Embarking on an effort to make IT infrastructures more energy efficient has clear potential benefits for the environment and can help organizations become better corporate citizens. It can also make a lot of economic sense.
To evaluate the true economic benefits of green IT, technology executives need to examine costs as well as savings, and work with people in finance to develop realistic goals.
“There are many ways that organizations can save money through ‘green’ IT efforts, but energy savings seem to prevail as a recurring factor in most green IT initiatives,” says Ruben Melendez, CEO and executive analyst at Glomark-Governan. “When evaluating green IT investments, most IT organizations look to both improve operating efficiencies and reduce costs.”
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Common green IT initiatives that fit both of these goals include data center consolidation, desktop virtualization, server consolidation and the use of multifunctional devices.
When looking at the financial side of these green IT investments, there is no one formula that applies to all investments in every organization, Melendez says. To effectively evaluate an investment in a green IT initiative, and forecast the resulting economic and financial impact on both the IT organization and the business, organizations need to create an objective business case, he says.
“Situations may exist where a solution may reduce IT energy costs and consolidate operations within the group, but negatively [affect] the business,” Melendez says. “Without exposing all the associated benefits, costs and risks of both investing and not investing in a green IT solution, executive buy-in will be limited at best.”
The costs of going green don’t start and stop with upfront cash investments and ongoing maintenance costs. “Green initiatives, depending on the adaptability of the company, may require significant change management costs,” Melendez says. For example, investing in a new data center consolidation solution might require re-training staff in new IT management processes, or new staff might need to be added.
Melendez says IT executives should work directly with finance throughout the entire proposed IT investment process. “When building a business case for a green IT solution, IT staff should consult with the finance staff to obtain realistic actual and [predicted] values to assess the benefits, costs and risks of investing and not investing in the solution,” he says. With more accurate financial data, the case for purchasing or not purchasing a solution will generate more objective forecasts.
“Over and above the economic impacts and benefits of being a socially responsible corporate citizen, companies should always consider what is best for their stakeholders,” Melendez says. “For private companies, will a green IT solution bring significant cost reductions or improve operating efficiencies? Or, are decision makers predominantly influenced by a need to have a ‘green’ footprint in the community?”
For publicly traded companies, “shareholders’ interest remains the most important factor in any investment,” he says. “Adding yet another bullet point to the corporate social responsibility resume will likely yield positive reviews from shareholders. However, if the return on the green IT investment does not help to move share prices upward, the social responsibility benefits become a moot point.”
