Green spending swallows a fifth of IT budgets

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Over the last few months, IT has come under increasing scrutiny as one of the largest energy consumers in many businesses. Rising bills for power and cooling, coupled with a series of large-scale power outages on both sides of the Atlantic, have forced not just IT directors but chief executives to look at cutting back on the demands of the data centre.

But data just released by AMR Research suggests that far from being a voracious consumer of energy, IT could take on a far greater role in helping businesses to control energy use. The same technology could help companies to manage or reduce waste, and even to participate in carbon trading schemes.

Some of that technology is already in place. But few companies realise the full cost of compliance with environmental rules, according to AMR's European research director, Nigel Montgomery.

A survey by AMR of 200 companies across the UK, Germany, the Netherlands and Spain found that technology-related spending on environmental initiatives will be more than 21 per cent in 2007.

This figure might come as a surprise to IT departments, as well as to business leaders. The figure was reached, in part, by apportioning personnel, audit and compliance costs for environmental projects. But Montgomery argues that spending on making companies greener can only increase. As many as 60 per cent of the firms surveyed thought they would increase their environmental spending in the next 12 months.

According to Satya Nadella, corporate vice president at Microsoft responsible for the company's business solutions software, much of businesses' current spending on environmental initiatives is reactive, driven by regulatory or legal demands.

Increasingly, however, businesses are setting out to improve their environmental performance as a result of customer pressure, not least the worry that they might loose sales to greener rivals. With more businesses adding an environmental or sustainability element to their purchasing policies, this applies as much to B2B transactions as to sales to consumers.

But, AMR and Microsoft suggest, businesses need to take a more proactive approach to green issues. Production decisions - or even the decision about whether to accept a customer order - should be driven by environmental issues as well as by profit. Companies will also need to pay more heed to the environmental impact of their own purchasing, from how they operates their corporate travel policies to IT itself.

To do this needs tools, however. Few business applications explicitly allow for the measurement of environmental consumption, let alone analysis of the potential environmental impact of decisions that have not yet been taken.

AMR's survey identified supply chain management, ERP and financials as the business applications companies believed would be most useful for managing environmental initiatives. Environmental dashboards were seen as a potentially useful tool by 92 per cent of businesses, the researchers found.

Microsoft plans to integrate support for monitoring a business' environmental activities into its Dynamics software. At the company's Convergence conference in Munich, Nadella demonstrated a roles-based environmental dashboard that an executive could use to keep watch on environmental activities across the business.

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