[This post first appeared on a Climate Savers Computing Initiative site. I'll skip the general intro to the greening topic from the original...]

...Five areas of the business are ripe for quick paybacks from green thinking: facilities (heating, cooling and lighting), fleet and distribution, waste, telework, and IT. Let's look at IT specifically and why companies are still going green.

When industry analyst Gartner Group estimated that information and communications technology was responsible for 2 percent of global carbon emissions — equal to the entire aviation industry — most people outside the IT world (and many inside it) were shocked. At the core of these numbers lies the shocking inefficiency of data centers.

Of all the energy going into a modern server farm, IBM estimates, less than 4 percent actually processes something you know, what the room was built for. The other 96 percent of electrons are lost at three stages: (1) cooling the room itself, (2) cooling the stacks or "blades" of servers, and (3) keeping idle machines humming. Most of this energy is wasted and costs real money. In recent years, the share of a data center's variable cost going to energy has grown fast. What was once a tiny part of the budget is now 40 or 50 percent of the operating cost. Over the life of a server, you can easily spend twice as much on electricity as on the capital cost of the server itself.

In response, the competition has been fierce to tackle those three stages of the problem and find ways to slash the energy budget. First, look at the design of the data center itself. One of my favorite "head-slapper" strategies in all of the greening movement is the use of outside air economization — that is, effectively opening the door and letting hot air out rather than cooling it — which Intel estimates can save $3 million in a 10 mega-watt data center.

Second, companies are looking at the server hardware. They're shutting down orphaned systems — Sun discovered during its "Bring Out Your Dead" day that 4,100 of its servers were unused, but plugged in sucking energy. But sometimes, as the Wall Street Journal suggested earlier this year, "the smartest thing to do is invest in new, more efficient systems." One company, Fair Isaac Corporation, bought new, more efficient servers and cut the total number in its data processing center in half. This requires some capital expenditure, but the paybacks can be fast.

Third, software companies are vying to help handle server loads and increase the average 20 percent utilization rate (meaning, 4 of 5 servers are basically idle, waiting for peak loads). The buzzword is virtualization, or using software to create pseudoservers that run in parallel on the same physical server and use all that idle processing power.

For companies using all of these tactics, such as Microsoft, newer datacenters can use 50 percent less energy than ones built just a few years ago. And that's just the large IT systems. Many organizations are now utilizing software to control all the PCs sitting on desks, putting them to sleep overnight and often saving millions. None of this pressure to cut back on IT energy and cost is going away. Forrester reported in January 2009 that 60 percent of IT managers are using green criteria in their procurement decisions and that even in tight times more managers are accelerating green IT efforts than slowing them down.

But what's the most powerful thing you can do to reduce IT energy use? Every time I speak to tech companies or sustainability execs, I hear one theme over and over: The people who create the energy use don't have a clue how much it's costing. The prescription: Add the power bill to the CIO's budget.

A couple posts ago, I talked about the ways you can use green data — footprinting information on your products and services up and down the value chain — to create enormous value for your company. As they say, you can't manage what you don't measure. And those with the best information can cut costs, reduce risk, answer customer questions on environmental and social impacts, and help customers reduce their footprints.

But it's a fair question to ask how you might gather this data, especially when budgets remain very tight as the economy gradually recovers. Conducting a full, detailed lifecycle analysis (LCA) is likely to be a time-consuming, resource-draining affair. But luckily there are some shortcuts. Here are a few principles and guidelines for getting smarter about your footprint with the least resources possible:

1. Qualitative analysis is good. In fact, it's better to start with a more strategic view on your products or services than to dive right into detailed numeric analysis. Map out your value chain for a quick view on resource use. Then ask really top level questions that aren't part of the normal day-to-day thinking for most functions in a company, like what comes in the door, and what did it take for suppliers to produce it (are there processes energy or water intensive, for example)? What do we do with our inputs, and how much energy and resources do we use? How much energy and resources do our customers use? What happens to our products after customers are done with them?

You're looking for directionally-correct answers on where the biggest risks and opportunities are...or at the very least, where your data gaps are and how best to fill them.

2. "Back of the envelope" analysis is also okay. Top-line numbers on your own impacts and energy use, from departments like IT, facilities, and distribution, can give you sense of where cuts are most needed or valuable. The data may not be readily available at first, but it certainly isn't capital intensive to find it.

3. Use data that's already out there. A truly detailed LCA is, frankly, a pain. Following a product through every stage of its creation and use is difficult. Luckily, the resources available to help you are multiplying. Industry groups and academics have conducted LCAs on many products. You can extrapolate numbers from similar categories to save time and at least understand where the biggest issues lie. For example, let's say you produce food products, some of which have a big dairy component. The dairy industry has conducted an extensive LCA on a gallon of milk. That study can tell you that the methane produced by livestock may dominate your life-cycle carbon footprint as well.

Another option: public (or quasi-public) databases. See the wonky-sounding Economic Input-Output Life Cycle Assessment (EIO-LCA) data at Carnegie Mellon, or the data collected by AMEE in the UK. Without going into too much detail, the EIO-LCA captures data on flows of goods in and out of all sectors of the U.S. economy, along with data on energy use in each sector, and allows for big picture estimates on impacts. It's a back-of-the-envelope calculation — on a very big envelope. But if you don't want to dig into databases yourself (and who does), then you'll be glad to know that some smart developers have embedded these data sources into handy software products, so...

4. Seek out tools to help you. There is also a wealth of options for software that can help you get a handle on your impacts, including those throughout your supply chain. There are a few now classic providers of product LCA software, such as Ecobilan's TEAM and GaBi Sofware. But new niche players and products that focus on a company's carbon footprint include offerings from both the usual suspects and new entrants: Carbon Impact (formerly Clear Standards, now part of SAP), Planet Metrics, SAS for Sustainability Management, Computer Associates eco-Software, and two open source solutions Carbon Counted and Earthster (in beta).

I've worked with, or been taken through demos of most of these players — all are offering good tools and expertise. But I'm sure I've missed many others so please send me tools you've found useful (andrew@eco-strategies.com).

On top of these carbon modeling tools, companies are offering a range of other green data-tracking services: a sustainability dashboard from Microsoft, Google PowerMeter to measure energy consumption (for homes, but how far off are business-targeted versions), and a cool new product from AngelPoints (working with Saatchi S) that puts the Wal-Mart Personal Sustainability Project program into tracking software so companies can show employees what all their pledges of behavior change add up to.

Beyond these more self-help methods, there is an ever-growing number of consultants that can guide you (including partners of mine such as Domani). You may need to start small with my guidelines above and estimate if resources are too tight, but if you can, working with experts can provide you with a much deeper picture of your company's data-gathering capabilities.

Finally, a larger investment in getting smarter — building that internal capacity to understand footprints on an ongoing basis, and even real-time — will pay back in ways you can barely imagine. Those with the best data win.

This first appeared on Harvard Business online.

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Happy New Year all (ok, I'm a bit delayed, but I entered the new year and promptly got really sick -- lost over a week in there). So let's start fresh now!

Anyway, I took a bit of time at the end of 2009 and early 2010, with a couple weeks' perspective, to think about the stories that really grabbed me in 2009. The top 10 is below, but see my brief write-ups and logic on each at my e-letter site here.

1) Copenhagen fails or does it?
2) The debate over climate science rages on (in the U.S. at least)
3) The EPA steps in
4) Wal-Mart keeps the pressure up (and saves the rainforest?)
5) Domino's employees deliver a new kind of openness.
6) IBM starts building a "smarter planet"
7) GM goes bankrupt
8) Some of our biggest capitalists get serious about carbon
9) China emerges as a green tech leader and the world's biggest emitter
10) The bottom of the pyramid becomes a source of innovation

And the bonus, theater of the absurd, wacky story...
10 1/2) Forbes names Exxon green company of the year

It's always easier to picture how a manufacturing company can go green — just cut back on energy, waste, and material to reduce air and water pollution, for example. But what does it mean for a service-focused business, such as a software company, to travel down the sustainability path?

Last week I got an interesting view on how enterprise software giant SAP is pursuing a green agenda. Sustainability was a core theme at SAP's annual meeting SAPPHIRE NOW, a large gathering of over 16,000 CIOs and tech professionals. (Full disclosure: SAP hired me to speak at the event.)

So how does a company with a seemingly small physical footprint create real value from pursuing sustainability? SAP seems to be pursuing three paths that are a good framework to keep in mind.

First, walk the talk. SAP is first reducing its own impacts. Last year, the company saved $90 million Euros through eco-efficiency, including a 7% reduction in energy consumption. A good portion of the savings came from reducing air travel, which makes up 35% of the company's total carbon impact. SAP also got lean in its IT operations; for the first time ever last year, it had fewer servers when the year ended than when it began.

SAP also worked to engage employees and tackled some smaller, symbolic issues like paper use. Sustainability managers placed large stacks of empty paper boxes in the cafeteria to demonstrate how much employees used in a single day. The company has also asked its 50,000 employees to take "100,000 steps" (that is, two each, or one for each foot) to be more sustainable in their lives.

Second, and far more importantly, help your customers reduce their impacts, a core greening strategy for any company. As co-CEO Jim Hagemann Snabe put it during his keynote, SAP wants to be "an Enabler." Snabe continued, "We believe transactional systems we have installed in many customers have information that...can help customers manage resources — not just human capital, materials or money but scarce resources like water, energy and CO2...This is the mission we have taken on with sustainability."

SAP took a hard look at its product line to see if it could deliver on this vision. In the last year, the company acquired Clear Standards, a well-respected carbon footprint software company (rebranding it Carbon Impact), and announced it will purchase Technidata, a leading provider of environmental, health, and safety management software. Last week, SAP execs were running around the show floor, gleefully demonstrating how cool Carbon Impact looked on an iPad, and demonstrating how it helps SAP analyze its own footprint data.

As an example of how SAP envisions working with companies to enable sustainability goals, execs describe how the company helped oil refiner Valero harmonize its operational systems. By obtaining much better information on energy use and processes across the organization, Valero was able to save $120 million in energy costs last year (and an expected $200 million-plus in 2010) and slash environmental incidents 63% since 2006. The savings realized from having better data available is a perfect example of the "Prius effect" that I've written about before.

By working in this way with their customers, SAP is able to reduce impacts and create value far beyond what it could just do internally.

Third, communicate clearly with customers and stakeholders about how your products and services help the cause. SAP has developed a view on the key operational focal areas that companies need to manage well to head down the road to sustainability. The company created a "Sustainability Map" that includes 33 topics — such as sourcing, logistics, design, and green IT - across 8 functional areas of the business. These topics map to some broad goals that SAP argues drive sustainable value creation (such as reducing operation risk and improving resource productivity).

The map is a critical part of the company's new CSR report, an innovative, social-media-driven approach to both discussing the company's impacts and pitching its solutions. This dual-purpose report makes sense for a service business.

Dr. Peter Graf, the company's Chief Sustainability Officer, put SAP's shift in large, strategic terms and made it clear that providing customers with solutions was critical to the company's future: "When we look at sustainability we compare it to other fundamental megatrends [such as] globalization and the Internet. Sustainability is going to be similar in the way it fundamentally changes all business processes...so as the leader in business process technology, we have to play, and we have no choice but to lead." (See a streaming video of an interview with Peter Graf and me here — you'll have to register, and then look under "keynotes and broadcasts").

For many years, IT companies felt that they didn't have a lot of skin in the sustainability game — they didn't have big smokestacks, after all. But now even service companies like SAP are seeing the deep connection between green and business growth survival.

[This post first appeared at Harvard Business Review Online]

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