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Sustainability/Energy Agenda Accelerates

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People ask about greenwashing and vendor hypocrisy. I don’t see it like that. If resources are being applied to managing electricity demand, or addressing broader sustainability issues, that is all to the good. The space is heating up almost as fast as the planet.

Today IBM announced a swathe of services and tools, and is clearly beginning to tie together its various IT energy management strands. Thus for example, it touts data center efficiency:

IBM Systems Director Active Energy Manager (AEM) tracks energy consumption in data centers and helps customers monitor power usage and make adjustments to improve efficiency and reduce costs. The new software allows IT managers to control — even set caps on — their energy use for servers, storage, and networking as well as the air conditioning and power management systems that keep the data center running.

IBM is also pushing into certification. I think the firm needs to think bigger though and to take on bigger challenges (not often I say that). Data center energy optimisation is interesting, but IBM should be looking at driving power improvements in supply chains, manufacturing plants, building central heating and so on. IT currently accounts for around 3% of world energy consumption. Lets get to work on the other 97%.

Nortel is going after Cisco “ruthlessly” based on better power performance of its gear. This is the most agressive use of a energy benchmarking I have seen so far in the industry. Great – bring on competition on the basis of power consumption.

I am liking SAS pitching its BI tools for the triple bottom line. with Global Reporting Initiative indicators and KPIs based relating to environmental, social, and economic sustainability. Excellent! I need to go chat to SAS – a very interesting privately held firm with a real culture of innovation and a high R&D budget to match. I wonder if they talked about this today at the

Boston is going green, which I am sure Stephen will appreciate.

With the triple bottom line in mind The FT reported yesterday that “The German government plans to make the country’s first trademark for good business behaviour, as a complement to “Made in Germany” as a respected global brand.”

Today my old mucker Dennis Howlett has been in Boston with Business for Social Responsibility (BSR) and a number of software companies discussing sustainability rights, responsibilities and opportunities. Next week at Sapphire 2008 in Orlando, SAP is hosting AccountAbility,  (BSR), and the International Business Leaders Forum (IBLF) in launching a dialogue on sustainability. I have been involved in planning, web 2.0 support, and will join the dialogue in Berlin. I’d like to see SAP in future set up industry vertical sustainability groups based on its successful Industry Value Network program, for best practice sharing. James?

GreenMonk appreciates change needs to be top down, as well as bottom up. All this of activity is goodness. We need to move on, and watching CSR evolve from a PR initiative to one driving corporate strategy is pleasing.

Climate Change
Creative Commons License photo credit: openDemocracy

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Green is a form of Lean

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Many of us are thinking through the implications of greener supply chains.

Al has been giving it some lately, for example, with his thoughts on the Carbon Added Tax. Over at SAP Research Andreas Vogel is leading the charge. IBM is doing some solid work here, as is BT. But we’re beginning to see a potential backlash, based on the Greens are Dreamers frame. The argument is that green thinking and approaches will be jettisoned as economic conditions toughen. But is that necessarily the case? Jason Busch from SpendMatters nails it in a post entitled How Will Green / Sustainable Procurement Play in a Recession?

While it would be easy to dismiss green and sustainable procurement practices as a luxury for companies to invest in when times are good, I actually believe that they could help organizations to buoy their top lines and pull up from a spiraling downturn or period of contraction. Whether it’s better marketing the benefits of green supplier practices to customers to spur pent-up demand or making investments in supplier development initiatives which reduce unnecessary packaging, supplier-focused sustainability initiatives have the potential to drive sales and reduce cost.”

I hold a similar line: it seems daft to argue, as the Bush Administration repeatedly has, that efficiency efforts harm economies. Efficiency can help you cut cost, even if (especially if?) its energy costs we’re talking about. Jason gets some great comments on his post. For actionable advice why not try Paul Gooch’s suggestion:

A former employer of mine ran an internal initiative called WRAP…waste reduction always pays. This applies as much to purchasing as any functional activity. The benefits go straight to the bottom line, and in the process you reduce your energy usage, carbon footprint, etc

But Lisa Reisman really distills the arguments to 100% proof: “green is a form of lean”. Thinking about carbon consumption is not just protectionist sabre-rattling: its an efficiency argument. It strikes me at the moment many economists and business commentators just aren’t thinking through their positions. We’re seeing rhetoric as the primary argument. Greens are luddites. Localisation means a return to the stone age. And so on. Green is a form of lean.

The implications for software and services companies are clear – keep investing in Green, recession or not. You can always change your marketing to read “cost-cutting”. If however you’re relying on a return to abundance as a primary planning assumption you could be in major trouble. Spend matters green or not.

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Shai Agassi To Forge Israeli Electric Car Network

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projbplace.jpg

So ex-SAP executive Shai Agassi’s Project Better Place has managed to pull it off. Former product chief Shai catapulted coolly into DLD in Munich yesterday straight from Jerusalem, where he had launched one of the most curious deals the auto industry has ever seen. He drove out that afternoon. To Davos.

Alongside Israeli Prime Minister Ehud Olmert and Renault / Nissan’s CEO Carlos Ghosn, Agassi announced, a spectacular and audacious agreement on Monday to deploy a new kind of electric power network and set of cars to run on them that will get Israel’s car drivers off oil as quickly as possible. It’s consistent delivery on his October deal, when he raised $200 million from Israeli Corp and VantagePoint Venture Partners.

Shai and I spent thirty minutes talking yesterday in Munich and what I heard proved to be true. On stage, Agassi is a brilliant presenter, dashing, focused, witty and strident. He’s up there with Al Gore in getting you by the throat and implying “talking about this isn’t enough!” and stood shoulders above the impressive line up the crushed and seat-deprived attendees of Burda Media’s DLD event had seen.

Project Better Place will integrate and deploy a new product, sales and support channel (read ‘charging’ stations) that will allow Israeli consumers to drive their own pure electric (not hybrid) car that has a 200km or so range. It will feature a new design of battery that can be swapped in and out in about the time it takes right now to fill up a car with gasoline. People will be able to do so at a country-wide network of swapping stations, or charge cars via power points. The cars will be designed and built by Renault / Nissan. Agassi says it will reduce oil use in Israel drastically – we’re talking figures like 50 per cent here.

The capital to get this going has come from a group of investors that includes Israeli Corporation (which right now supplies Israel with oil – proving, as with Abu Dhabi’s latest moves – that oil money can sometimes turn green) and also features VantagePoint Venture Partners, blessed right now with this shining star to distract everyone from the mess at Tesla. Agassi claims the system will launch within four years.

One of the big features of the system is that electric power will be sold as packages akin to the way that mobile phones are sold today – there will be multiple plans you can buy, including one that says if you buy about six years of power, they’ll throw in the car for free.

Shai Agassi

Photo credit jdlasica

But can he really pull it off? Agassi has got to this situation incredibly quickly. When I ask how in a year he has managed to leave his old job and do one of the most audacious deals imaginable he says “Nine months! It’s been nine months!”

In truth, for any entrepreneurs out there who may suddenly feel deeply inadequate, Agassi has had this process in train for three years. The journey started when he listened to a challenge by a speaker at Davos to do something to make the world a better place. Agassi admits that during those first few years “I walked every single wrong path first. I was sure for months hydrogen, then I was sure it would be ethanol.”

This characteristic of Agassi’s seems crucial to understand. You feel he’s churned the options over in his head constantly and worked out the answer. Now he’s settled on it, his purpose is to set that vision out to the world, do the necessary business deals to make it happen and then…”. Actually, “and then?” is a fairly good question and there isn’t right now a lot of substance to see, beyond the deal itself. Be in no doubt that Project Better Place now needs to ‘execute’, as IT guys would say. They’ll need some very talented people, they’ll need to ensure that Renault / Nissan and other partners such as battery provider NEC deliver technologies, and integrate those technologies together, on time. They will also need to work out the details of the service model and sales and marketing, factors that could make or break the project. And of course if oil prices fall dramatically (admittedly unlikely) the economics become a problem.

So is the man up for it? The company website is today a lonely place, with a link to ‘leadership’ that leads to… just Agassi. There are two people photos. Him and, curiously, his young son, who is part of the Davos pitch. Yet while Agassi himself quipped on stage to the (German) DLD audience that he “used to be the next CEO of SAP”, he never was SAP’s CEO and opinions gathered from my Twittering IT analyst friends vary on just how successful his time at that firm was.

First, here’s Dennis Howlett, veteran technology and financial software analyst:

“Shai created a roadmap and at one stage was delivering a ton of product [at SAP]. “But it became indigestible for many SAPpers.”

Then over to Greenmonk’s own James Governor:

“The Agassi legacy at SAP?…. a job unfinished. He built an architecture, but it was not as widely adopted as he, or the board, wanted.” James’s other comment is curious. “Shai evidently doesn’t have a great deal of patience and is inclined to hector communities (for example, customers) that don’t do what he wants.”

What next? Well Project Better Place has a hell of a lot to do and, once Davos is over, Agassi better get together a brilliant team and start executing. Right now, you hear nothing except him. While the project talks about partnership and being open, it would seem that the big deal has for now taken priority over engaging the talent base required. The firm will need a lot of great people, and those partnerships will take a lot of managing.

What’s sure is that the world is a better place for this development. Amongst the visionaries and future talk underway at DLD, Agassi stood out as a doer.

But don’t for a minute think this is the only future for cars. Agassi’s vision has unlocked anything up to a billion dollars but there is surely more to come and many things are happening right now. Agassi is a visionary but his vision is pretty narrow.

Shai’s in Davos now, wooing the great and mighty with that vision and his audacity. For the next three years he’ll definitely be judged on that ability to ‘execute’. We wish him well.

Read on at Re*Move, where we ask Is Project Better Place the big answer?
Mark Charmer is a contributor to Greenmonk Associates. He is CEO of The Movement Design Bureau, a think tank.

Photo credits: Project Better Place.

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Cool IBM Green Data Center Blog: This is how we roll.

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When I logged into my monkchips WordPress console today I noticed an inbound ping from a new blog called The Raised Floor, which got my legacy boy senses tingling. Sure enough when I got over there it was clear that we’re talking about data centers, from the people that invented the concept (and yes I do mean Big Blue). I particularly like the picture they have used for their banner, with a classic black and white shot of a mainframe room, with the floor raised… and green grass underneath. Like so:

The content is pretty solid right out of the gate – although there are some gaps. Asking whether tape vendors are pitching green, for example? You’d have to be underneath that raised floor not to have come across a tape vendor wrapping itself in the green flag. LTO, one of the sponsors of the ComputerWorld UK Green Zone, is a good example.

But its the quality of people involved that caught my eye: notably one John Patrick. Who is John? Only the guy that Louis Gerstner gives much of the credit for encouraging the company’s long march to open standards. John can probably claim as much credit as anyone for helping to change the basis of the IT economy from raising barriers to entry, to one that succeeds on the basis of lowering barriers to participation. He is a good pal of Irving Wladawsky-Berger, another one of IBM’s most important change agents of the last century. I am not a fan of John’s politics, particularly, but if he sees the importance of greener technology then I certainly have his back. As Hero Nakumura would say – This Is How We Roll.

The blog is going on my blogroll. I look forward to some great content. I leave you with an excerpt.

IBM is leading by example. One of their “green” projects is consolidating 3,900 servers onto 30 new top of the line mainframe servers. The result is not only more compute power but dramatically less use of electrical power and space. One of IBM’s customers went from 300 servers to six. The University of Pittsburgh Medical Center consolidated 1,000 servers onto 300 and saved $20m in costs while freeing up datacenter space for more hospital beds.

Datacenters have been popping up everywhere — most of them built before 2001. The datacenters are very large rooms full of many different kinds of equipment — designed in the same way they were decades ago — like a kitchen where the stove puts out more heat so you turn on the air conditioning to cool down the entire room. The chef is comfortable and others in the room are freezing. IBM is designing datacenters for customers where cooling “zones” are specific to the type of equipment in each zone. Green datacenters not only save space and energy but also benefits the environment overall. In the past the electric bill has been allocated as overhead to all parts of the company. Redesigns are saving many millions of dollars. With the huge growth of energy for the IT infrastructure the CFO is reallocating energy expenditures from general overhead to the CIO so they can see what IT is really costing.

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Towards Sustainability: We Are The Watchdogs

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SAP’s Amit Chatterjee points out that corporations are spending real money on this new-fangled sustainability thing. Dollars spent is always an interesting metric. You don’t pay McKinsey money to help you write a corporate social responsibility report. You bring them in to redesign parts of your business. This is a new kind of business process re-engineering (BPR), with a new focus, and new concepts of efficiency. Why is Greenmonk interested? Because the focus is on behavioural change.

“During the presentation, it was clear that there was a significant need for changing behavior.  I was trying to determine how long it would take to make this trend a reality vs. short-term FAD status.  Then I was hit with the most interesting stat of the whole presentation.  Another director of the Firm announced that McKinsey was currently serving 20 of the Fortune 100 around establishing or building out their corporate sustainability program.

Ladies and gentlemen, CSM has arrived.  Basically, when a large corporation is willing to hire McKinsey brainpower (which does not come cheap) to establish a strategy, it is no longer a fad, but a true initiative for change within an organization.  Thus marks the arrival of CSM into our lexicon as a legitimate method for competitive advantage or lever for shareholder value.  This is truly exciting news.”

I wrote about Amit and SAP’s Governance, Risk and Compliance (GRC) strategy a while ago over at Monkchips. I called GRC the new ERP. Well folks, what did ERP support? First wave BPR. What are we now facing? Sustainable BPR… Another wave of change.

Although this discussion may seem to be top down, and therefore not “green from the roots up”, and therefore outside Greenmonk’s remit, any successful organisational behaviour change is going to need bottom up commitments and ideas. BT, for example, uses blogging and local team leads to encourage bottom up eco-innovation. Social software is going to play a crucial role in any successful sustainability strategy.

Thomas also picked up the theme (he has been dragging me into the corporate social responsibility space, helping me to understand its more than platitudes):

“I don’t want auditors crawling all over sustainability, but I do want to know that the stuff in the annual report and elsewhere is relevant and material. I want to know who is serious and who is bs’ing me. I worry about greenwash.”

Anyone that cares worries about greenwash, which is why we all need to engage with this stuff. The more engaged we are the harder it is for big companies to fool us. As investors, citizens, employees, customers we have to be the watchdogs. We can’t assume someone else will do that job for us. The responsibility is ours. That’s green from the roots up.

picture courtesy of Frankie Roberto.

disclosure: SAP is a client of RedMonk, the industry analyst company I co-founded.