Another new business tax is coming your way, one with the snappy name of Carbon Reduction Commitment Energy Efficiency Scheme (CRCEES). Full details of the scheme are still being finalised, but we can safely predict that from 2012 it will impact around 5,000 large companies and public sector organisations across the UK.
It is the latest example of climate change concerns impacting the bottom line, and is certain to focus the minds of CEOs and CFOs on how much energy they are using and what it costs.
Reputation as well as money is at stake, since the scheme involves publishing an annual performance league table to identify heroes and villains by revealing how well each organisation is controlling its energy-related carbon emissions.
Coming on top of ever-rising energy bills, the new tax is set to have significant bottom-line impact on power-hungry sectors such as manufacturers, supermarkets and utilities. And, of course, on organisations with a large and power-hungry IT infrastructure.
For many CIOs, it means the end of the era of complicit ignorance regarding the energy consumed by IT, and increasing demands from their boardroom colleagues for firmer action to monitor, measure, control and reduce that consumption.
Few CIOs will have the luxury of saying it's not their business, because they don't pay the electricity bill. The argument will remain valid that IT is crucial to all parts of the business, so companies shouldn't compromise it to save a few pounds in fuel or tax.
But, if you can't produce a plan to address energy consumption, your CEO and CFO may start to wonder if you are trying as hard as you should.
The bad news for CIOs is that there is no single magic bullet to address the issue of the energy that IT consumes. But the good news is that there are now quite a number of things you can do which together will go a long way towards solving the problem:
- New techniques of server virtualisation are starting to be widely adopted. They involve consolidating the work of several under-utilised servers (often running at little over 10 per cent capacity) into fewer machines, or even a single machine. Result – massive cost savings with no loss of service.
- Cloud computing is another technique that can offer big savings in power consumption. It gives rapid, cost efficient access to a huge range of services and applications. It neatly transfers major investment – and carbon footprint - from you to the service provider. From our experience, cloud computing can deliver net savings, including energy savings, of 40-50 per cent.
- Take a fresh look at outsourcing, especially after the flurry of news this year from IT outsourcing specialists announcing new 'green' data centres. As with cloud computing, you effectively transfer expensive investment and carbon footprint – and the pressure to reduce it by making most effective use of techniques such as virtualisation – from your own business to that of your outsourcing partner.
- Data centre optimisation techniques being implemented by the outsourcing companies are in many cases being put into the public domain, available for you to examine and replicate in your own facilities.
- Smart metering can produce some eye-opening results on precisely where and when all that electricity is going in your IT facilities. Indeed within my own company we have won some important cost savings after analysing meter data and applying our IT expertise to ourselves.
- Intelligent procurement can also play a role. We are contracted to purchase hardware for a client who insists that every item meets a demanding international sustainability standard covering energy efficiency in manufacture and use, lack of harmful materials and ease of recycling. Many others will follow their lead. Perhaps it's time to pay a few per cent more upfront for energy-efficient hardware that will deliver solid savings over the longer term. CFOs are increasingly looking across related budgets for whole-life cost-saving opportunities.
The list doesn't end there. There is a government department which is saving £1 million in electricity costs a year after fixing its PCs to go into low-power mode overnight, only starting back up to receive new software or security patches down the line. And there is carbon and cost savings that IT can enable throughout the business – by reducing travel, eliminating excess paper, transforming logistics.
There is a real challenge for the CIO to address energy costs. And you can be sure that from now on, it's a challenge which will only grow. Equally, there are many initiatives the CIO can take to meet the challenge. It's not just about saving the planet, it's also about good IT practice, resource efficiency and saving money.