Smarter Midmarket Companies Share Greener Bottom Lines

Sept. 15, 2009
When you consider that 95% of businesses in the world are small and midsize firms, the impact of their adoption of green solutions can be huge.

The world around us is changing. It is becoming not just smaller and flatter, but smarter. Today, almost anything can become digitally aware and interconnected -- products, teams, processes and ways of working. That presents organizations with the ability not only to respond to changes quickly and accurately, but also to predict and prepare for future events. This is possible, in large part, because the innovation driving a smarter planet is able to originate and proliferate from more unexpected sources including individuals, academics, venture capitalists, online communities and companies. Not surprisingly, small and midsize companies are at the heart of this exciting trend.

Smaller and midsize companies are the engines of economic growth fueling a smarter planet and are very often on the leading edge of industry innovation. Their flexibility and entrepreneurial DNA give them the freedom to experiment with new business designs, innovative ways to serve customers and creative technology strategies, while being more attentive to issues of corporate social responsibility -- benefits that are inherent in green IT solutions. In fact, a recent IBM study of 1,200 midsize companies shows that almost two-thirds are working on initiatives now or in the next 12 months to reduce the environmental impact of their information technology. When you consider that 95% of businesses in the world are small and midsize firms, the impact of their adoption of green solutions can be huge.

The most common strategies cited in the study are adding virtualization technology to corporate servers, consolidating and virtualizing storage systems and updating data centers -- projects that can improve cost and energy efficiency through better use of computing and storage capacity, electricity, and cooling and ventilation systems. Companies that employ these solutions can see a decrease in the number of devices running in their server rooms, the energy required to run both servers and storage, and the cost of future hardware investments. What is almost as surprising as the "what" is the "why." Growing businesses are not doing this just to be good corporate citizens. Among the companies studied, almost all initiatives were driven by a 60/40 split between business drivers and environmental concerns. These organizations have discovered that it's not just good for the planet to go for greener IT -- it's also good for their balance sheets.

The most popular business driver was cost control, with more than half of respondents saying they wanted to reduce their use of electricity and consumables such as paper and fuel. They also saw Green IT as a way to increase functionality, lower expenses, and be more responsive to customer demands -- the essential building blocks of a smarter, more dynamic infrastructure. Feedback from our survey participants reveals another interesting finding: most businesses fall into one of four Green IT personalities:

  • Green Advocates (25% of companies in the study): These companies integrate environmental considerations into all areas of their business, including IT.
  • Smart Spenders (38%): They are willing to spend money up front if long-term cost reduction is achievable.
  • Green Seekers (7%): They want to reduce environmental impact and are looking to implement accepted Green solutions, while also open to trying new approaches.
  • Green Observers (30%): They do not have specific environmental goals and need management support for green initiatives.

Canadian apparel manufacturer Ash City, on the other hand, is a Green Seeker -- a company that has implemented basic Green IT measures but is still in the early phases. Collecting rainwater on the roof of its new 250,000-square-foot headquarters to irrigate the landscaping was step one. The next step was to build a data center from the ground up that was energy-efficient and cost-effective. Ash City implemented IBM's Scalable Modular Data Center technology, which is a space-saving, quickly-deployable design that houses the company's servers in high-density server racks cooled with a chilled water system instead of traditional air conditioning. When it is cold outside, the system's efficiency is further increased by a heat exchanger that provides low-cost green cooling by using outside air to cool the chilled water. Ash City estimates that this eco-friendly approach has cut its IT carbon footprint in half.

Regardless of your Green personality, there are many other strategies companies can employ to reduce their environmental impact. These range from environmentally safe equipment recycling programs to supply chain optimization initiatives and carbon footprints diagnostics and reporting. In addition, telecommuting and mobility strategies can offer businesses the advantage of reducing office space while providing employees with a more flexible working environment. And with remote conferencing, companies can foster collaboration among employees while reducing travel costs.

The need for companies of all sizes to create sustainable business practices is real and immediate. Global competition is driving companies of all sizes to reduce costs and improve efficiencies. At the same time, the global economy is creating more and more competition for the very resources it depends upon to survive, and the only answer is to think of ways to run a smarter business. IT energy consumption alone is expected to double in the next five years. Lowering the impact of IT on the environment is a must-have, but the good news is that it comes with the added benefits of improved business performance, lower costs and new capabilities.

Corporate social responsibility will become the norm rather than the exception as stakeholders and governments exert increasing pressure on businesses to improve their environmental practices. Fortunately, there are many actions companies can take to reduce their carbon footprint and yield real, immediate savings -- efforts that will place them at the forefront of a more responsible and sustainable economy.

Steven C. Solazzo is general manager, IBM Global General Business, which focuses on meeting the needs of small and mid-sized companies.

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