CIOZone.com - Professional Network for CIOs and IT Professionals

By Ellen Pearlman

Strategy: Energy Efficiency
Big Idea: It's not easy going green, but it could be the next big global business transformation
Articles: "Taming the Guzzlers That Power the World Wide Web" by Matthew L. Wald, The New York Times, Nov. 7, 2007
"The Dawn of E2K in India" by Thomas L. Friedman, The New York Times, Nov. 7, 2007.

High energy prices and concern about fallout from the recent turmoil in credit markets are giving top global executives a pessimistic view of economic conditions in their countries, particularly in Europe and North America, according to the results of a just completed McKinsey Quarterly report called the "Global Survey of Business Executives: Economic and Hiring Outlook, Fourth Quarter 2007." A little over one-third of the 1,409 global executives expects their country's economy to be worse by mid-2008 than it is now; in North America 46 percent of respondents took that viewpoint. What's to blame for this negative view? Eighty-seven percent of all global respondents pointed to rising oil and gas prices as the chief reason for concerns about rising inflation. And half the respondents laid the blame on an increase in electricity costs.

So, do the companies these executives work for have a plan for addressing inflation worries? Forty-three percent said, "No" and 24 percent didn't know-only one-third could say, "Yes."

Today having a plan for reducing the costs of energy consumption can provide a strategic edge to an organization. In November, The New York Times reported an estimate from experts that energy costs can be 40 percent of the cost of operating a data center. And according to EPA statistics, it costs $4.5 billion a year for the electricity to run the nation's server farms ["Taming the Guzzlers That Power the World Wide Web" by Matthew L. Wald, The New York Times, Nov. 7, 2007].

Another problem noted in the Times article is the conflicting priorities of IT professionals and facilities managers. Typically data center managers-who are not responsible for paying the utility bills-are more concerned with choosing servers based on "speed, performance and reliability, but generally not on energy use," says Wald. The article also reports on what some manufacturers are doing to improve the efficiency of their servers. But, clearly, CIOs need to be in the forefront of developing a comprehensive, global energy strategy, with the support and buy-in of other key business executives.

Another well-known Times columnist, Thomas L. Friedman, had a different take on the energy question. In his November 7, 2007 column ("The Dawn of E2K in India"), Friedman uses the term E2K to describe all the "energy programming and monitoring that thousands of global companies are going to be undertaking in the early 21st century to either become carbon neutral or far more energy efficient than they are today." He sees this as a huge opportunity for outsourcing companies in India-even bigger than Y2K was for establishing them as outsourcing leaders-to show global companies how to use energy technology to gain a competitive edge.

As more and more companies recognize the importance of becoming carbon neutral, and as legislators debate the best way to get them there, it is going to become the "next big global business transformation," says Friedman. Is your company one of the few that has an energy plan in place? If not, what are you doing to raise awareness and make energy strategy a priority at your company?

Also of interest:

CIOZ Question: Should companies be required to become carbon neutral? Post your thoughts below.

Comments (4)

	1. 03-04-2008 16:47
	not only cios should consider going green but also consumers can save energy and money - today.  There are good tools available today like e.g. www.enviprot.com Guest

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	2. 04-02-2008 21:56
	That is a pretty loaded question and assumes government regulation to make it happen.    What is happening is that "going green" is becoming a business necessity that will make "requirements" unnecessary. Companies have to cut costs to say competitive and reducing energy consumption is certainly better than redcucing headcount.    Plus shareholder activists will start to push this issue and the need to find less polluting methods and sources other than oil will drive companies to become carbon neutral. But a "requirement" to do so will only be counterproductive. Guest

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	3. 04-28-2008 10:21
	Seems to be an arguement as the best way to nibble back a big problem. Redesign and paradigm breaks that slash the problem down to the root is whats needed. I have some ideas for 70% savings that come in as a cost saving rather than an expence. Guest

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	4. 08-22-2008 18:29
	What companies are finding out is that the cost of going green is more expensive than anticipated. In today's economic times where savings have become critical, the GREEN negates any push for cutting cost. Guest

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