Green IT: Sustainability and Risk Analysis. David C. Chou Professor of Computer Information Systems Eastern Michigan University

Transcription

1 Green IT: Sustainability and Risk Analysis 1 David C. Chou Professor of Computer Information Systems Eastern Michigan University

2 2 Purposes of this study Discuss the implication of Green IT and sustainability. Propose a Green IT value model for assisting the IT industry to pursuit the goal of environmental sustainability. Illustrate the four components of Green IT value model: awareness, translation, comprehension, and green IT value. Identify the Risk in green IT implementation. Analyze various risk factors and uncertainties that encounter Green IT practice.

3 3 Why going to Green? Weather changes such as global warming, earthquake, and tsunami have raised people s anxiety toward environmental protection. Other environmental issues such as the rising price of gas, energy, and electricity, world water shortage, greenhouse gas emissions, use of hazardous materials, the proper disposal of industrial waste, etc. creating the pressure to go Green. Thomas Friedman (2008),in his well-known book Hot, Flat, and Crowded described the environmental concerns we faced today.

4 4 Sustainability Sustainability has become a norm in recent years since horrendous things happened. In dealing with sustainability, governments have stipulated a variety of laws and regulations to protect the environment. The three fundamental components of sustainability are economic growth, social equity, and environmental protection (United Nations General Assembly, 2005). Businesses today face not only market competitions but also new regulatory environment. Melville (2010) proposed a belief-action-outcome (BAO) framework to illustrate the role of information system that can contribute to the goal of environmental sustainability.

5 5 The IT Industry goes to Green Since the IT industry has to utilize resources such as energy, water, and hazardous materials to produce hardware, its production process may frequently generate waste that damages the environment. Thus the IT industry faces heavy pressure to go Green. The crusade of Green IT is the practice of designing, manufacturing, and using computers, servers, and various peripherals efficiently and effectively in order to minimize environmental damage. The realization of Green IT could generate great value for our society. International Green IT Conference 2014 in Malaysia.

6 6 Green IT Conference 2014 OCU 2014

7 7 Why Green IT? The IT impact to environmental sustainability has been recognized by computer professionals. Green IT also strives to achieve economic viability and improved system performance and use, while abiding by our social and ethical responsibilities. Green IT initiatives can greatly contribute to the three pillars of sustainability: economic, environmental, and social imperatives. Environmental impacts of IT includes green use, green disposal, green design, and green manufacturing.

8 8 Goals of environmental sustainability Competitiveness, resource productivity, and innovation Cost deduction A better environmental standards, technology, and investment Generating higher operational effectiveness in organizations Creating competitive environmental strategies

9 9 Green IT s activities design for environmental sustainability; energy-efficient computing ; power management; data center design, layout, and location; server virtualization; responsible disposal and recycling; regulatory compliance; green metrics, assessment tool, and methodology; environment-related risk mitigation; use of renewable energy sources; and eco-labeling of IT products.

10 10 Firm s responses to Green IT IBM has developed a comprehensive working model to help create Green business in the market. IBM s framework consists of the following seven areas: strategy, people, information, product, information technology, property, and business operations. HP manufactures its computers through: smart design (smart materials for energy efficiency or material innovation, careful design from the start or design for environment, and fewer materials, lower costs on packaging and transportation) built-in efficiency (new standards such as ENERGY STAR qualified, high ratings lead to high savings through EPEAT Gold ratings, and greater efficiency built right in through efficient power supplies).

11 11 IT valuation Value can be the measurement of satisfaction of utilizing goods or services. Value theory consists of a variety of ways to identifying how, why, and to what degree that people would value objects they have encountered. In Value Chain Analysis (Michal Porter, 1985), every step in business process has been analyzed to determine its value. It is a systematic way of examining all the activities a firm performs and how they interact to each other. Porter s value chain analysis can be applied into the information technology industry for seeking competitive advantage in environmental sustainability.

12 12 Value theory and Green IT analyses The value chain analysis can be further developed into the research of Green IT and its valuation process. IT creates value by saving people s working time, helping users to make better decisions, or improving the quality of products or services in an organization. IT value has been measured through financial metrics such as return on investment (ROI), total cost of ownership (TCO), net present value (NPV), internal rate of return (IRR), pay back analysis, etc. Furthermore, IT valuation result can be critical to corporate IT budgeting and IT investment decision processes. This paper introduces the Green IT value model to explore such venture.

13 13 IT value and Green IT The real IT value comes from the blending of IT practices and organization s skills at managing information and people s behaviors and beliefs. While Green IT and environmental sustainability can deliver social and economic values becomes a norm, which will affect people s behaviors and beliefs. The development of Green IT stems from the recognition of environmental sustainability. Therefore, corporate IT budgeting and IT investment processes must consider Green effort. IT value concept can be applied into the Green IT value model.

14 14 Green IT value model In order to identify the value of seeking Green IT and its performance outcome, the provision of a clear value framework would contribute to the Green IT field. The Green IT value model contains four components: Awareness ( 認知 ), Translation ( 轉換 ), Comprehension ( 理解 ), and Green IT value ( 綠能 IT 的價值實現 ).

15 15 Green IT value model awareness translation comprehension Green IT value Environmental sustainability OCU 2014

16 16 Awareness The potential value of Green IT must be identified and recognized by business and organizations before Green IT to be adopted to create its value. The economic benefits of Green IT have been recognized by organizations, including reducing IT operating and capital expenses, cutting down electricity bills, and enhancing public image to organizations. Other than that, the global awareness of environmental sustainability stimulates the societies to appreciate and seek the value of Green IT. Recognizing the opportunities of environmental, economic and social benefits would encourage organizations to reach these goals, thus Green IT value can be realized.

17 17 Awareness: organization s activities Understanding the relationship of environmental quality and quality of life. Recognizing the needs of Green IT by organizations, governments, and society. Knowing that IT devices consume high energy, release pollution, and generate waste. Identifying economic benefits of Green IT. Postulating potential value of Green IT.

18 18 Translation The value of Green IT is derived from the resources to be used for translating Green awareness into real life Green IT initiatives. Organizations must create Green IT strategies that link to their organizational strategies. The most important task in the translation component is to convert ideas and opportunities into operational courses. During this stage, organizations must seek to provide sufficient resources for Green IT conversion. Organizational changes and management capability must be fully arranged. Organizations must create a profound knowledge management system for Green IT knowledge gathering and distribution.

19 19 Translation: organization s activities Creating Green IT strategies and link it to organizational strategies. Sharing company s Green IT vision with employees. Classifying expected value of Green IT. Transforming Green IT idea into operational courses. Seeking resources and funding for Green IT practice. Developing innovative technologies for Green IT implementation. Performing organizational change and change management. Offering training programs to employees. Adopting knowledge management system to assist Green IT mission.

20 20 Comprehension During this stage, organizations must create measurement to measure Green IT outcomes against expected results, to remove deficiencies in the performance results, and to create situations in compliance with Green IT laws and regulation. Organizations could utilize public tools for calculating computer equipment s energy usage, such as: ENERGY STAR Computer Power Management Savings Calculator, Life Cycle Cost Estimate for ENERGY STAR Qualified Desktop/Side Computers, U.S. EPA s spreadsheet for calculating the green-house gas equivalent for energy usage, and Apple Mac s energy saving calculator.

21 21 Comprehension - continued Creating an environmental management system (EMS) in organization is essential for Green IT projects, as indicated in ISO standard. It is the overall management system that includes organizational structure, planning activities, responsibility, practice, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the environmental policy. (ISO 14001, 1996, definition 3.5). Creating measures for reporting Green IT performance results to employees is an important mission in this stage. Another task in this stage is the creation of needed environmental laws and Green IT standards and regulations for the industries and societies.

22 22 Comprehension: organization s activities Creating measurements for assessing Green IT outcome. Monitoring performance in IT department. Adopting suitable tools for calculating energy usage. Creating an environmental management system (EMS) in organization. Creating Green IT performance reporting system. Establishing Green IT laws, standards, and regulations for industries and societies.

23 23 Green IT value Combining the results of Green IT awareness, translation, and comprehension will result in identifiable Green IT value. Value can be further depicted as the measurement of satisfaction of exploiting a thing. Green IT value, generally speaking, is the measurement of satisfaction of exploiting Green IT and its environmental impact. The value of Green IT can be identified through two levels: the enterprises satisfaction and the social and environmental satisfaction.

24 24 Green IT value - continued Enterprises achieved Green IT objectives through the following paths: green use, green disposal, green design, and green manufacturing. Similarly, enterprises Green IT value can be realized through these four paths. The value to be generated from greening IT consists of reducing the energy use of computer hardware and software, refurbishing old computers and possibly recycles retired computers and peripherals, designing computer hardware and peripherals with energy efficiency characteristics, and building computers and electronic devices with minimal impact on the environment.

25 25 Green IT value - continued Successful Green IT initiatives allow companies to attract more customers to buy their products and services. This will enhance corporate branding image in the market. It also may lead organizations to increase their IT investment for creating new technologies to enhancing green business processes and services in the market. These Green IT prompted benefits and satisfactions that add eminent value to enterprises.

26 26 Green IT value - continued The adoption of Green IT strategy and energy efficiency programs contributes to environmental value by mitigating potential environmental damages and risks on the planet. The combination of environmental protection and economic growth creates the value of social equity. After all, the whole society can enjoy Green IT value and environmental sustainability.

27 27 Green IT value: organization s activities Combining the results of the three components in Green IT value model: Awareness, translation and comprehension. Defining the value as the measurement of satisfaction of exploiting Green IT. Collecting value from enterprise s satisfaction of implementing Green IT. Collecting value from social and environmental satisfaction of implementing Green IT.

28 28 Risks in Green IT practice There are many risk factors and uncertainties that may affect and prohibit the practice of Green IT, which may then deviate from the pathway of environmental sustainability. In order to achieve the goal of Green IT and sustainability, those possible risks that may forbid the green practice need to be identified and monitored. Since the practice of Green IT is complicated, we should look into a variety of aspects of actions. Organizations should follow the laws to monitor their production and supply chain processes regularly. However, these regulations and policies may frequently cause oversights. The government also needs to bring up societal interests and passions to reach to environmental sustainability.

29 29 Implication of risk Risk that occurring in any task of business process or project management represents an undesirable event or a negative outcome to the expected result. Risk is defined as the combination of the probability of an event and its consequences. (ISO/IEC Guide 73). Chapman and Ward (2005, p. 48) defined risk as the implications of uncertainty about the level of performance achievable, portrayed by adverse variability relative to expected outcomes, assessed for each performance attribute using comparative cumulative probability distributions when measurement is appropriate.

30 30 Measuring risk A simple way to measure risk (RE) is through a function of the probability of a negative outcome and the importance of the loss due to the occurrence of this outcome. This risk measurement can be calculated through the following equation: RE = i P (UO i ) * L(UO i ) where P (UO i ) is the probability of an undesirable outcome i, and L(UO i ) is the loss due to the undesirable outcome i.

31 31 Risk in awareness component The awareness stage in the Green IT value model describes the degree of recognizing Green IT made by individuals, organizations, governments, and societies. Possible risks in this stage are: Lack of the knowledge of environmental sustainability. Lack of the knowledge of Green IT. Profit-centered managerial philosophy. Lack of individual behavioral change. Lack of social responsibility. Insufficient business ethics. Insufficient effort from government.

32 32 Risk in translation component The major work in the translation stage is to convert ideas and opportunities into operational courses of Green IT. Organizations during this step need to acquire adequate resources for pursuing Green IT. Possible risk factors are listed below: Insufficient support from top management. Concern of investment risk. Lack of stakeholder s consent and support. Inadequate experience in Green IT. Insufficient funding to Green IT initiatives. Lack of specific IT support. Inadequate experience in change management. Inadequate experience in training programs. Lack of skill in building knowledge management system.

33 33 Risk in comprehension component During this stage, organizations should construct suitable metrics for monitoring the performance of Green IT implementation. Striving for knowledge of crafting desirable measurements for assessing Green IT processes is a major focus in this practice. Possible risk factors are listed below: Lack of knowledge of Green IT metrics. Insufficient experience in workplace monitoring. Selecting improper tools for calculating energy usage. Insufficient knowledge in creating EMS. Insufficient knowledge in crafting Green IT policies and laws.

34 34 Risk in Green IT value A company that adopts Green IT strategy in its daily operation may contribute to environmental quality and sustainability. Corporation s social responsibility to Green IT should communicate well with the community and the society. Possible risks factor are listed below: Insufficient knowledge in defining the value of awareness, translation and comprehension. Insufficient knowledge in calculating Green IT value. Insufficient value data to be collected in organizations. Insufficient capability of interpreting the results of value. Insufficient capability of communicating with the society.

35 35 Risk Management in Green IT Risks Monitoring & Management awareness translation comprehension Green IT value Environmental sustainability OCU 2014

36 36 Conclusion Environmental sustainability has become a common goal in the global community. Organizations, especially in the manufacturing industry, are responsible for environmental protection and sustainability. The IT industry, as a heavy energy consumption group, needs to pay more attention to the goal of environmental sustainability. Complying with Green IT is now an important objective in the IT industry. Green IT Value Model demonstrates the path of achieving environmental sustainability in the IT industry. This value model can be further used to investigate risk analysis.

37 37 Conclusion - continued A successful Green IT practice can reach to environmental sustainability. However, risk and uncertainty may always affect the result of Green IT practice. The identification and understanding of these risk factors may allow companies preparing these threats ahead of time, so they may have better chance to achieve the goal of environmental sustainability. Future research could focus on empirical analyses on the value model and risk metrics identification.

38 38 Thank you!