IBM: Going Green With or Without You

NEW YORK — The day after it came forward with a string of new products to support its Big Green initiative, IBM (NYSE: IBM) dispatched an executive to a high-profile trade show to talk up energy-efficient computing.

In a keynote address at the Direct Marketing Association’s biannual conference, Elaine Lennox, vice president of marketing management for IBM’s enterprise services division, advised her audience to start thinking about to implement green solutions before the government does it for them.

“Regulation today is not such a big deal, but over time it’s going to become a prime driver,” Lennox said. “Five, 10 years from now — you betcha — there will be regulations.”

Fighting rivals such as Hewlett-Packard (NYSE: HPQ) and Sun Microsystems (NASDAQ: JAVA), IBM is trying to cast itself as the leader in green IT, providing energy-efficient solutions at a time when power costs are spiking and a growing consumer awareness is giving a competitive advantage to companies that can successfully position themselves as green businesses.

Lennox said that for most of IBM’s U.S. clients, the most effective way to pitch a green overhaul of the datacenter is to focus on the cost savings. In Europe, however, where regulators have been more aggressive, Lennox said that many clients approach IBM asking for help in complying with various energy-emissions requirements.

But as the green movement goes mainstream and government regulations begin requiring IT managers to take steps that are currently voluntary, Lennox warned that the luster of a green company will disappear.

“There’s a huge brand opportunity here,” she said. “If you go forward 10 years, there’s not going to be that same opportunity to differentiate yourself because it’s going to be expected.”

IBM launched its Big Green initiative a year ago with the twin goals of doubling its datacenter capacity without increasing energy usage, and pushing green initiatives with a $1 billion investment commitment.

The company reiterated that commitment yesterday, pledging to invest $4 billion in green IT over the next four years.

Lennox frankly admitted that the problem IBM is trying to solve is substantial. To begin, the company estimates that datacenter energy usage accounts for 2 percent of global man-made carbon emissions, roughly the same amount as the entire airline industry.

Also, IT managers are not always the most receptive to a pitch about how a green datacenter will save the world. Lennox said that chief executives are usually quicker to see the branding potential that can come from cultivating a green image, but for CIOs and IT managers, the immediate bottom line is the prime concern.

According to Lennox, IBM’s green consulting business has produced for its clients an average energy savings of more than 40 percent, and an increase in server utilization ranging from twofold to fourfold.

IBM has turned its green consultancy into a profitable business line, raking in $300 million in new revenue in the fourth quarter of last year.

But green IT is still a fairly new phenomenon, and standards to measure what actually makes a datacenter “green” are only beginning to emerge. Indulging in a bit of self-promotion, Lennox recommended that companies thinking about a green strategy enlist an outside consultancy.

Indeed, a major push from IBM’s announcements yesterday was aimed at improving the standards by which companies measure their relative greenness. But of course it doesn’t have to be IBM. An outside agency’s stamp of approval is always more credible than the company’s own word on the subject, she said.

Several times in her speech, Lennox emphasized the importance of being able to prove claims about energy conservation or other green initiatives. More companies are including energy conservation numbers in their annual reports, and advertising touting a company’s “greenness” will become commonplace.

Lennox looks for a backlash to overstated claims such as “We’re saving the world by cutting our server energy usage by 20 percent!” or those that can easily be proven phony.

Going against greenwashing

She said that this will become particularly important as rejection builds against what’s known as greenwashing, where a company slaps a label on a product declaring it environmentally friendly without looking changing much anything else about the company’s operations.

For its part, IBM is working with a company called Neuwing Energy to help quantify the impact of its green efforts. Neuwing CEO Matt Rosenblum was on hand to describe what his company is doing to help introduce standards into what is essentially uncharted territory.

Neuwing partners with IBM to consult with clients about their IT operations, helping arrive at measurable numbers to pin down slippery terms such as “carbon footprint.”

In some states, a certification from Neuwing or a similar company can save businesses real money on utility costs. In Connecticut, for instance, Rosenblum said that the state requires utility companies to buy certificates of energy efficiency from companies like stock, so going green turns into a very real revenue line.

With environmental regulations in the offing at both the national and global levels and likely to have a serious effect on how businesses deploy IT, Lennox urged the audience to start thinking seriously about greening their operations.

“You’d much rather be on the team talking to the government about how it’s going to be done,” she said, than sit on the sidelines and wait for the regulations that are going to “force you into it.”

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