Green IT has been around for some time now and has taken on a number of guises, from energy effi ciency to more easily recyclable products. The question remains however: can you, as IT resellers and systems integrators, sell a solution solely on its ‘green’ merits? And can you sell a green solution for more money than a less environmentally friendly one? We set out to find the answer
In light of the recent, and for many, ongoing economic situation, Microsoft’s Windows Server Group Marketing Manager David Rayner says: “A fundamental by-product of a green IT policy is saving money, so the recession creates an opportunity to have a green IT discussion.” It has encouraged customers to undertake greater due diligence around saving money, often by deploying a greener IT solution. Similarly, Ingram Micro’s General Manager for Business Licensing, Networking and Security Solutions, Scott Cowen, sees going green as “good business practice”.
How popular is green IT still?
One measure of how seriously end users are taking green IT and sustainability is the frequency with which it is a requirement of government and private tenders. It seems, however, that there is disagreement on how much importance is being placed on environmental considerations and sustainability in New Zealand at present. Dr Colin Boswell, Advisor to research fi rm IBRS, says a review of recent RFPs issued through the New Zealand Government GETS resource suggests the Government is no longer requiring its departments to request tender responses that explicitly address environmental considerations.
However, IDC New Zealand’s Louise Francis, Senior Market Analyst, asserts “sustainability is a key priority in Government’s procurement policy and tender process”. Green IT strategies are long-term projects for organisations and therefore cancelling such projects is generally not an option. Added to this, the IT vendors and distributors interviewed have noticed a number of signs of increasing interest in certain areas of green IT, such as server consolidation, greenhouse emissions information, carbon credits and carbon neutral messages, total cost of ownership statistics, and a greater emphasis on energy effi ciency rather than green IT per se. APC’s New Zealand Country Manager, Andrew Kirker, says 50% of tenders mention energy effi ciency in the data centre space, but not ‘green’ IT specifi cally. IBRS’s Boswell also says a survey by independent environmental consultancy Global Action Plan warns that the IT industry’s carbon footprint is skyrocketing and could soon surpass that of the aviation industry. With that, IT – and how businesses use their IT – will increasingly come under scrutiny as governments and corporate boards seek to achieve carbon-cutting commitments.
Paying the price
In a 2008 IDC green poll survey of 71 IT executives, 35.1% of respondents said their reason for paying a price premium for green IT products was to comply with regulations, with only 16% saying it would be to harness cost efficiencies. Forty-three percent said they would be willing to pay 1-10% more for a green IT product. But IDC’s Francis says this willingness was “contingent on the solution demonstrating genuine costs savings as a result of increased efficiencies or competitive advantage which enables the user to charge its customers a premium as a result”.
In April this year, however, Gartner published a whitepaper (IT Procurement Best Practice:
Negotiate Green Results You Can Audit for Environmental Savings by Stewart Buchanan), which said: “Green IT procurement doesn’t have to be a difficult compromise between environmental policy objectives and cost reduction. Focus on realistic results to achieve measurable returns on your spending.” So, even if there has been a temporary reduction in sustainability requirements by government, it is unlikely to be a lasting one as the price premium gap between ‘green’ products and their less environmentally-friendly counterparts diminishes. Indeed, some (such as APC’s Kirker) would contend that there is already little difference between pricing and, as Ingram Micro’s Cowen says, many vendors compete in markets where strict compliance laws exist, such as Europe, and therefore greener features are automatically incorporated into ‘normal’ new products. Microsoft’s Rayner agrees, saying that many new products have plenty of built-in ‘green’ functionality. However, he adds: “There is certainly an opportunity for partners to increase sales margin by focusing on enabling green IT features within products.” To get the most out of products, they have to be deployed correctly with specifi c features enabled and configured, which results in additional services revenue for those partners that have the competency to carry out the work.
If you are considering charging more for ‘green’ IT solutions, Boswell of IBRS suggests you ask yourself the following questions and then decide if you can feasibly go ahead with it:
- How competitive is your market?
- How uniquely green and cost-effective is your solution?
- How much influence did you have when the tender was being written?
Post recession popularity
The emphasis has recently been very much on cost efficiencies and cost reduction, so now the
New Zealand Government has announced that we are coming out of the recession, will ‘green’ IT retain the same sort of popularity and for the same reasons? Gartner analyst Simon Mingay suggests that it will remain popular. In his recent whitepaper Sustainability Will Be Important Even Beyond the Recession, he writes: “Sustainability will be a strategic theme beyond the recession. Although it will continue being justified on efficiency agendas, it will increasingly be justified to meet stakeholder expectations, to build trust and compliance, and to manage risk related to the business’s
reputation.” He explains that during 2008 and 2009, sustainability and ‘green’ IT have been used to justify and identify cost-cutting activities. “Post-downturn, environmental sustainability will no longer be after-the- fact window dressing; instead it will begin to influence core business strategies.” There will, however, always be an overlap between sustainability and efficiency.
The suggestion is, then, that there will be plenty of requirements and requests for green IT next year. So much so that Excom Education, an IT training provider, is launching a number of courses that focus on saving money and protecting the environment. It is also working with certification authorities to bring to market “the first green IT certifi cation”, says
Chris Haines, Excom’s New Zealand Branch Manager. He adds there are several reasons why a knowledge of green IT best practices is becoming a vital part of every IT professional’s skill set. Firstly energy costs are increasing
(50% over the next three years – Gartner) and secondly upcoming legislation in Australia, which demands that organisations account for their usage of resources such as energy, and pay for the right to pollute, will mean everyone will have to take environmental factors much more seriously. “Resellers and systems integrators benefit from employing green IT best practices in their project work, giving them
a ‘green advantage’ that they can sell to their customers and that differentiates them from their competitors,” he says.
Can green be the only colour?
So far, green IT has been considered in terms of cost effi ciency and best practice, but can it be sold solely on the merits of being a green solution? As IDC’s Francis says, sometimes ‘greener’ and more expensive product solutions will be considered and purchased in order to fulfi ll compliance requirements. Aside from this, the key driver is to save costs, and Francis says: “An integrated solution is the key, rather than a stand-alone green product or service.” IDC has found that the customers are looking for explanations of how the green technology enhances the solution in terms of ROI, greater efficiencies or competitive advantage.
IBRS’s Boswell explains it best when he says: “Playing green cards will only give your proposal a chance of success when the prospect has made it clear that green issues will be the prime selection criteria. On the other hand, if ‘green’ is not the prime selection criteria and your proposal has made it to the short list and secondary criteria may be used
to differentiate between the proposals, ‘green’ may be a key differentiator.”
Playing the green card
If you can’t sell green IT for its own sake, then how can you sell it? Microsoft’s Rayner says you must know fully where your customer competes. “If it is overseas, particularly in Europe, they either should have or will have
a Green Strategic Priority which green IT can play to.” He also says you should properly explore how enabling green IT technologies will really save your customers money. If you can quantify it in dollar terms, more the better. And finally he says you must have a services capability based on enabling green IT technologies “so you can capture the deployment margin opportunity”.
Added to this, Ingram Micro’s Cowen says: “The key is to ensure the information and tools that are provided from manufacturers are understood and promoted.” He also warns that, since much of green IT is focused on power savings, you must make sure you are actually talking to the right decision makers (“Not all IT managers pay the power bill!”). APC’s Kirker adds that PUE (Power Usage Effectiveness) is a great sales tool to show how ineffi ciently an older data centre uses its power compared to a new one.
Boswell of IBRS has also provided us with an excellent list of ways in which you can promote the sale of green IT. He says you should:
- Stress your product’s environmental friendliness. Make comparisons easy by supplying comparative Energy Star and EPEAT figures for your products and thoseof your competition (but, clearly, only if yours are the best).
- Emphasise the extended life of the equipment you propose, demonstrating cost and energy savings possible by providing cost-effective upgrades and replacement parts.
- Promote your recycling program.
- Demonstrate your ‘rightsizing’ policies. Show that you are not proposing excess capacity and that your modular and scaleable approach allows the prospect to buy with confidence only what they need, and that they can upgrade as necessary. Show how the rightsizing features in your proposal (servers, storage, power supplies, UPS systems, air conditioners, fans and air exchange systems) can reduce your prospect’s energy consumption.
- If virtualisation is an option, show how it can improve capacity utilisation, eliminate redundant/inefficient equipment and reduce electricity consumption. Quantify the one-time savings on IT equipment and the ongoing savings in operational expenses.
- If you are promoting storage systems, demonstrate potential savings from, for example, data de-duplication and the power and cost savings from using a SAN or NAS.
- Promote your embedded power management features.
- Build energy tracking and management tools and devices into your proposals. These could include tools for calculating the ROI from your proposed solution.
- Demonstrate how your solution will optimize cooling opportunities.
- If you are proposing printing solutions, demonstrate the cost reductions possible
Similarly, even if the ‘green’ aspect of the solution is not its mainstay, there are ways of responsibly ‘tilting the playing field ’in your favour to allow the ‘greenness’ of your technology to be seen in a good light. Boswell
- Find compelling arguments for building ‘green’ products and solutions into the evaluation criteria. These could
- be mandatory requirements (some government IT RFPs must include green considerations; local authorities may have specific energy conditions that apply and which can be ‘greened’). Play on social responsibility and show how your solution will help the prospective client to demonstrate to the board, and he public, the green benefits of your recommendations.
- Reinforce the perception that energy savings are green. Show how your green solutions make real contributions to energy and other cost savings. Stress the two-for- the-price-of-one benefits.
- Promote solutions that reduce the size and the cooling costs of the data centre, such as blade servers and virtualisation.
One thing Boswell is quite clear on is that you “avoid green washing like the plague”. “If it becomes obvious that you or the client are just talking the talk and pretending to be green, expect ridicule and loss of credibility (and future sales).” Indeed, you could also face legal action under the Fair Trading Act 1986 (FTA). The Commerce Commission has identified ‘green marketing’ or ‘carbon claims’ as two potential areas of concern, and has released guidelines (the Guidelines for Green Marketing and Guidelines for Carbon Claims) to educate businesses. You can see checklists pertaining to these guidelines on the Commerce Commission website at tinyurl.com/yz5elaj and tinyurl.com/ygh3zbm.
It’s important to note that a reseller who makes misleading green washing claims to the public is directly responsible for those claims under the FTA – that means that you are responsible for any information from vendors that you incorporate in your advertising literature. Ken Ginn, Senior Solicitor at law firm Webb Henderson, which specialises in technology law, says: “Breach of the FTA does not require any intention to mislead, and conduct only needs to be likely or liable to mislead to be unlawful.” He suggests you require your vendors to substantiate any claims that you wish to use in your marketing, or you seek a warranty or an indemnity in your agreement with the vendor in relation to such claims. To avoid running into problems regarding green washing, Ginn also suggests you adopt an in-house compliance program, as per the guidelines of the Commission.
Still keen on green
As Ingram Micro’s Cowen says, “green technology is entrenched across the industry”. But the emphasis in how it is perceived and sold may be likely to shift. IDC’s Francis says that green IT will be all about metrics over the next 12 to 18 months. “Organisations will be looking for ways to benchmark sustainability and measureable ROI will be demanded from vendors.”
A Gartner whitepaper by Simon Mingay and Bettina Tratz-Ryan this April (User Survey Analysis: Sustainability and Green IT, Worldwide, 2009) stated in its key fi ndings that the focus will remain on cost savings, not green IT, for
the duration of the recession. However, about one-third of enterprises questioned describe themselves as having an “aggressive” position toward sustainability and environmental issues, which has the most impact on environmental- related activities and green IT programs, including IT buying behaviour.
Green IT, in whichever guise, is here to stay and will continue to infl uence buying behaviour. By playing your green cards wisely, you can stand to not only win sales, but possibly even increase your margins.