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April 30, 2008

“Green” IT: Sustainability in one Keystroke TASSCC Technology Education Conference Austin, TX Chris Park Principal Deloitte Consulting Sol Salinas Senior Manager Deloitte Consulting. April 30, 2008. Agenda.

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April 30, 2008

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  1. “Green” IT: Sustainability in one Keystroke TASSCC Technology Education Conference Austin, TXChris ParkPrincipalDeloitte ConsultingSol SalinasSenior ManagerDeloitte Consulting April 30, 2008

  2. Agenda

  3. “I would try to take advantage of—and capitalize on—a green movement, whether I believed in it or not. If you’re a CEO, you have no option today.” -Jack Welch, April 12, 2007

  4. Sustainability Overview

  5. Global Trends Driving Sustainability The emergence of new converging factors has elevated the importance of sustainability:

  6. Today Evolution of Corporate Responsibility and Sustainability Governments , businesses and stakeholders at all levels are realizing that significant change will be required Continued Increasing Broad-based Global Prosperity Unsustainable Consumptionfor World Resources Steady State Resource Consumption (Renewable/Recyclable) Unsustainable Levels of Global Pollution Global Prosperity / Consumption / Pollution Declining Pollution Application of CR and Sustainability Principles Globalization Industrialization Time Pollution Global Prosperity Resource Consumption

  7. Global Trends Changing demographics Reducing environmental impact Preserving natural resources Globalizing economy Permitting requirements becoming more stringent Changing geopolitical landscapes As a result, Sustainability and Corporate Responsibility have become top-of-mind issues at the local and federal level • Demanding Stakeholders • Financial markets • Activist shareholders • Institutional investors • Consumers • Civil society / NGOs • Government regulators • Employees • Vatican City* Impact on Business • Increased requirement for accountability and transparency • Greater requirement for governance and social responsibility • Heightened pressure from institutional and individual investors • Drive to innovate – clean tech sector (clean energy, clean production, clean water) • Increased competition as more companies vie to be recognized by global ranking systems • Normalization / standardization - ISO 14001 (Environment) and OHSAS 18000 (Health and Safety); ISO 26000 (Social Responsibility – 2008); Global Reporting Initiative (GRI) providing guidelines for sustainability reporting; Standards (AccountAbility AA1000 series; ISAE) for assurance of CR & Sustainability reports, LEED for environmentally sustainable construction

  8. Number of organizations using GRI reporting guidelines 1000 887 800 695 600 503 400 350 225 200 110 0 0 2000 2001 2002 2003 2004 2005 2006 Assure Assure Don't Assure Don't Assure Don't Report Don't Report The sustainability marketplace is nascent but evolving and growing rapidly • Awareness and disclosure is increasing: In 2006, more than 75% of S&P 100 and 60% of Dow Jones 30 companies reported their CSR performance Greater than 70% of Fortune 500 companies have responded to the Carbon Disclosure Project (CDP) The US lags Europe in Assurance of CSR reports… % of Fortune 500 companies responding to the Carbon Disclosure Project Europe Top 100 US Top 100 3 10 41 28 56 62 Source: Social Environmental Context. View page

  9. Why Sustainability Matters to the Public Sector Government Mandates • Executive Order (e.g., EO 13423, EO 13101, EO 13148) • “Strengthening Federal Environmental, Energy, and Transportation Management” • Raises the bar for federal leadership and performance in several areas • Greening the government through waste prevention, recycling, and federal acquisition • Acts of Congress (e.g., Energy Independence and Security Act of 2007) Social Responsibility “the right thing to do” • Energy security is one of the top priorities of the United States and the President • Environmental stewardship & resource conservation • “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs,” from the World Commission on Environment and Sustainability “Lead by example” • Office of the federal Environmental Executive published an October 2004 report called Leading by Example: Report to the President on Federal Energy and Environmental Management • “Americans expect the federal government, now more than ever before, to promote the general welfare of the American people” Cost Savings • The United States consumed 22% of the power generated worldwide in 2006 • Federal servers and data centers account for about 10% of electricity consumed by the IT industry (or about 0.015% of the total electricity consumed in the US), which equals $450 million • The federal government is the largest consumer of energy – the potential for cost savings through improved efficiency is considerable

  10. Texas Efforts – Recent Legislation & State Agency Initiatives 80th State Legislative Session • HB 66 (Leibowitz/Watson) requires the Department of Information Resources to research and use, if technically feasible, software power management for state agencies and state universities to reduce energy for operating state computer networks and networked personal computers. • HB3693 (Strauss et al) an omnibus energy efficiency bill, which established efficiency provisions applicable to school districts and to certain institutions of higher education and executive branch state agencies, requiring them to establish a goal of reducing their annual electricity consumption by 5% for each of six state fiscal years beginning September 1, 2007. Texas Department of Information Resources: • Data Center Consolidation - Since data centers consume significantly more electricity per square foot than office space, freeing this space for other use provides an opportunity to reduce the state’s utility bill and decrease its carbon footprint. • Online meetings - DIR issued a request for information (RFI) in June 2007, and conducted several vendor forums, utilizing Webcasts and online chats. The final interactive procurement Webcast during this process yielded the following statistics: • 183 individual viewers representing 154 companies participated in the Webcast • 47 percent of viewers were company executives • 67 percent of vendors were from outside of the City of Austin, including participants from Canada and India DIR estimates that vendors collectively saved $108,000 in travel costs for the online event. Additionally, by shifting from an in-person meeting to online, the carbon footprint of such an event almost disappears. Source: Department of Information Resources Strategic Plan, http://www1.dir.state.tx.us/transform/

  11. Green IT Overview

  12. Green IT: Forrester’s definition Forrester classifies Green Computing (Green IT) into four broad categories of IT suppliers' and users' initiatives: Design: Technology manufacturers are reexamining all aspects of IT system design, from semiconductor materials up through data center facilities, with green in mind Manufacture: System manufacturers along with their sub-contractors are working to clean up their processes and supply chains Operation: IT users are starting to implement policies and processes that significantly reduce the environmental footprint of their IT operations Disposal: Manufacturers and customers share responsibility for proper disposal of IT systems and devices at the ends of their useful lives Scope of Green Computing (Green IT) Source: Forrester report titled “ The Greening of IT” by Christopher Mines, Frank E.Gillett

  13. Current state of Green IT Technology suppliers are investing in and starting to promote low-impact manufacturing; energy efficiency; and responsible, end-of- life disposal for IT devices and systems IT Vendors are taking various efforts to increase energy efficiency which include: Designing more energy efficient products Building consortia to develop standards and best practices Creating services to help customers reduce energy usage Putting their green products, services, and strategies to work within their company’s operations In a survey conducted by AMR Research, around 44% of the respondents* (for the year 2007) said that the IT budget spend on environment initiatives is around 11% In another survey conducted by Forrester, around 85% of the respondents of North America feel that environmental concerns are important in planning a company’s IT operations Importance of Environmental concernsin planning a company’s IT operations Percentage of IT Budget to bespent on environmental initiatives * - Source: PwC’s survey report, “Going Green: Sustainable Growth Strategies”

  14. Energy Usage in Data Centers: Current US Scenario U.S. data centers are consuming twice as much energy as they were five years ago In 2005, total data center electricity consumption in the U.S., including servers, cooling, and auxiliary equipment, was approximately 45 billion kWh resulting in total utility bills amounting to USD 2.7 billion. In 2000, total servers installed in the US data centers were approximately 5.6 million whereas the same in 2005 increased to 10.3 million Forrester Research says that a data center with 2,500 servers – relatively small will use enough electricity in a month to power 420,000 homes for a year Typical Data Center Energy End Use Source: Report titled “Energy Efficiency in Data Centers: A New Policy Frontier” by Joe Loper and Sara Parr Alliance to Save Energy with support from Advanced Micro Devices & www.associatedcontent.com

  15. Green IT is quickly gaining momentum as a C-suite consideration What is my CIO doing to minimize environmental impact? An enterprise class data center uses more power in one year than the city of Leicester. Broad Group Research The IT industry is estimated to produce 2% of global CO2 emissions. Gartner Research According to the recent Uptime Institute Data CenterCapacity and Energy Efficiency Survey, 41.7 percent said that their data center would run out of power capacity in 12-24 months A PC left on all day will cost about $75 a year. If switched off at night and at weekends, this drops to nearer $20 a year. Carbon Trust. For an organization with 50K desktops, this equates to a saving of $2.6m Electricity use for servers doubled over the period 2000 to 2005. Lawrence Berkeley National Laboratory Today, energy costs typically form less than 10% of the IT budget. This could rise to more than 50% in the next few years. Rakesh Kumar, research Vice President, Gartner Energy efficiencies of up to 55% can be achieved in the data centre. EPA Report to Congress

  16. Is there a Green IT “Timing Is Everything”/”Beat the deadline” imperative reminiscent of the days of Y2K and SOX? With all of the current drivers, now, more than ever, competitive advantage will be gained by companies capable of driving Sustainability ahead of federal regulations. Early adopters and the early majority will reap the most rewards from going green early.

  17. Within the IT organization, the Data Center typically provides some of the lowest hanging fruit for Green IT initiatives Analysis of power consumption through the data center shows “An Inefficient Truth” Up to 98.6% of the power consumed by a data center is wasted* Data Center Server Processor 45 Watts supplied to IT equipment 14 Watts supplied to CPU Peripheral Slots 20% 10% Utilised 55% Power, Cooling & Lighting 32% Processor 45% IT Load 90% Idle PSU 15% Memory 14% Motherboard 10% Fans 4% Drives 5% 100 Watts Supplied 1.4 Watts used for computation * Source: EPA Report to Congress on Server and Data Center Energy Efficiency, August 2007

  18. …But Green IT addresses more than just key data center issues Key Impact Areas “Green IT” can help realize significant energy savings thereby reducing costs as well as carbon footprint • Green Data Center • DC Consolidations • Cooling Redesign & Upgrade • Server Architecture Consolidation / Optimization • Server and Storage Virtualization • Application Rationalization • Emissions Tracking and Monitoring • DC Layout Redesign • Energy Cost Reduction • Equipment Lifecycle & Waste Management • Alternative Energy Sources • Application Hosting Green Server Farms • Greening Workplace IT • EPEAT and ENERGY STAR Equipment Migration (PCs, printers, fax/copier) • Green Networks • Equipment Lifecycle, Recycling and Waste Management • Green IT Workplace Practices & Culture • Green Workplace & IT Design (e.g. fewer powered Ethernet ports, wireless LANs, optimized AC) • Thin Clients, Thin Provisioning / Storage Management • PC Power Management Green Data Center Define “green data center” maturity goals and performance targets (e.g. energy utilization reduction, controlling server sprawl, green facility planning) Develop opportunities for data center relocation and/or consolidations and defined targets Identify “quick win” opportunities and prioritized DC-focused initiatives Provide framework to identify, capture, and effectively utilize energy-related data Identify opportunities for tax incentives and credits Develop incentives and rewards for IT personnel Greening Workplace IT – Taming the “Energy Addicts” Provides IT-focused framework that can be fully integrated with the Sustainable Workplace work stream Gain visibility to the energy “guzzlers” – both equipment and workplace practices Drive realignment of procurement and vendor management policies; influence “greener” technology vendor programs and practices Develop incentives and rewards programs to employees for achieving energy efficiency goals Facilitates deployment of a Green IT Change Framework An effective greening of IT demands a holistic approach to develop and implement a “Green IT” program

  19. Green IT makes sense because it’s really about good business practices Green IT follows good business principles to reduce costs and improve services, while reducing environmental impact. This allows companies to address key business drivers in a positive ROI-focused manner. • Green Strategy • Infrastructure Optimization • Data Center Optimization • Cost Reduction • Green Sourcing & Procurement • Metrics and Measurements • End of life / waste management • Green Culture ENVIRONMENT Environmental impact of the IT industry rapidly being exposed TECHNOLOGY Generating significant environmental challenges, but offering new & exciting solutions GREEN IT REGULATIONS Changes in regulations are creating new risks & new opportunities BUSINESS Expected to take the lead in combating climate change & also keep costs down Environmental Benefits • Increased efficiency reduces costs • Cost savings are long term • Reduced environmental impact • Increased sustainability • Improved management and control • Increased flexibility and response Cost Reduction Service Improvement Demonstrating a commitment to environmental issues is already allowing progressive organizations to gain competitive advantage and enhanced brand positioning!

  20. IT represents 30-40% of an organization’s energy consumption. Energy consumed by servers and related infrastructure around the world doubledbetween 2000 and 2005, due to increasing reliance on technology. The volume of servers in data centers, particularly low-end servers, represented 90 percentof that growth in power consumption. Roughly 50 cents is currently spent on energy for every dollar companies spend on computer hardware. And that's going to increase to 71 cents – a 54% increase – by 2010. That’s not even including maintenance and other operational costs. Green IT – Highest Potential Benefits Around Energy Savings and Consumption • Greening Categories • Vehicles • Petroleum Conservation • Alternative Fuel Use • Renewable Energy • Energy Efficiency/Greenhouse Gases • Electronics Management • Building Performance • Procurement • Pollution Prevention • Water • Environmental Management Systems Sources: InformationWeek, “Data Center Energy Consumption Has Doubled Since 2000,” 02-15-07 Financial Week, “IT’s energy hogs need to run lean,” 03-03-08

  21. EPEAT is an EPA program that provides a system of standards for energy efficiency for desktop computers, notebooks, and monitors. More than 300 computer models meet these standards Energy Star is a joint program of the EPA and DOE that sets strict energy efficiency guidelines for office equipment, home electronics, appliances, heating & cooling, and lighting products. More than 25% of personal computer products meet these standards. An environmentally sound waste management program encompasses: In house recycling of IT products (e.g. printer toner, batteries, cables) Environmentally sound end-of-life strategies Manufacturer recycling of IT products Purchase of products with recycled content Purchase of products with minimal packaging Green IT – Opportunities to Reduce Costs, Improve Performance and Reduce Carbon Footprint • Goal: Electronics Management • Annually, 95% of electronic products purchased must meet Electronic Product Environmental Assessment Tool (EPEAT) standards where applicable • Enable Energy Star features on 100% of computers and monitors • Reuse, donate, sell, or recycle 100% of electronic products using environmentally sound management practices • Substantial impact on cost reduction, and performance improvement and the reduction of the carbon footprint Source: Energy Star Annual Report 2007

  22. Green IT becomes a New Business Paradigm • Unlike a typical scenario where business drives IT, this is a case where IT can propel clients toward a new competitive advantage: • Immediate ROI through reduced energy costs • Increased workforce morale and productivity • Enhanced reputation in the public eye and in the marketplace (brand equity) • Improved attraction and retention of talent • Satisfaction of regulatory requirements around greenhouse gas emissions – no longer “if” but “when” • Opportunity to learn from the growing pains and potentially leapfrog into a global leadership position • Reduce impacts to global climate change IT Becomes a Driver! • Clients can leverage IT as a catalyst to jump-start green changes, take proactive steps to reduce costs and energy consumption, and become a true partner with the business to achieve the ES vision.

  23. The Green IT Business Case Tactical and initiative based “Green IT” implementations can help realize significant energy savings thereby reducing costs as well as carbon footprint: Cost savings • Lowers IT’s overhead costs, particularly energy use • Adobe Systems’ $1.4 million green renovation of its San Jose, California headquarters, boasted: • A 10.5 month payback • Generated a 121 percent ROI • Saves Adobe $1.2 million annually Productivity • Green workplaces can improve productivity • 5 percent to 16 percent compared to standard buildings Incentives • Governmental incentives & utility company rebates. • The Federal Energy Policy Act of 2005 provides a tax deduction of up to $1.80 / square foot for commercial buildings that reduce heating and cooling energy consumption by at least 50% • State by state tax credits Additionally, Green IT initiatives can allow for: • Marketing and communication opportunities • Community involvement and Social Responsibility • Risk Mitigation The “greening of IT” offers the opportunity to gain almost immediate ROI through reduced energy costs, boost workforce morale and productivity, enhance the company’s reputation in the marketplace, and satisfy anticipated regulatory requirements around energy use and global greenhouse gas emissions.

  24. You may be going green and not even know it – a Green IT Checklist Sustainable Workplace Sustainable Workforce Sustainable Products and Services Sustainable Functions and Processes Sustainable Governance

  25. Issues and myths around Green IT • Although Green IT makes good business sense, sometimes there are hurdles to overcome within the IT organization Issues: • Lack of stakeholder and/or executive support • IT management simply unaware of issues they may be experiencing (i.e. power/space) or benefits of Green IT • Tendency to wait until federal regulations are mandated, then spending vast sums of capital and facing implementation risks just to play “follow the leader” • The current IT “plate” may be too full from competing intiatives, thereby neglecting other vital IT programs Myths: • SLAs for reliability and performance might be compromised • Payback from green IT initiatives is uncertain or long term • Green IT is vendor marketing hype or "greenwash“ • Approaches to Greening IT are haphazard or piecemeal

  26. Five steps to get started • Opportunity exists to proactively begin to address organizational capability and performance • Create awareness and a sense of urgency around compliance and opportunities that drive value • Conduct a organizational capability diagnosis around (structure, people, processes, tools/technology and metrics and data) • Establish a green organizational performance and environmental baseline • Define organizational and environmental performance gaps • Develop a strategic green blueprint and detailed implementation plans to close performance gaps with short and long term initiatives to realize results and benefits

  27. The Future  Sustainability 2.0: Beyond the basics Improving the depth, rigor, integrity and transparency of sustainability and CR reporting Improving the automation of data gathering and analysis for the S/CR report Extending the sustainability reach beyond existing organizational boundaries Directly tackling energy and emissions related to IT infrastructure- data centers, storage, desktops Addressing workforce flexibility- combining real estate, IT, HR etc to restructure how and where work is accomplished Reassessing the IT talent management strategy Aligning and optimizing community development, philanthropy, foundation and service with core strengths of the company and the talent management strategy Optimizing the benefits available from tax credits, incentives, rebates to fund new efforts and increase ROI As Green IT continues to grow into the next “New New Thing,” market maturity will require companies to continually drive beyond just the basics, as the search for competitive advantage will continually raise the baseline bar for sustainability. Some areas that are already starting to gain notice include: • Coordinating additional S/CR initiatives through a program management infrastructure to manage issues, communication, measurement, prioritization, roadmap development and execution/project management • Scenario planning for potential changes in US regulations around reporting, compliance, carbon trading etc; impact analysis on current and future sustainability and CR plans • Directly addressing the physical footprint (real estate and facilities) to optimize densities, reduce SF, reduce/eliminate net energy use and carbon emissions • Re-evaluating commitments to carbon neutrality given emerging US market for offsets and concerns related to disclosure and value • Attacking product design and lifecycle issues for maximum impact reduction

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