping for their household. And it’s not just less-wasteful packaging that people are looking for. They want to know whether a product is manufactured using sustainable or recycled materials, and are eager to learn the effect on the environ­ment of the manufacturing process itself. In response, corporations have tried to cast themselves as being sensitive to the environment. Many are working to lower their energy use and to find sources of raw materials that follow sustainable resources practices. And at least a few companies are par­ticipating in global campaigns in­tended to mitigate adverse effects on the environment, such as carbon trading. Much of this re­sponse, however, has been limited to activities that can rapidly cut costs, a somewhat narrow way of viewing the problem.

Case in point: the corporate IT department. Over the past five years or so, environmental awareness on the part of IT ex­ecutives has risen dramatically. Corporate buyers demand energy-efficient hardware, and manufacturers are responding with chips and servers that require far less power to operate. The level of toxic materials in equipment has been drastically reduced, and recycling of old computer equipment has increased significantly among corporations. The corporate data center, an enormous consumer of power, is being re­thought. This is happening both on the demand side, where companies (most no­tably, Google) are using alternative sources of energy to power their centers, and on the technology front, where concepts such as virtualization (the use of software that lets hardware perform more than one task at a time) have dramatically increased the utilization of servers and thus opened the door for further gains in energy savings. This approach isn’t a bad idea, given that U.S. companies spend close to US$6 billion on the power needed to run data centers and another $3.5 billion to air-condition them, according to technology industry watcher IDC.

The goal of dramatically minimizing power consumption is laudable, and it looks great on the balance sheet; nonetheless, if corporate IT really wants to have a sig­nificant effect on how companies respond to environmental concerns, it must go beyond thinking merely about the cost side of the equation. Instead, it must focus the combined power of information and technol­ogy on promoting a green agenda while boosting top-line growth. By providing more data both to their own organizations and to their customers about the environmental costs and benefits of the products and services they sell, IT departments can, in turn, help generate a more complete understanding of the impact that their products — and the methods of producing them — have on the environment.

Consider, for instance, the in­formation available to consumers to help them make choices about “green” products. Many large appliances now come with energy ratings that are designed to let consumers know how energy efficient they are. Yet those numbers provide just a fraction of the information necessary to understand the appliance’s total im­pact on the environment. One re­frigerator might have a lower en­ergy rating than another, but it may be made in an inefficient fac­tory that emits more CO2, is an energy hog, and uses environmentally harmful materials. The net impact of the first refrigerator’s lower en­ergy cost could easily be outweighed by the environmental toll of its production.

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