Green IT and the bottom line - KPMG

1 G r e e n I T a n d t h e B o t t o m L i n e

IT AdvIsory

Green IT and the Bottom LineEnhancing Enterprise-Wide Economic, Environmental, and Social Sustainability

KPMG LLP


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xponential growth in energy consumption

and costs, mounting concern over green-

house gases and toxic waste disposal, and

the major capital investment needed to expand

limited data center facilities are driving increased

interest and efforts around “Green IT” operations.

Many large organizations already see Green IT as

more than just a technology issue, acknowledging

that it is in fact a fundamental business challenge

with a key technology component. And while infor-

mation technology (IT) operations face significant

challenges in reducing their environmental impact,

the value proposition for implementing a green

strategy is also significant. Linking Green IT initia-

tives to those shaped by corporate social respon-

sibility frameworks can make IT a valued business

partner on the journey to a “greener” business

and provide organizations with an unprecedented

opportunity to align environmental management

initiatives with broader sustainability initiatives.

Indeed, with an appropriate business-oriented

approach, the greening of IT operations can

support the three crucial aspects of sustainability

for an organization — economic, environmental,

and social — the so-called “triple bottom line.”

E

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It Can Pay to Go Green

Energy costs related to IT are expected to continue to climb, affecting IT equip-ment such as servers, switches, and storage as well as critical infrastructure components such as power and cooling systems. These costs are prompting many organizations to recognize the business value to be derived from a focus on “green.”

Consider these statistics:

• Most large enterprise IT organizations spend at least 5 percent of their total IT budgets on energy, and this cost could rise two to three times within the next five years. Gartner, “Why ‘Going Green’ Will Become Essential for Data Centers,” October 2006

• It costs nearly as much to power a server for three years—the typical lifespan—as it does to buy the hardware. Dallas Morning News, “Technology Industry is Going Green to Cut Costs,” February 22, 2008

• Data center energy consumption in 2006 [was] estimated to be two times the consumption levels in 2000…Under current efficiency trends, national energy consumption by servers and data centers could nearly double again by 2011. Environmental Protection Agency Report to Congress on Server and Data Center Energy Efficiency, August 2007

• Momentum for greenhouse gas (GHG) legislation is building. As of December 2007, lawmakers had introduced more than 165 bills, resolutions, or amend-ments specifically addressing global climate change and GHG emissions—up from 30 pieces of legislation five years ago. KPMG research on GHG actions in the 106th to 110th Congresses

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KPMG’s Approach for Realizing Green IT Benefits

KPMG understands that developing and executing a Green IT strategy—and real-izing full value from the effort—requires a combination of business and technology skills and experience. Our approach addresses the technology, process, and change management issues that require broad organizational cooperation across multiple functions, such as corporate real estate, IT, tax, facilities, and environmental health and safety.

our Green IT approach can help organizations:

• Reduce energy consumption, water consumption, and waste generation through adoption of industry leading practices and emerging practices and technology, including identifying consolidation and virtualization opportunities

• Reduce energy, water, and waste costs through third-party contract management, identifying cost-effective tariff and rate structures, provisioning systems into advantageous markets, and adopting leading energy-management practices

• Identify and capture available tax and utility incentives to help offset the cost of planned investments

• Define measurement and reporting frameworks, establish key performance indicators (KPIs) and baseline measurements, and create a monitoring program to drive continuous improvement

• Identify and comply with existing and emerging standards and regulations.

KPMG’s Green IT Approach

Bottom-Line Benefits

Plan

Assessand

Strategize

Designand

ImplementMonitor

KPMG’s Coordinated, Sustainable IT Framework

Technology/Facilities/Process/Tax/Energy/Change/Risk

Environmental

SocialEconomic

KPMG’s Green IT approach addresses the complete implementation life cycle. Beginning with a detailed project plan that articulates your goals, we assess your organization’s unique operations and circumstances to quantify the poten-tial benefits of a Green IT strategy and develop a sub-project road map. Our experienced technical and process profes-sionals support your organizational efforts with project management assistance and change management guidance during the design and implementation phase. To enhance sustainability, we create an ongoing monitoring program by defining and establishing key performance indica-tors and baseline measurements.

G r e e n I T a n d t h e B o t t o m L i n e 3

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Economic, environmental, and social benefits may include:

• Reduced IT complexity, including lower costs, improved quality, and increased availability

• Delayed or avoided capital investment for facility and infrastructure capacity upgrades or new builds

• Recordable and reportable green savings that support sustainability reporting initiatives and help prepare for likely future legislation or regulation

• Preparation for possible greenhouse gas legislative or regulatory impacts.

Approach

Plan

Assess andStrategize

Design andImplement

Monitor

Green Frameworks

OPER

ATIO

NAL

IT Leading PracticesIT BenchmarksIT KPIs

Potential Benefits

EconomicReduced energy costs; optimized data center

footprint

SocialImprovement in

quality-of-life issues

EnvironmentalReduced carbon

footprint, GHGs, toxic waste; easier global

reporting

STRA

TEGI

CTA

CTIC

AL

GRI G3CDP

Dow Jones Sustainability IndexAA1000FTSE4GoodSA8000ISO 26000LEEDEnergyStarISO 14000 and 14001

KPMG’s Green IT Framework

A More Comprehensive Approach Can Equal More Comprehensive Benefits

A top-down, holistic approach can provide a broader perspective and enable an organization to focus on the bottom line—economic, environmental, and social benefits. We leverage widely accepted corporate social responsibility frameworks at the strategic and tactical levels as well as leading practices, benchmarks, and KPIs at the operational level.

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The Greening of IT Operations: Case Studies

■ Fortune 50 Company

A Fortune 50 company with a sizable IT organization wanted to develop a strategy to reduce the environmental impact, or carbon footprint, of its data center operations without increasing costs to the business. Previous efforts to improve the organiza-tion’s environmental impact focused on internal programs and performance report-ing; these efforts were disjointed and had not achieved measurable or sustainable improvements.

KPMG leveraged a multi-functional project team of IT, tax, and utilities professionals to assist the company in developing a strategy that mapped to its environmental and business-specific objectives. The effort included a plan to manage pending risks and ambiguity by monitoring key trends, such as energy prices and potential legislation, and to adjust strategies based on the changing landscape. KPMG then worked with the company to develop a one-, three-, and five-year prioritized implementation road map that highlighted consumption and cost savings, environmental benefits, and level of effort required of company resources.

❧ Benefits to the organization

Opportunities were identified to reduce waste and the consumption and cost of energy and water as well as to capture tax and utility incentives related to road map improvement opportunities. Additionally, the company was able to anchor its IT operations around a single environmental program that considered the entire IT life cycle and could be used to prioritize and orchestrate discrete project initiatives now and in the future. Further, through identified operational-level KPIs and a reporting dashboard linked to the strategy-level sustainability framework, the company was able to baseline, measure, and report improvement efforts.

Finally, communication channels and critical dependencies between the IT organization and other business units (such as real estate, facilities manage-ment, and environmental health and safety) were established, facilitating an enterprise-wide view of the business challenge and potential areas for future collaboration.

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■ Large Federal Government Agency

The organization was interested in assessing the effectiveness of current initia-tives—including energy reduction and Leadership in Energy & Environmental Design (LEED) certification—in reducing the environmental impact of IT and data center operations. It also sought to identify opportunities to reduce the environmental impact of IT operations while maintaining a high level of IT reliability, availability, and customer satisfaction as well as alignment with overall organizational sustainability efforts.

After evaluating the organization’s current initiatives and alignment with its other sustainability efforts, KPMG’s multi-functional project team worked with the organiza-tion’s leaders to identify opportunities for continued reductions in energy and water use through the adoption of industry leading practices and emerging technologies as well as reductions in energy and water costs by managing third-party contracts and leveraging cost-effective tariff and rate structures. We also identified tax and utility incentives to offset costs of planned “green” investments. Finally, we defined mea-surement and reporting frameworks and provided recommendations for establishing a monitoring program to drive continuous improvement. The result was a prioritized implementation road map highlighting consumption and cost savings, environmental benefits, and level of effort required.


Opportunities for reducing energy and water consumption within IT and data center operations—as well as organizational energy and water costs—were identified. Additionally, existing IT initiatives to reduce the environmental impact of IT and data center operations were communicated to the broader organization to improve the alignment of IT initiatives with overall sustainability initiatives, such as LEED certifica-tion, and to establish an enterprise-wide view of the business challenge and potential areas for future collaboration.

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■ KPMG LLP

IT leadership wanted to reduce identified IT risks and related IT operating costs as well as improve energy efficiency—an effort that involved the relocation of KPMG’s major U.S. data center. IT leadership also wanted to support KPMG’s Global Green Initiative, designed to reduce member firms’ combined carbon footprint by 25 per-cent by the year 2010 through emissions reduction programs and the use of renew-able energy, while simultaneously leveraging KPMG’s Green IT approach.

The firm adopted many Green IT leading practices, including server and storage consolidation and virtualization, power management enablement, and use of high- efficiency uninterruptible power supplies. To date, 450 server environments have been reduced by 20 percent with a goal of reaching a 40 percent reduction. Green efforts are also part of the construction plans for the data center: building materials include recycled concrete, metal, and wood as well as paint with low volatile organic content (VOC) and a more efficient category of cabling. Improved waste manage-ment efforts were also undertaken. In addition, the relocated data center will be just the second such facility to use a state-of-the-art, natural-gas-powered micro-turbine.


The firm aligned the green initiatives of its IT organization with its enterprise-wide Global Green Initiative and positioned IT as a key contributor to the success of that effort. KPMG is earning credits toward LEED certification of the data center. It has lowered costs significantly and has improved the overall power requirements and energy efficiency of the new data center through consolidated IT infrastructure and energy-efficient IT and data center architecture.

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Why KPMG?

We help chief information officers enhance their impact on overall business goals. KPMG’s IT Advisory professionals understand that Green IT is a key component in an enterprise-wide sustainability effort. We can help you align your information technology efforts with the organization’s strategic and financial objectives and real-ize improved performance from your IT investments. We work hand in hand with members of senior management as they seek to make the right choices, at the right time, at the right cost. Our professionals possess the critical attributes you require in an IT adviser:

• A deep understanding of the IT life cycle and other business processes and how they connect

• More than 15 years of sustainability experience in Green IT and in implementing and auditing sustainability measurement and reporting programs through KPMG’s Global Sustainability Services network

• Deep tax and regulatory knowledge and experience

• Coordinated project team approach that engages professionals with specific experience in information technology, tax, utilities, corporate social responsibility reporting, and carbon credit certification and trading

• Objectivity and impartiality

• Global breadth, local knowledge

• Experience serving market-leading clients across industries

Contact Us

Matt BishopPrincipal, Advisory [email protected]

Brad FisherPartner, Advisory [email protected]

Mark Forman Principal, Advisory Services [email protected] 202-533-4003

steve HastyNational Partner in Charge, IT Advisory [email protected]

Lance MortonSenior Manager, Advisory [email protected]

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© 2008 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. 080511

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Green IT and the bottom line - KPMG

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