“You know son, when I was young, I wanted to change the world. I soon realised I couldn’t achieve that so I decided to change my country. I struggled with that too so I tried to change our town. I failed at that so I wanted to change our family. I haven’t managed to do that so I focused on changing myself. I am now too old to do any of those things except that I have managed to change myself. But now that I have changed myself, I now realise that if I could have started with me, I could have changed us as a family, I then could have gone on to change our town, and perhaps tackle changing the country, and who knows I may have been able to change the world too. But the lesson, son, is that it should have always started with me, and so anything you want to do should start with you.”
To boost profitability, we can cut IT costs, as it’s easy to lop off a little fat there. Apparently IT also generates 2% or more of the carbon footprint so if we cut their costs we save carbon too. But hang on, by spending more on IT can’t we boost a company’s profit and lower carbon use across the enterprise? With the right attitude yes. Let’s check out some examples.
A recent study indicated that companies with a true focus on sustainability are more profitable and more resilient than their peers. The study conducted by A.T. Kearney, a global management consulting firm , found that of 99 firms on the Dow Jones Sustainability Index, in 16 of the 18 industries examined, those businesses with a commitment to sustainability outperformed industry peers over three- and six-month periods by 10 percent and 15 percent respectively.
At Wal-Mart, they are implementing strategies and technologies in their new stores and their vehicle fleet that will cut greenhouse gas emissions significantly—they hope to see a 25 percent improvement in their fleet in three years and a 20 percent boost in store efficiencies in the next seven years. By using technologies that measure and report energy consumption from top to bottom, CFOs and other managerial personnel possess the information they require for determining the true business cost of energy. This information can then drive decisions about future investments for lowering energy consumption and reducing operating expenses.
Using green IT strategies, companies can improve energy consumption on the production side as well. Working with Toyota to help them reach their 5-Year Environment Plan in their vehicle production strategies, Fujitsu and Toyota developed a Green IT vision statement that guided their company in optimising infrastructure, managing energy use, and monitoring the lifecycle of IT assets. IT was a major contributor to meeting these goals.
As part of overall sustainability plans, green IT can help businesses achieve environmental goals on three key fronts: immediate reduction in operational expenses, informing long-term infrastructure investments, and guiding business policy and procedural improvements. It is this latter one that has most impact across the enterprise, but also most management maturity.
It comes down to strength of leadership. When an IT department develops green purchasing and waste management policies for everything from paper to e-waste, it sets a green example for other departments to emulate. Sun Microsystems, for instance, adopted plans for green purchasing and energy savings that would result in a fast ROI. Their Finance department was quickly brought on board for the project, and eventually word of their improvements spread. Today, the company is looking to reduce overall energy used in manufacturing its products.
Can IT rescue the company, well perhaps not. Can the contribution from IT be leveraged into improvements across the enterprise, yes. And could cost cutting of IT blindly prevent this from happening, quite possibly.
For more information about this topic try The Truth About Green Business
One of the technology forecasters’ latest claimed “winners” is Unified Communications (UC). A recent report published by Research and Markets predicts that the UC market in Australia will grow at a compound annual growth rate of 16.1% between 2007 and 2013.
Like many “new” technologies, particular integration technologies such as this one, it lacks a clear definition. Vendors may try to define it, and perhaps label every sluggish selling piece of kit they have as a part of the UC revolution. This can create confusion.
The intent, at least, of UC is to integrate several different communication systems (voice, messaging, video, mobility, data, conferencing and presence management) onto a single integrated platform.
Integrating all this communications could create a new wave of investment, but what are the benefits for:
End Users – UC can provide flexibility for meeting best fit to users’ communications preferences. In practical terms this means that one login will provide an end user with the option to communicate through a host of options (e.g. fixed line, VOIP, email, SMS, instant messaging, videoconferencing etc.). This can also means a unified inbox and outbox, hence simplifying the management of our messaging and the associated task management and follow up, collaboration etc.
Management – UC (properly implemented) can deliver many of the outcomes that managers tend to dream about: Improved leverage of existing infrastructure, increased efficiency through streamlined/integrated business processes resulting in cost savings.
IT Department – The main benefits from the perspective of IT (in addition to the Management viewpoints above) are in the areas of control, security and reporting through its integrated platform.
Thinking about jumping in? Just like all new technologies requiring systems integration expertise, be sure to tread carefully. Business benefits first, then smart sourcing and well constructed contracts. After all no-one likes being at the hands of one or more systems integrator/product providers who have promised the dream, and are now giving you a broken sleep.
For more information on the Research and Markets report find it here.
Computer Economics produced a report on this issue entitled Unified Communications Adoption May Become Inevitable. An overview of this report can be accessed here.
And finally for anyone game to get basic instruction Unified Communications For Dummies
Many Australian managers are very downbeat about the long term survival prospects of their businesses and are concerned about the impact of short term thinking on organisational health. This is the central conclusion of a wide ranging survey conducted by the Australian Institute of Management.
The Institute surveyed 1200 executives (including business owners, middle managers, CEO’s and board members) on issues related to organisational health and survival. The resulting report, entitled Corporate Endurance, finds that:
- 51% of respondents associated with private enterprises believe that short term profit goals are having a key influence on business performance
- 15% of board members and CEO’s are not convinced that their businesses will still be around in five year’s time
- On a more positive note, many respondents named environmental sustainability as a key emerging focus area for their businesses
These findings underline the conflict between long term investment and short term protitability. And with increasing corporate reporting regulations and the strength of media (meaning news spreads fast), bad news about short term results spreads fast and hits hard.
‘Short Termism’ is a topic covered within “Managing for the Long Run” by Danny Miller and Isabelle Le-Bretton Miller. They introduce the ‘Four C’s’, the traits that they have observed in 40 companies that have led national markets for two decades or more.
- Continuity: Being around for the long term is part of their core cultures. This was evident in their approach to training, apprenticeships and the development of business strategies
- Community: Invest in employee loyalty by building a community centred on strong values achieved through mentoring programmes and employee friendly policies
- Connection: Focus on win-win external relationships, treating customers, suppliers and partners in ways that will create long term mutually beneficial relationships
- Command: Active, intelligent and proactive governance, and managers and boards should have the ‘freedom, knowledge and incentives’ to invest for the long term
For those who have read or followed Branson, you will know that his is one of a number of private companies that ditched their public shareholdings and took back ownership in favour of not having to explain long term business decisions to those who don’t get it.
Danny Miller and Isabelle Le-Bretton Miller book is Managing For The Long Run (Harvard Business School Press, 2005) is based on their experience with 40 companies (most of whom started out as family businesses) that achieved long term market leadership.
It seems that many companies would be well advised to install revolving doors on the offices of Chief Information Officers (CIO’s). The March 2009 survey by CIO Magazine found that 24% of the 265 companies surveyed asked their previous CIO to leave due to ‘poor performance’.
This means that CIO’s shared ‘top spot’ with Chief Financial Officers for being most likely to be dismissed on performance related grounds.
The way in which the survey results were framed is obviously open to interpretation and debate since ‘poor performance’ can mean radically different things in different contexts. It can even mean ‘Did not agree with the new CEO’s strategic direction’ in some cases. This does not, however, take away from the fact that there is a widely shared perception that becoming a CIO is somewhat of a mixed blessing as you might soon be heading for the exit.
There are obviously many complex reasons behind this game of ‘corporate musical chairs’, but I believe that the (relatively) old maxim that ‘Business does not understand IT and IT does not understand business’ is perhaps worth quoting here. It is unfortunately often the case that CIO’s are fired on the basis of ‘unrealised miracles’ that were eagerly expected by a management team that did not understand what IT can and cannot do. IT departments can, on the other hand, also often be ‘blamed’ for not clearly making the business case for certain innovations.
This is obviously not the place to try and plot a ‘CIO Survival Strategy’ but I do think that there are a few basic things that CIO’s should keep in mind as they navigate the treacherous seas of corporate politics. These include the following:
- Constantly Market IT’s role (and other’s roles)
- Make the business case (not the technical case)
- Maintain Balance (beware the golden bullet and the next best thing)
We can explore these in some detail at another time. Suffice to say, the IT department remains one of the most changing and at times most vexed portfolio of all, still waiting to be understood by the vast majority of business executives.
And for one of the better new texts, see Peter Weill’s IT Savvy: What Top Executives Must Know to Go from Pain to Gain
There are many management texts around that leverage from wartime battle strategies and do so in a powerful way. Most are about gaining new territory, beating the competition, out-thinking the opposition.
No management books that come to mind focus on survival as a core capability. Talk of survival doesn’t hold the glamour and glory of victory, but in times like today, it is, well, kind of important.
Let’s face it, thousands of managers all over the world are making tough choices to ensure the survival of their organisations. The Australian Bureau of Statistics reports that the unemployment rate jumped by almost 1.5% from March 2008 – March 2009. At around 6% some economists are even predicting a 10% future! This is purely driven by organisational cost-cutting (i.e. survival) strategies. But how many of these cost cutting strategies are truly strategic, versus being operational or reactive choices.
And who could blame managers. They have hardly been prepared for moments like this. Few management texts cover it, and I don’t see it covered in business schools. Seth Godin’s recent blog post about car specs (we buy based on accelerating power not stopping power) applies equally here. We are all trained at how to scale up, but poorly trained at how to scale down…rapidly, efficiently, effectively.
Wartime history does provide an excellent guide. And it is no wonder, for it is war, and all its horror, that has created so much innovation. During wartime, leaders make tough choices. Some of these choices involve radical downscaling to channel resources to where it is needed most. Here are the principles they apply:
- Survival is paramount: Direct all resources directly towards victory and towards survival. Leaders in war economies know that ensuring all school classrooms get a new paint job every year will be irrelevant if the war is lost. They invest resources elsewhere even if it causes some temporary hardship. Being in an economic winter means that we maintain only the basic functions for survival. Think of a bear in hibernation.
- Do not destroy capacity: Most wartime planners know to take the long view by making choices that accelerate a return to normality at the end of hostilities. This means that they would generally try to:
- Prevent the destruction of civilian infrastructure (rail lines, roads,
- Shutdown important, but non-essential, national projects in a way that they can be resumed with least effort
- Retain the skills and knowledge of key people by temporarily redeploying them elsewhere. (For example, redeploy an engineer to rebuild destroyed bridges, not send him in as a soldier – he will then be available and ready to rebuild the nation once the war is over). At the end of our economic winter, there will be spring. Growth will return, and we want to enjoy that growth, not be hampered by destruction at our own hands.
- Prevent the destruction of civilian infrastructure (rail lines, roads,
- Investigate new ways of doing things: War is a gold-mine of innovation. The necessity breeds it, the urgency to find new ways. A huge amount of the everyday objects around us started life in a military lab somewhere. But you say that a lack of resources in a cost-cutting environment prevents it? Yet that is the very constraint that breeds it.
OK, maybe it is not as bad as a war right now. Although for some it could be close. There are, however, some striking parallels and therefore some lessons. In summary:
- Strategise for survival: Ensure all your choices contribute to staying afloat.
- Plan for recovery: Do your best not to destroy vital infrastructure or deplete your human resource to such an extent that recovery will be almost impossible.
- Innovate: Find cheaper and more efficient ways to perform core functions
Oh and the last point, maybe you shouldn’t talk about adopting wartime strategies, it might freak out your colleagues and team. But you do need to get them on board. The picture above, is a picture of a once famous WWII poster and slogan: “Better pot luck with Churchill today than humble pie with Hitler tomorrow!”. It motivated, at a time of scarcity, for citizens to play their part too. As it is through them where that innovation will be born.
Since the economic meltdown started, one question has been: Is this the end of the green agenda, at least in the short-term? And will environmental stewardship be considered a luxury we can no longer afford?
A recent survey by IBM and Info-Tech reported that many mid-sized organizations around the world are buying into green IT despite falling bottom lines and falling stock prices. Another survey by Cisco identified that one-third of all businesses with green plans intend to move forward with them. So can environmental sustainability be good for the bottom line?
The driving force behind continued—and even increasing—green IT investments is the need to control costs by improving energy efficiencies. This is the first-tier greening strategy that most organisations should do, without excuse, as they can save money. The IBM paper looked at 11 possible green IT initiatives, with the most popular being storage consolidation, remote conferencing, and telecommuting.
It doesn’t surprise to see that these three initiatives can result in immediate bottom line savings. Plus they create a smaller carbon footprint through lower electricity bills, reduced consumables costs, decreased current and future operational expenses. Plus they may even attract rebates and incentives from local governments and utilities.
The examples in these reports hold true elsewhere. Data centre experts at the March 2009 Green: Net conference in San Francisco, encouraged increasing server utilization to improve energy efficiency by more than 200 percent. And companies such as Cisco are still pushing ahead with products to dramatically impact CIO’s bottom lines. Its new Unified Computing System (launched March 16, 2009) is said to reduce data centre capital expenditures by 20 percent.
There may be other benefits of “the downturn”. As investors look for safe growth options for their money, buying into technologies that improve efficiencies and pay big returns may be a good option in the current climate (economic and environmental). While relatively modest, CoolIT Systems, recently received $5.1 million in funding to expand development of its liquid cooling system.
There will continue to be uncertainty ahead, despite the optimistic view of green IT’s future. This is particularly so once we get beyond the first-tier changes, which provide both immediate and parallel cost and green improvements. Beyond this first-tier the payback may not be so immediate. And with company acquisitions such as IBM’s potential takeover of Sun Microsystems, we are yet to see the end of the economic fallout and any reshuffling of the corporate world that lay ahead.
So, my advice is to stay tuned, but in the mean-time, get those costs down, and while you do it, let the world know how green you are becoming. Now that has to be good for business.
- Maintain an efficient HVAC system: Improper air flow in your HVAC system can increase cooling costs by up to 15 percent, so an efficiently-functioning HVAC system can have a surprising effect on cooling costs. With a regular, routine maintenance schedule, you’ll save money every month. To keep your system running smoothly, clean and replace air filters, clean evaporator coils, shade your air conditioner, and ensure the condenser coils are unblocked.
- Turn down the cool: Contrary to popular belief, servers do not have to be kept exactly between 13 and 16 degrees Celsius (°C). In recent tests conducted by Sun Microsystems and others, it was discovered that servers can actually tolerate much higher temperatures and levels of humidity than originally thought. So go ahead and turn the thermostat settings on your HVAC system up. Consumer Reports estimates that for every half of a degree Centigrade you raise your thermostat setting you shave three percent off your cooling costs. Big players like Google, Microsoft, and HP are even getting in on the savings. Google recommends nudging temperatures from 21°C to 26°C. By inching their thermostat by just 1-2°C, Microsoft realized annual energy savings of approximately AUS$380,000 in one Silicon Valley data centre. Following a similar change, HP hopes to reap the equivalent of AUS$12 million in annual energy savings. So the potential, even for smaller organizations, is pretty significant.
- Ensure air flow is efficient: By this we mean to keep hot and cold air separate. Some very practical changes—like making sure the hot air from one server isn’t blowing directly into the air intake of another server—can drastically cut cooling costs by keeping the two air systems apart. Configure your room layouts to minimize mixing of hot and cold air, and then install barriers to further prevent this from occurring: blanking panels in server cabinets and aisle barriers are two options.
- Monitor energy consumption: Knowing how much energy your data centre uses—for running the HVAC and powering the equipment—can go a long way to reducing your overall power consumption. To make the task of monitoring hassle-free, put a Direct Digital Control (DDC) system to work. With the information provided by your DDC, you’ll be able to reduce energy consumption today and predict what you’ll need to keep running in the future.
- Use variable frequency drives on air handling units: By adjusting the rotational speed of your cooling fans with a variable frequency drive (VFD) system, you’re more accurately able to match cooling needs to actual demands. Slowing the speed during low-demand periods dramatically reduces energy requirements and can achieve a payback period of less than 16 months with a 50 percent reduction in power consumption.
Shut off unused equipment: If you’ve got idle servers or cooling units, turn them off! It’s a simple solution that can quickly reduce your energy costs.
There is always bigger adjustments you can make, but these cost-effective options will get you saving quickly for a very low investment. Your costs will go down, and your carbon emissions along with them.
And if workload pressure has come off your team, what better way to use those available skills, than applying it into long term savings that can impact on your bottom line within the week.
In you haven’t heard of the term, go to the Microsoft or IBM sites. If these heavyweights are driving the market towards cloud computing then we better pay attention. And while some may say that their sales literature creates its own haze, this is not what we are talking about. Cloud computing requires a complete rethink of the way computers are used in business (and in our personal lives). At its most basic cloud computing can be defined as the use of the internet (the ‘cloud’) to satisfy most, if not all, of your information technology and data management needs. This means, for example, that businesses will no longer purchase a vast array of local software running on local hardware (PCs and servers) but they will instead buy internet based services that perform the same tasks. Software as a Service (SaaS) offerings such as Salesforce.com have been initial steps in this direction.
Cloud computing aims to make use of the current combination of faster processing speeds, faster networks and reduced digital storage costs to deliver ‘supercomputing for the rest of us’. It does this by shifting computing power from a local computer that, powerful as it may be, is limited in speed and efficiency compared to a server farm that may number in the thousands. These economies of scale create savings, including energy and therefore greenhouse gas savings.
The main benefits of this approach are:
- Stability: The implications of local computer problems or crashes are minimised as data processing and storage take place remotely. Of course network reliability remains crucial.
- Speed: In crude terms cloud computing moves us from one machine working on a problem to possibly thousands doing so. This means that complex modelling and calculations (e.g. financial risk analysis, medical profiling etc.) can be done in a fraction of the time.
- Accessibility: Many cloud based programmes are browser-based, meaning that you need only a web browser to access them wherever you are in the world. Some also provide phone based interfaces.
- Cost: Cloud computing systems have very low start up costs as you can normally start with a low cost, perhaps even single user subscription and then expand from there. It is therefore perfectly suited to smaller business without the capital to fund upfront purchases, but may wish to scale up rapidly in the future. It is this cost efficiency factor that translates directly into Green outcomes too.
The main cloud that hangs over cloud computing (sorry about that I couldn’t resist) is with security, privacy and ease of access. Many managers may not want crucial business information stored on a server outside of their own enterprise. Security lapses and downtime for critical business processes do impact heavily and will remain a crucial issue. Supplier performance and commercial considerations will count for much. There is already one legal dispute that I am aware of underway for a cloud based supplier that entered receivership resulting in questions over data ownership with one of their clients. The resulting business disruption can be imagined quite easily.
The reason why this is important is that the rise in cloud computing will lead to more than a shake-up in the IT Department; it could have profound implications on just about every aspect of running a business. Most significant among these are:
- Standardisation: Having all employees log on to cloud based applications wherever they are in an organisation, or the world, means that it will become easier to develop similar (and ultimately familiar) standards and systems across an organisation.
- Collaboration: ‘Seamless Virtual Collaboration’ has always been one of the promises of the internet age. Cloud computing brings this ideal much closer by providing the essential backbone for such collaboration to take place.
Does the move towards a flatter and more open world have a chance of being mirrored inside the slower moving hierarchical structures of global corporates and government organisations via cloud computing….perhaps? It certainly has the potential to support that change.
It remains to be seen whether cloud computing will live up to the current hype surrounding it. What is clear, however, is that having a cloud computing strategy in place could be a very smart move for the year(s) to come.
So if you can see through the fog of doom and gloom to the cloud above, this may very well help to reduce costs and increase adaptability, at a time when we are seeing out our economic winter and preparing for our next spring.