Most industries in Australia have been addressing sustainability issues, at least to some extent, for several years. For example, energy companies and miners have had to, at the very least, address sustainability issues for many years, as have financial services companies, government, retailers and manufacturers.
IT, however, has traditionally perceived itself to be a clean industry and has been late to focus on sustainability. Over the last couple of years, IT carbon and ways of reducing it have come into focus.
Sustainable IT is made up of two components. Firstly, it consists of ways of reducing IT’s carbon emissions through activities such as data centre consolidation or even small operational changes like power management for PCs. Secondly, and perhaps more importantly, it comprises ways in which IT and IT suppliers can enable whole organisations to reduce carbon emissions in non-IT specific activities such as by developing smart grids for utilities or by enabling video conferencing.
A recent survey undertaken by Frost & Sullivan revealed that, despite the global financial crisis, IT professionals in Australia are placing more emphasis on sustainability initiatives than a year ago.
Over time, Frost & Sullivan expects sustainability to become embedded within every IT process and purchase. It will become a much more significant choice determinant for products and services over the coming years along with other determinants like price, performance and references. It will be assumed that sustainable IT offers cost benefits. This will lead organisations to seek accurate ways of determining payback periods, net present values and returns on investment.
Passing on the cost of carbon usage and of recycling to the consumer will result in the benefits of sustainable IT investments being realised sooner and offering greater financial benefits. It should be noted that this is not a hypothetical comment. Incorporating carbon costs and the cost of recycling into products and services is not a possibility. Frost & Sullivan believes that organisations will incorporate these costs and pass them onto their customers within the next three to five years, if not before.
Of course, no investment is made that does not offer clear financial benefits within a reasonable timeframe. As a technology or business activity matures, buyers start to look beyond financial benefits and more to the strategic benefits that can be offered. Foresighted IT buyers are now making sustainable IT purchases not only for financial benefits but also to differentiate themselves from their competitors. This has parallels with the evolution of outsourcing.
In the early days of outsourcing, cost reduction was the dominant and often the only driver for outsourcing decisions. Today however, outsourcing buyers assume that there will be measurable cost benefits associated with an outsourcing purchase. Cost reduction is no longer the sole driver. Instead, outsourcing buyers are increasingly interested in ways that outsourcing can differentiate them from their competitors. For example, an outsourced contact centre may not only offer cost benefits but also enable an organisation to fully integrate its channels to market. Multi-channel integration allows many organisations to offer vastly improved customer care and hence differentiation from their competitors. Seeking business benefits beyond cost reductions can also be expected to occur when buyers examine sustainable IT options. For example, a utilities firm might invest in developing a smart grid, not only to manage costs over a period of time but also to differentiate its customer offerings from competitors. A utilities service that can provide information about energy use per device can differentiate that service and offer additional value to customers.
Key advances in technology use in Australia will complement the move to sustainable IT. The National Broadband Network will allow an increasing number of services to be provided over the Internet, further enabling service dematerialisation such as the elimination of CDs. The move to cloud computing, together with server virtualisation, will also create greater efficiencies and economies of scale in the data centre.
E-waste is another major sustainable IT issue. Australia has yet to implement e-waste legislation which exists in many other mature economies. IT products contain comparatively large amounts of embodied energy, yet they have relatively short life spans. Questions are being raised about the life spans of IT products. For example, why do we dispose of all the components of a laptop computer each time we purchase a new one? Can’t we, for example, re-use our keyboards or monitors? As yet, there are no clear answers to these questions. This suggests that the bulk of the IT industry still has some way to go before sustainable practices are embedded into all parts of the IT supply chain.
Nevertheless, IT stakeholders are becoming increasingly aware of the benefits and challenges associated with sustainability issues and sustainability is becoming a key component of, at least some, key IT-related decisions.
Andrew Milroy is industry director, ICT Group at Frost & Sullivan