Future of Green IT: Greenbacking Green The potential for quick savings from green I.T. has caught the attention of corporate giants and small businesses.

In November, Citi opened a state-of-the-art data center in Texas. The new 305,000-square-foot facility features computer servers that are "virtualized" so each can do the work of 10 older models, software that alerts operators if systems aren't running efficiently, and pollution controls on emissions and water usage. The new center is part of an effort to cut in half the 52 data centers Citi operates worldwide. Those centers-often kept as cold as an icebox so computers will run optimally-account for 24 percent of the company's power usage.

Working with HP, Citi has saved over $1 million so far on power and cooling expenses by consolidating and "virtualizing" roughly 15 percent of its 42,740 servers worldwide. "We did an initial analysis and it pretty much paid for itself when we looked at what we were paying for some of the older data centers and what capacity we'd need," says Jack Glass, Citi's senior vice president for data-center planning.

Those efforts show where the future of I.T. lies: more energy-efficient hardware, software that helps manage power usage, zero-emissions facilities, and lower thermostats in data centers.

While the global economy has tanked, spending for green I.T. is soaring. Forrester Research, a technology market research firm, expects the $500 million spent on green I.T. services in 2008 will grow to $4.8 billion by 2013. While the economy has made it harder to go green simply for public relations value, executives are finding other reasons. Tech cycles are short and, as older hardware needs to be replaced, firms are consolidating and upgrading to greener models. Some global executives are also hedging their bets as they await U.S. regulations to cap carbon emissions; a new emission trading law goes into effect next year in the U.K.

But financial payback is even more compelling. The potential for quick savings from green I.T. has caught the attention of corporate giants and small businesses. Technology pioneers Microsoft and Google are building green data centers near cheap hydroelectric power sources in the Pacific Northwest. The world's fifth-largest commercial airline, Continental, has saved more than $2 million through server virtualization. Highmark, a health insurer in Harrisburg, Pennsylvania, with 4.5 million members, cut its electric bill by 10 percent last year, and halved its 400 servers, by building a more efficient data center with help from IBM. "That only amounted to about $52,000," says Mark Wood, Highmark's director of data-center infrastructure. "But in 2010, we're expected to see rate increases of 20 to 40 percent from our utility."

"Spending a little more for energy-efficient servers typically pays off pretty fast when you look at energy costs over three or four years," says Christopher Mines, a Forrester analyst. "Whereas the hybrid car I bought is going to take 12 years to pay me back for that price premium."

The recession has made it more difficult for companies to invest in multimillion-dollar data centers, but there are alternatives that make the economics work quicker. In data centers, server virtualization, changing the layout of devices, and using more heat-resistant hardware can cut the number of servers needed and reduce cooling costs. "These engagements are typically $20,000 to $50,000," says Steve Sams, IBM's resident green I.T. expert. "The average reduction in energy consumption is 23 percent, and they're paid back in energy savings in two years or less." In offices and branches, savings can be found by turning off computers across the enterprise when not in use, consolidating printers, trying to go paperless, and replacing PCs with "dumb" terminals that use 80 percent less power.

Tech manufacturers are heeding the call. In Microsoft's Vista operating system, the company added 30 new power-management features, including an improved "sleep" mode that can save customers an estimated $50 a year in energy cost for every PC.

Computer servers are now being designed more heat-resistant so that data centers don't have to be kept so cold that "you could store frozen dinners there," according to Bill Kosik, HP's director of energy and sustainability for critical facility services. HP and IBM, among other I.T. firms, now make a business of conducting "energy analyses" for clients and offer up "green" plans for I.T.

That's what got Citi started. "Nobody can turn on a dime like the I.T. industry," says Citi's Glass. "When it comes to introducing more efficient hardware, it doesn't take them as long as the auto industry to come out with a more energy-efficient design."
Visit Portfolio.com for the latest business news and opinion, executive profiles and careers. Portfolio.com© 2007 Condé Nast Inc. All rights reserved.