Communicating a company’s social responsibility and commitment to the common good is a role not just for communications executives like myself. It is one that most appropriately must start at the boardroom level and be shared across the entire executive team. Today’s message? The Green Enterprise – a story that plays well to the public, the markets and all stakeholders, including employees and shareholders alike.
In recent years, science has started to unmask one the biggest illusions in business – that knowledge-intensive work is much “cleaner” and more “eco-friendly” than polluting smokestack industries. Fact is, the environmental impacts of office buildings as well as the energy use by employees and information technologies serving them are considerable. And so are the costs.
For example, in the US alone, the US Environmental Protection Agency (EPA) reported that in 2006 the nation’s data centers used 1.5 percent of all US energy consumption – 61bn kWh – at a cost of $4.4bon. By 2011, the EPA estimates those figures could rise to 100bn kWh and $7.4bn. Given that the US consumes about a quarter of the world’s energy each year, the global figure for powering the world’s data centres by 2011 could be as much as 400bn KWh, spewing up to 172 million metric tonnes of carbon dioxide a year into the atmosphere, according to calculations from the UK-based National Energy Foundation.
Rise of the green enterprise
This kind of research provides just one of many cost-based insights that are giving executives worldwide good business reasons to embrace so-called green enterprise initiatives. Other drivers toward the green enterprise are: regulatory pressures; customer expectations; investor influences; and market image.
In short, green enterprises can build their bottomlines in three measurable ways:
Increase business productivity and overall performance, helping to build market share and profitability
Reduce operating expenses in the face of relentless competition, helping to keep and build margins
Raise corporate brand image, helping to attract a fast-growing segment of environmentally aware – and demanding – consumers
Green enterprise initiatives leverage the long-standing environmental precepts of Reduce, Reuse and Recycle. These were often ignored in the days before the commodisation of just about everything – even knowledge-based outputs – back when proprietary pricing power ensured profit margins, energy was cheap, and waste disposal costs were few or non-existent, because the earth’s carrying capacity was considered infinite.
Fast-forward to today, with global competition and deregulated markets squeezing margins tight, with energy costs soaring, and with the world consensus about global warming almost unanimous. In this context, the environmental precepts of Reduce, Reuse and Recycle have become prescriptions for enterprise profitability. Corporate objectives of revenue growth, lower costs, asset efficiency, and performance excellence can now align with environment sustainability.
More effective communications and knowledge access
Over the years, companies have increased the efficient use of their monetary capital tremendously. But their big opportunity today is to improve the efficiency of their human and knowledge capital. The best way to do this? Through more effective communications, collaboration and knowledge access across their organisations.
Of course, this is much easier said than done. While the rise of ubiquitous global networks, the proliferation of end-devices and the increase in worker mobility have had productive enterprise results, they also have contributed greatly to the fragmentation of the enterprise intellectual fabric.
Classic “phone tag,” for example, has gotten worse as more and more workers must manage inter-device communications and contact management among their desktop/laptop computing environments, their personal digital assistants (PDAs), their mobile phones and their fixed-line phones. To flag an important email for attention may require a phone call or two (or a voicemail or two, if the intended recipient is not available). Another example is not having the knowledge readily available, either in some form of documentation or in a subject matter expert, to help solve a customer problem or advance a sale.
Fortunately, the advent of network-based, presence-aware communications software with a unified communications architecture based on open standards can enhance collaboration and knowledge access. It does this by giving users fixed-mobile convergence with one-number access across all their devices. It also enables them to know the availability of others who are on-network, so they can quickly convene tele- and videoconferences and share documents seamlessly.
How much can this help an enterprise? An Accenture study of a corporate pilot of this kind of presence-aware software showed that distributed, on-the-go workforces such as field technicians, sales people and logistics personnel could realise productivity gains of up to 40 percent. For a $4m annual payroll covering 1,000 people, that is equivalent to about $1.6m in productivity gains.
Further, a study conducted by the Canadian consulting firm Insignia Research concluded that companies with 1,000 employees could lose more than $12.5m a year to productivity losses and avoidable expenses without this kind of communications application.
Where “green” comes in
Unified, presence-aware communications like the above can provide a wide range of cost-savings, including environmental ones. If employees are working longer hours, they are consuming more resources, such as the energy to power and light the office infrastructure as well as the extra burden on IT infrastructure. If employees are traveling more – commuting when they could work from home, unneeded truck rolls for service, and meetings to “sync-up” – they are consuming more energy in their transportation, while losing productivity in producing results.
Consider the scenario in which XYZ Enterprise’s 250 most frequent travelers each travel six times per year. After deploying a video-conferencing software application, these travelers can instead conduct part of their remote meetings through videoconferencing, cutting their annual trips by one (or 17 percent). Prior to deploying this application, the typical XYZ employee spent an average of $1,797 x 6 = $10,782 per year on travel as a direct expense. That does not count the indirect costs of time spent on the road and travel administration.
Under a conservative assumption that traveling employees cost $50 an hour and spend 10 hours on the road on average for each trip, it means lost productivity of 10 x 50 x 6 = $3,000 per employee a year. For 250 employees, annual enterprise travel costs – both direct and indirect – were $3.45m. By replacing 17 percent of the travel with videoconferences, XYZ Enterprise is able to reduce direct travel cost to 1,797 x 5 = $8,985 per employee, and lost productivity of only $2500 per employee. Overall travel costs are now $2.87m, with annual savings of $574,250 – roughly enough to pay for a software-based communications system for 1,000 users. Carbon savings? About 73 metric tonnes a year.
Green IT savings, too
Already mentioned is the enormous power consumption of data centres worldwide. To cite a specific example, some analysts estimate that one of the world’s largest ISPs’ 2006 power requirements for an estimated 450,000 servers worldwide were 135 megawatts per day – enough to power about 33,000 homes, according to some sources. That level of consumption generates an equivalent of about 72 metric tonnes of carbon dioxide a day.
Clearly then, IT can have a substantial carbon footprint of its own, not to mention direct energy costs. These latter costs break down into 53 percent for cooling and infrastructure; 37 percent for components such as servers; 13 percent for storage; 10 percent for power supply units; and six percent for
network equipment.
In 1993, Siemens was among the first companies in the telecommunications industry to consider the environment in the design, manufacturing, deployment and recycling of its enterprise equipment. We took this approach as a matter of corporate responsibility.
Since then, the company has made great strides in lowering the capital and operating costs of its equipment. It has done so by carefully evaluating the holistic product life cycle, the total energy consumption of its solutions and components, and the business process efficiencies that its communications solutions provide. In addition, it has embraced open standards over the years to enable enterprise customers not only to mix interoperable, best-of-class components but also to interoperate with their legacy infrastructure. This latter capability helps customers get the most out of their legacy investments that, in effect, means reusing and recycling the older equipment.
To illustrate, here are just three ways that green engineering of your company’s communications infrastructure can help save energy and overhead costs, while reducing your carbon footprint:
Power consumption of IP phones can be reduced as much as 50 percent by using advanced circuitry and features like power “standby.” Software-based IP phones that operate via PDAs, laptops and desktop PCs can reduce power consumption even more. Projected across the full base of Siemens end devices, this efficiency can cut power consumption by 32 gigawatt hours, about the same amount of electricity it takes to power some 8,000 households a year. It also equals about a 20,000-tonne reduction in annual CO2 output.
Wireless technologies can help reduce both energy and cabling costs, while offering much greater mobility for employees that can help improve their productivity. The new Power-over-Ethernet (PoE) standards can eliminate the use and cost of copper metal needed in separate electrical wiring to power wireless access points. The industry’s most energy-efficient wireless access points, for example, require just 13 watts of power – less than half the energy demands of other wireless access points – and well within the PoE standards, so no external power supplies are required.
Power demands of large IP switching system may be reduced dramatically by using software-based VoIP solutions. For example, a carrier-grade, enterprise-class IP communications platform can run centrally on off-the-shelf, energy-saving servers in an IT data centre. Just two servers can provide richly featured communications services to as many as 100,000 subscribers. Classic distributed VoIP systems can require as many as 70 servers for the same number of users. In fact, a recent study showed that centralizing and running communications as a pure software application can cut power consumption by 25 percent compared to first-generation distributed Voice-over-IP (VoIP) systems. And compared to a 15-year-old Private Branch Exchange (PBXs) telephone system? Power can be cut up to 90 percent.
Why now and not before? For reasons mentioned earlier, the demand for green technologies did not exist as long as regulated markets and customer lock-in by proprietary vendor solutions guaranteed fat profit margins. At the same time, cheap energy and little or no waste disposal costs meant accounting could pay little heed to the cost of those inputs. Of course, few if any of these conditions exist today. Fortunately, technologies have progressed considerably to help offset tighter margins and higher energy and carbon costs.
While eco-friendly, IP-based communications can help “green-up” a company’s IT and corporate-responsibility profile, it also may help an enterprise to attract and retain customers and employees in the longer run. Meanwhile, it is important to carefully consider the underlying architecture, power consumption and environmental regulatory compliance of any prospective platform. A lot of vendors say their solutions are green but many are merely “green-washing” existing technology without making the considerable investment in engineering that truly green technology requires.
Ultimately, green enterprises stand to reap tremendous benefits of greater efficiencies, more productivity and a better corporate image going forward. Why commit to doing it now? Not only are green approaches to business the right thing to do, but – similar to the quality control movements of the 1980s and 90s – being a green enterprise today can be an effective competitive advantage. And tomorrow, it will be a competitive imperative, so companies should get started now.
Fredy Osterberger has more than 20 years of international marketing experience from arious industries, companies and agencies. He spent 10 years with Apple in Europe, following two years with Intel. In 2006 he joined Siemens Enterprise Communications to lead all of its corporate and marketing communication activities globally
Key points
1. “Green Enterprises” can build market share and profitability through greater energy efficiency and a lower carbon footprint.
2. New IT technologies can improve business performance via better communications, collaboration and knowledge access, while helping improve energy efficiencies and lowering the company’s carbon footprint.
3. Companies have improved their financial capital efficiencies tremendously in recent years… but today’s big opportunity is to improve the efficiency of their enterprise human and knowledge capital, which the green enterprise can help do.
For further information tel: +49 (0)89 722 24849;
email: jeremyw@connectpr.com; www.siemens.com/open
