Lorie Wigle, the general manager of eco-technology at Intel, laughs when she is asked if there are enough computer industry executives with “eco” or “green” in their title these days to make up a whole new peer group.
But “going green” is no laughing matter, either for the technology industry or its financial customers. The green movement is gaining momentum in some corners of the financial industry. Last month, three of the largest U.S. financial firms—Citigroup, JPMorgan Chase and Morgan Stanley—and several large power companies developed “The Carbon Principles,” whose objective is to make it more difficult for new U.S. coal-fired power plants to secure financing. The Rain Forest Action Network’s Global Finance campaign pressed many of the world’s largest banks—Bank of America, Goldman Sachs, Citi and JPMorgan Chase, among others — to “fund the future” by agreeing to lending principles that protect the environment. RAN’s campaign took effort, but convinced institutions to adopt green lending practices. Still, refusing to lend to ‘dirty’ industries is one thing; making a commitment to clean up one’s own act is even harder.
This raises the obvious: How green is your house? It’s a legitimate question. For better or worse, the financial industry is the bellwether of how to balance environmental concerns and business demands. The steps can be radical. The stakes are high. Screw up and it will cost time and money—not to mention the drastic business implications of a system slowdown. If any industry should find the true costs and benefits of going green, it would be the financial sector. “We view them as a leading indicator for the rest of the marketplace, particularly in terms of energy efficiency. They were almost canaries in the coal mine for what started to be a big issue for a broad range of customers,” Wigle says.
But some observers have accused U.S. banks of window dressing the green issue. Tower Group analyst Inci Kaya has read many of the green initiative reports issued by banks in the United States and Europe, and says she notices a striking difference between them. “Compared to their European counterparts, U.S. banks are far behind,” Kaya says. “Deutsche Bank and Royal Bank of Scotland, for instance, are far more detailed and granular in explaining their green initiatives. In the U.S., I think the intentions are genuinely there, the nice words and big numbers are there. Okay, but doing what?”
Kaya believes the reason U.S. banks lag in issuing vetted green data is, quite simply, that they are not facing legal mandates. “The Kyoto rounds have already been ratified in Europe and haven’t been in the U.S.”
But this lag in the regulatory climate presents U.S. banks’ green strategists with an opportunity. They have greater short-term flexibility to kick the tires of various approaches. “We’re still early in the process as an industry,” says Michelle Erickson, director of Citigroup’s global sustainable IT program. “At this point, you can still make a case for a return reasonably quickly for most of the activities taking place.”
The state-of-the-art in facilities/data center cross-pollination is the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program. Citigroup is building a LEED-certified data center in Frankfurt, Germany, scheduled to open in June, that will use 25 percent less energy than a comparable non-green data center. Citi says the 16,000 megawatt hours saved annually are enough to power 3,000 single-family homes.
Gartner’s Rick De Lotto, principal analyst for green IT in the financial services industry, says IT staffs could actually be the canary’s canary, already well involved in the process of reducing energy use. Hence, they occupy an important strategic position within their organizations for how to proceed with green initiatives. “The IT guys were already in crisis mode because energy prices were spiking,” he says. “This is a chance for IT managers to really leverage their experience and get a place at the table.”
Last fall, De Lotto wrote in a research report that “in many cases the IT department will be a firm’s only internal pool of any type of engineering talent. This will make the IT department a natural test bed for new technology ideas and business practices.”
Make no mistake, this test bed has been active, and, despite Kaya’s scolding, many U.S. banks have set explicit goals to reduce their own energy consumption. Bank of America has stated “aggressive, voluntary goals” to reduce greenhouse gas emissions across the company by nine percent in the next year.
Wachovia aims to reduce its carbon footprint by 10 percent in two years. “We’re looking anywhere we can to reduce that, looking at ways of reducing power usage any way we can,” says Jason Nash, senior platform and data center architect for Wachovia’s corporate and investment banking division.
Most banks’ short-term internal green initiatives seem to be meat-and-potatoes solutions like data center and server consolidation and virtualization. First National Bank of Omaha, for example, saved almost $2 million annually after it moved computer resources on 30 Unix servers and 560 Windows servers onto a single IBM System z mainframe.
De Lotto says even more energy reduction is possible at the desktop. “Modifications and enhancements to data centers [especially related to cooling issues] have received most media attention because they are power inefficient and are big and easy to see,” he wrote in his report, “Green IT: The Future is Now.” “However, the area where the greatest overall effect can be made the fastest is at the desktop and with client devices.”
The Wachovia architects are exploring a green approach that will combine the two: removing computers from individual workstations and putting them in the data center, then using virtualization to consolidate individual instances of operating systems and applications. “Most people do not need a physical system in the data center for themselves,” Nash says. “A virtual system shared by 10 people would be fine. At night, we can roll them into a fraction of the blades they are running on in the daytime, shut them down or use them for grid applications, and then roll them back across the blades again before work starts in the morning. So we’re not going to have to pay the power bill to have all the blades running all the time. We’re currently looking at proof of concept on that.”
Banks don’t have to go all the way to desktop virtualization to cut power usage in the cubes, says Will Durr, svp of technology delivery at Waterbury, CT-based Webster Bank. His institution is planning to install client power management software sometime this year. “If we turn off our PCs 12 hours a day over the course of the year, the savings are significant,” he says.
Gartner’s De Lotto figures just using existing Energy Star-compliant desktop power management for monitors and computer units would save $75 per desktop per year. “Multiply that by 1,000 PCs and your CEO will be taking you to lunch,” he says. “When you get right down to it, anything that cuts electrical usage is a good thing. And it’s going to be years before they figure out the right way to get data centers set up. Right now, there’s no telling where the breakthrough will come technically. So it’s 10 yards and a cloud of dust. Grind, grind, grind, grind, grind. Don’t forget the low-hanging fruit. Don’t spend $1 million upgrading your heating system until every light in your data center turns off when the last person leaves the room.”
After the low-hanging fruit is plucked, the next step takes engineering ingenuity. Creative IT executives are beginning to work closely with facilities staffs to craft more holistic energy-efficient policies—and getting vendors involved in the planning. “We’re looking at various ways to add cooling to a data center and how to take advantage of that elsewhere,” says Durr. “For example, if we’re adding new data center AC capabilities, can we take the resulting warm air and maybe heat some of that facility? I don’t think there’s any IT sales rep out there knocking on my facilities department, or anybody saying, ‘I think I can help you from this perspective,’” he says. “It’s usually a partnership where IT brings them to the table, and facilities happens to be there, and we can start a conversation.”
Green planners must weed through the bewildering array of technologies and processes that bear false promises while facing the pressure to make fast, effective decisions. In some cases, new technologies meant to conserve electrical power and computer and network resources are still in their birthing pangs. In others, the impartial informational and educational infrastructure that would help these people make better “green” decisions is sorely lacking. “I don’t think the information is easily available,” Durr says. “When you do your homework, you can find the information, but you really have to do your homework.”
De Lotto estimates that financial companies will be driven by their stakeholders to formally adopt environmentally sustainable IT operations and strategies by 2012. If those policies are enforced by the immutable laws of global resource scarcity, then executive level board planning should begin now. “Distribution and sourcing-related energy scarcity will begin to limit data center and backup site selection by 2012,” he wrote. “Tighter regulations will emerge regarding energy use and load shedding, and rolling blackouts and brownouts may be imposed. Serious rethinking about data center design and operations, as well as core processing system design based on cooling and energy-use reduction issues, should begin no later than mid-year 2008.”
Industry players must temper urgency with caution. He says “greenwash,” the term used to define inflated and unsubstantiated claims of a product’s green bona fides, “is everywhere and almost anything can be spun as being an improvement. It’s going to take a lot of due diligence, a lot of point-by-point, tedious comparisons. If a vendor comes in with an improvement, [the company] had better be able to come up with certification by a third party. Any claim that CIOs will be reporting up the line has to be certified.”
Prudent as that strategy sounds, there just aren’t enough existing authoritative resources around to assist planners, so for those charged with carrying out the new green regime separating the hype from the real deal is still a bit of a challenge. Those resources are on the way. Some are being universally awaited as viable benchmarks; others appear to offer good intentions but not enough concrete information.
A nascent industry and government effort is underway to help technology buyers evaluate new equipment and to spread best practices. The Environmental Protection Agency has two efforts well underway—the publication of data center efficiency guidelines and Energy Star ratings for servers—and a third, specifications for network storage efficiency, is in its early stages. The non-profit Standard Performance Evaluation Corporation (SPEC) released the industry’s initial server efficiency benchmark in December.
The computing industry also recently launched numerous “green” informational umbrella organizations, including the Green Grid, which focuses on advancing energy efficiency in data centers and business computing ecosystems (www.thegreengrid.org), and the Climate Savers Computing Initiative, which is targeting power supply efficiency (www.climatesaverscomputing.org). But information—either technology-specific or that geared toward vertical industries—is still hard to obtain. “If those consortia could deliver more specific information, that could only be of value to those seeking to find the right route,” says Tom Beese, CEO of ClearSpeed, a London manufacturer of chip-based acceleration parallel co-processors.
Durr says Webster’s IT staff does some evaluation themselves, and relies on the veracity of its vendors for some other elements to help them through the maze of information. “They know if they don’t deliver, we won’t return,” he says.
Intel’s Wigle, who is also the president of Climate Savers, says the company is taking customers’ clamor for third-party resources very seriously, but also says setting benchmarks is a daunting challenge. “We’re working closely with our customers as well as with the EPA,” she says, “but setting Energy Star for servers is a fairly difficult process. Servers are used in so many different ways.”
Wachovia’s Nash says the lack of a trusted third-party resource on energy efficiency results in time-consuming and costly evaluation. Typical vendor information will tell an IT executive about power consumption at maximum load, Nash says, but that’s not enough. “That does not tell us what it would be with a certain configuration in our environment, so we are still left to do individual testing in a climate like that,” he says. “Right now, each organization takes it upon themselves to do that, and it’s an ad hoc process, started and stopped each time they go through the cycle of evaluating new equipment. So third-party data is a big deal for us.”
Like the EPA, the industry consortia are also working on more technical and vertical information. There are no hard estimates when that might be available. Enough customers are demanding more concrete numbers that vendors are jump-starting the process. Those involved in consortia are also optimistic about soon having more comprehensive resources. Given financial services’ role as an early adopter, the sector will likely reap the earliest vertical information.
But a CIO making long-term plans and budget decisions can’t wait for vendors or industry groups to get their facts together. Institutions should make an effort to move the evaluation process from ad hoc to coordinated. Erickson says creating a cross-enterprise and hierarchical communication channel is vital to seed firmwide green strategy and implementation. Citi created a CIO council, staffed by executives from IT, infrastructure, architecture and engineering, business, and risk management divisions. The council, in turn, created a team responsible for collecting information, recruiting staff for exploratory groups, finding support for initiatives within their organizations and reporting back. “Look at everything happening in the organization already,” she says, “whether it’s IT or not and whether it’s labeled as green or not.”
De Lotto says a key step beyond gauging ad hoc practices and creating governance channels is setting up firmwide sustainable IT auditing and compliance capabilities. That will not be easy; the educational infrastructure to produce knowledgeable green IT practitioners and auditors is just beginning to emerge. American Power Conversion Co’s. Data Center University and Arizona State University are two of the pioneers in green IT training, he says.
He also advises banks to think beyond conventional wisdom in long-term green planning. Energy costs have to be cut, but banks are different from manufacturing firms in that they must be able to react to unforeseen circumstances. “There is an overall tendency to increase centralization and control, but taken as part of a grand organizational strategy, there’s also a lot to be said for a completely distributed environment for disaster recovery. Here’s one hard example: Take the demands for lean computing and factor in how to approach planning for a possible pandemic, which would push toward issuing individual laptops. I don’t know how that’s going to work out in real life, whether we’ll run out of oil or get the flu first.”
