Enterprise Green IT Readiness

10 Enterprise Green IT Readiness Alemayehu Molla and Vanessa Cooper School of Business IT and Logistics, RMIT University, Melbourne, Australia Key Points • Presents a green IT readiness, or G-readiness, framework, to display the input, transformational and output capabilities in greening IT. • Defines the nomological structure of the framework and offers a series of propositions linking the G-readiness dimensions. • Offers mechanisms to explain the organizational capability in sustainable management of the IT infrastructure and in the IT department’s role to promote enterprise-wide sustainability. 10.1 Introduction The pairing of information technology (IT) and the environment is now referred as green IT. The emerging notion of green IT raises questions such as how green IT is, and how IT can enable a business’s green strategy. In the context of ‘green’ and ‘IT’, a few perspectives have emerged. To refer to the preservation of environment, whilst many use the terms green (Murugesan, 2008; Molla, 2008), some use the terms sustainability (Elliot, 2007; Elliot and Binney, 2008; Maruster, Faber, and Peters, 2008) and eco-sustainability (Chen et al., 2008; York et al., 2009). Likewise, although the terms IT, information systems (IS) and information and communications technologies (ICTs) are used interchangeably (Capra and Merlo, 2009; Elliot, 2007; Elliot and Binney, 2008), sometimes these terms are used to refer to different things (Chen et al., 2008; York et al., 2009). To get a better understanding of green IT and green IT management frameworks, it is therefore important to examine the use of the terms green and IT in green IT. The concept of IT is complex. There is a difference between the technical IT infrastructure and the IT human and managerial capability (Broadbent and Weil, 1997; Byrd and Harnessing Green IT: Principles and Practices, First Edition. Edited by San Murugesan and G.R. Gangadharan.  2012 John Wiley & Sons, Ltd. Published 2012 by John Wiley & Sons, Ltd. 200 Harnessing Green IT Turner, 2000; Ravichandran and Lertwongsatien, 2005). The IT technical infrastructure is commonly defined as a pyramid of four layers: the physical infrastructure (e.g. cooling, ventilating and power delivery), IT network and communications technologies (e.g. physical servers and network devices), shared services (e.g. enterprise-wide databases and electronic data interchange (EDI)) and business applications that utilize the shared infrastructure (e.g. sales analysis and purchasing) (Broadbent and Weil, 1997). The IT human capability pertains to ‘the experiences, competencies, commitments, values and norms of the IT personnel delivering the IT products and services’ (Byrd and Turner, 2000). The managerial capability comprises the management of all IT activities, including strategic foresight concerning changes in the business, IT and wider environment (Ravichandran and Lertwongsatien, 2005). Human, technological and relationship resources influence the functional capabilities of IT departments which in turn impacts the capability of IT to support an organization’s core competencies. Figure 10.1 presents a pictorial representation of IT infrastructure and capability. The greening of the IT infrastructure implies that eco-sustainability consideration has to be incorporated within the IT technical and human infrastructure and IT managerial capability dimensions of the IT infrastructure. This leads to questions such as the following: • How do enterprises succeed in greening their IT? • What capabilities do IT departments need to develop in applying environmental sustainability criteria to manage IT? IT Managerial Capability IT Human Capability Values Norms Business Applications Experience Shared Services Change Management Commitment IT IT Network Infrastructure Management Network Critical Physical Infrastructure IT Technical Infrastructure Competencies Strategic Foresight Figure 10.1 The IT infrastructure and capability perspective. Enterprise Green IT Readiness 201 To answer these questions, a number of green IT models and strategies have been proposed in both practitioner and academic publications. From practitioners’ perspective, green IT adoption can take place either through green-led or market-led mechanisms (Info-Tech, 2007). Green-led adoption occurs when green believers and green communities promote green IT, whereas market-led adoption occurs when green IT is led by market forces and innovative enterprises. To tackle both IT and enterprise-wide environmental sustainability responsibility, chief information officers (CIOs) can adopt a systematic and continuous approach of investigating the opportunities and threats associated with greening IT, developing strategies and business operations for IT, deciding the role of IT in providing tools and insights and leading change to respond to the opportunities and threats. Like practitioners, researchers have suggested several green IT strategies and procedures. Murugesan (2008) recommends three approaches – the tactical incremental , strategic and deep green approaches. Whilst the tactical incremental approach comprises preserving existing IT infrastructure and policies and incorporating simple measures (such as energy consumption reduction) to achieve moderate green goals, the strategic approach involves conducting an environmentally oriented audit of a company’s IT infrastructure use and developing a comprehensive green plan and initiatives to address broader green goals. The deep green approach expands the measures of the strategic approach to fundamentally redesign the IT infrastructure in a way that neutralizes greenhouse gas emissions. Likewise, Schmidt et al., (2009) describe a procedural model for sustainable management of IT. The procedure covers assessment, identification of measures, prioritization, implementation, monitoring and evaluation. Whilst these works have contributed towards a clearer understanding of the procedures and approaches that organizations can follow to green their IT, we need a conceptually coherent and comprehensive framework to nurture the capabilities that IT departments have to develop to implement procedures and strategies, green their IT and benefit from the potential interrelationships among these capabilities. In addition, IT managers need to follow a systematic assessment to evaluate their green IT progress. In this chapter, we present a green IT readiness (G-readiness) framework that helps to foster green IT adoption in enterprises. 10.2 Background: Readiness and Capability Although the term readiness has been used to explain organizational change, IS business process reengineering (BPR) and innovation implementations, it has also become very popular in the e-commerce and e-government areas. Several researchers and practitioners have used the readiness or e-readiness concept in studies and global reports (Lai et al., 2006; Mia and Dutta, 2007). At a global scale, the World Economic Forum publishes its annual report on the ‘network readiness’ of countries (Mia and Dutta, 2007). There are two main notions to the use of the ‘readiness’ concept: (i) readiness as a precursor condition (or set of conditions) for the implementation of change, IS or digitization (e.g. e-business or e-government) innovations (Guha et al., 1997; Raymond, Bergeron, and Rivard, 1998; Todd, 1999) and (ii) readiness as an indicator of the agility of a business and a capability that needs constant building, rebuilding and upgrading (hence maturity) (Clark and Cavanaugh, 1997; Mia and Dutta, 2007). In this chapter, we follow the notion of readiness as a capability. 202 Harnessing Green IT Organizational capability can be explained using the resource-based view theory (Barney, 1996; Rivard, Raymond, and Verreault, 2006). The resource-based view of the firm considers firms to be heterogeneous bundles of resources whose characteristics can predict organizational success (Barney, 1996; Bharadwaj, 2000). An organization’s capability differentiates it from its competitors and can affect organizational performance. Capabilities could be tangible or intangible firm-specific processes and assets that represent firms’ ability at coordinating and deploying resources (Amit and Schoemaker, 1993; Bhatt and Grover, 2005). It can also include functional skills and cultural perceptions to manage change and innovation. Capabilities emerge over time through complex interactions among tangible and intangible resources (Bharadwaj, 2000; Ravichandran and Lertwongsatien, 2005). Overall, though, capabilities could be input, transformational and output based (Lado, Boyd, and Wright, 1992). Input capabilities refer to firms’ physical, capital and human resources. In particular, human resource capabilities include the training, experience, judgement and insights of managers and workers. Transformational capabilities transform inputs into outputs, and include innovation to generate new processes, products and services as well as organizational culture, learning and adaptation. Output capabilities refer to firms’ tangible products and services and intangible output. Extending these views to green IT, capabilities represent the tangible and intangible assets, resources and processes by which firms deploy eco-sustainability considerations in building and managing their IT infrastructure. Thus, a firm’s capability to green its IT can be understood by looking at the permeation of eco-sustainability in a company’s IT and IT department’s input (IT human resources), transformation (the routines and processes that IT management follow to deliver its services) and output (the IT products, systems and practices that are delivered to support the wider organization). These dimensions are related to the concept of the IT infrastructure discussed in Section 10.2. An analysis of existing green IT practitioner publications illustrates the importance of using the input, transformational and output capabilities in green IT. As a basic input capability, greening IT requires changing the mindset of IT personnel and IT management (Accenture, 2008; Capra and Merlo, 2009; Gartner, 2008; Mines, 2008). In terms of transformational capability, policy, governance and measurement are central (CFO, 2009; Elliot, 2007; Elliot and Binney, 2008). In terms of output capability, there are a number of technologies that are considered to be green and there is an increasing push for green data centres (Accenture, 2008). Thus, green IT covers not only technical considerations but softer practices as well. 10.3 Development of the G-Readiness Framework G-readiness refers to the maturity of environmental considerations, whether they’re part of a coherent set of IT management policies, they have been adopted into IT human and managerial operational practices or they have been built into concrete IS. It demonstrates the comparative levels of green IT development among enterprises and serves as a benchmark for understanding IT’s contribution to support an enterprise’s environmental sustainability strategy. G-readiness consists of five components: attitude, policy, practice, technology and governance. The attitude dimension of G-readiness is an element of the IT human 203 Enterprise Green IT Readiness Green IT Attitude Capability IT Infrastructure Green IT Policy Green IT Practice Green IT Governance Green IT Technology Input Transformational Output Human Managerial Technical Figure 10.2 The nomological structure of G-readiness. infrastructure and represents the green IT input capability. The policy and governance components are elements of IT managerial capability and represent its transformational capability. The technology and practice components are elements of the IT technical infrastructure and represent its output capability. G-readiness is an organization’s capability as demonstrated through the combination of green IT attitude, policy, practice, technology and governance in applying environmental criteria to its IT technical infrastructure as well as within its IT human infrastructure and management across the key areas of IT sourcing, operations and disposal to reduce IT business process and supply chain related emissions, waste and water use. Figure 10.2 presents a descriptive nomological structure of G-readiness. 10.3.1 Green IT Attitude An attitude represents an enduring positive or negative feeling about some object or issue (Eagly and Chaiken, 1993). Attitudes are learned dispositions and are often the result of experiences. In the context of climate change, two major attitudes are prevalent. Most submit that the climate is changing at an alarming rate and that human (including business) activities are the main causes of the change (IPCC, 2007; Stern, 2008). On the other hand, some are sceptical about the causes and impacts of climate change (Royal Society, 2007). This group maintains that the climate is always changing and its impact is not as severe as most believe. Correspondingly, organizations are likely to adopt very different attitudes at the corporate level in dealing with eco-sustainability, and these differing attitudes will impact their expectations of green IT (CFO, 2009; Hart, 1997; Info-Tech, 2008). Green IT attitude is defined as an organization’s IT human infrastructure’s sentiment towards climate change, and refers to the extent to which IT people are aware and concerned 204 Harnessing Green IT about the impact (both positive and negative) of IT on eco-sustainability. The attitude of IT people and managers towards environmental sustainability and the role of IT is a key factor in initiating actions to green IT (Gartner, 2008). Having a favourable attitude towards green IT is very important – it precedes the development of green IT transformational capability. Thus, the following proposition emerges: Proposition 1: Firms with IT people and managers who believe that environmental issues are important are more likely to have a relatively well-developed green IT policy, and a relatively matured green IT governance mechanism. 10.3.2 Green IT Policy Organizations should develop their green IT policy aligned with its overall environmental policy and initiatives. Green IT policy encompasses the frameworks the organization puts in place to apply environmental criteria in IT-related activities. It defines the extent to which green issues are encapsulated in an organization’s procedures guiding the sourcing, use and disposal of the IT technical infrastructure, the activities of the IT human infrastructure and the use of IT in the wider enterprise (Gartner, 2008; Olson, 2008). The maturity of green IT policy reflects whether environmental considerations are systematically permeating the IT activity value chain and are repeatable, or are disorganized and based on uncoordinated efforts. Policy captures an organization’s intent to green IT. However, not all policies are expected to be smoothly implemented, nor are all practices expected to be policy led. Thus we arrive at the following propositions: Proposition 2: Firms with a relatively well-developed green IT policy are more likely to have greener technical IT infrastructure. Proposition 3: Green IT practices are more likely to flourish in firms that have a relatively well-developed green IT policy. 10.3.3 Green IT Governance Green IT governance is the operating model that defines the administration of green IT initiatives and is closely related to the policy construct. Roles, responsibilities, accountability and control for green IT initiatives need to be clearly established. Businesses should decide whether the responsibility for green IT initiatives should be delegated to the CIO or the environmental sustainability manager (CFO, 2009; Gartner, 2008). For example, in ANZ Bank and Deloitte, IT leads green IT initiatives, whilst in some other institutions, IT’s role is restricted to providing either tools or insights (Gartner, 2008). Deloitte’s green IT operating model is based on a three-step process of planning sustainability measures, implementing and tracking the measures and addressing green organizational change (Deloitte, 2010). Green IT governance also includes allocating budget and other resources to green IT initiatives and defining metrics for assessing the impacts of green IT initiatives. Indeed, governance capabilities will require standard administrative processes for developing green IT initiatives to be put in place. This leads to the following two propositions: Enterprise Green IT Readiness 205 Proposition 4: Green IT practices are more likely to flourish in firms with a relatively well-developed green IT governance mechanism. Proposition 5: Firms with relatively well-developed green IT governance are more likely to have a high level of green IT technical infrastructure. 10.3.4 Green IT Practice Green IT practice pertains to the actual application and realization of eco-sustainability considerations in IT infrastructure sourcing, operation and disposal. Organizations are likely to vary in the practice of analysing the green track record of IT hardware, software and services providers (CFO, 2009). They are also likely to vary in their practice in operating the IT and network-critical physical infrastructure in data centres and beyond data centres throughout the organization in an eco-friendly manner (Accenture, 2008; CFO, 2009; Velte, Velte, and Elsenpeter, 2008). For example, some are enforcing the Advanced Configuration and Power Interface (ACPI) to slow down processors. In 2005, IBM USA’s telework programme involved over 20 000 employees, saving more than 5 million gallons of fuel and avoiding more than 50 000 tons of CO2 emissions. A number of companies either recycle their IT hardware at the end of its life or dispose of it in an environmentally friendly way (CFO, 2009; Mitchell, 2008). For instance, Deloitte’s green IT practices involve ‘replacing traditional computers with thin laptops (Samson, 2008), for new data centres, and introducing application centralization and platform standardization’. Green IT practices would contribute positively to greening the IT technical infrastructure. Proposition 6: Firms that apply eco-considerations in IT infrastructure decisions are more likely to have a green IT technical infrastructure. 10.3.5 Green IT Technology The technological dimension refers to technologies and IS for (i) reducing the energy consumption of powering and cooling corporate IT assets (such as data centres), (ii) optimizing the energy efficiency of the IT technical infrastructure, (iii) reducing IT-induced greenhouse gas emissions, (iv) supplanting carbon-emitting business practices and (v) analysing a business’s total environmental footprint (Accenture, 2008; Caldelli and Parmigiani, 2004; Chen et al., 2008; Elliot and Binney, 2008; Info-Tech, 2007). For example, SAP’s Recycling Administration Application can help organizations to meet regulatory reporting and documentation requirements, manage recycling declaration and payment processes more efficiently and reduce the risk and cost of environmental reporting. The SAP Environmental Compliance application is designed to help ‘organizations ensure compliance with environmental laws and policies and reduce associated costs, efforts and risks on (the) plant and corporate level. It streamlines all environmental processes by seamless integration with operations control data, production control systems, and components from SAP software for environment, health and safety, enterprise asset management, materials management, the SAP Manufacturing Integration and Intelligence (SAP MII) application, business intelligence and knowledge management’. 206 Harnessing Green IT 10.4 Measuring an Organization’s G-Readiness To illustrate the utility of G-readiness in practice, in this section we present a brief case study of a green IT consultancy firm that works with client organizations to determine their current ‘G-readiness’ capability, with a view to assisting them in improving this. Data were collected via semistructured interviews with the firm’s two principals and by document analysis, including green IT consultancy reports developed by the firm and information published via the company Web site. 10.4.1 G-Readiness Consultancy Services Connection Research (2010; http://www.connectionresearch.com.au/), Australia is a market research firm specializing in sustainability issues and, in particular, sustainability issues for IT. The firm has two principals, two employees and approximately six part-time consultants. The firm’s key customers include trade associations, government agencies and medium-large organizations. Connection Research provides market data to clients collected via direct methods such as surveys and through comparing such data with data from the Australian Bureau of Statistics. Assessing the G-readiness of organizations is one of Connection Research’s key areas of business. The firm uses the G-readiness framework described in this chapter, albeit adopting alternative terminology in places and an alternative graphical representation. For example, attitude, policy, behaviour (practice), technology and metrics (governance) form central constructs. Connection Research also identifies four ‘pillars’ of green IT within its consultancy services, namely, life cycle, end-user computing, enterprise and data centres and the role of ICT as an enabler. Each of these pillars is also included in the G-readiness framework described in this chapter, for example life cycle encompasses procurement, recycling and reuse and disposal issues. To develop its framework, Connection Research initially administered a survey based on the framework to 500 organizations around the world and asked them to rate themselves on a 1–5-point scale. Since the survey was first administered, it has been repeated by Connection Research in Australia, England, India and the United States. The framework and survey instrument are publically available to encourage as much use as possible and, thus, build an increasingly comprehensive database. The firm then uses the results of the survey as a means to benchmark its clients against other organizations. Essentially an organization completes the survey and compares itself across each dimension (described further in Section 10.4.2) to other organizations across different industry sectors and also different countries. Based on the client firm’s initial result in the survey, Connection Research provides additional services to client organizations. There are two versions of these services. The first is a ‘Green IT Report Card’ of approximately four pages, which provides a breakdown of the client’s performance across the five dimensions and pillars of green IT compared to other organizations in its industry and at the national total. The report card includes a brief reflection on the client’s performance across each area and offers broad suggestions of how performance could be improved. The second set of services is the ‘Readiness Index’. This product involves a more comprehensive consultancy process where more individualized services are offered to the Enterprise Green IT Readiness 207 client company. These services are offered in greater detail and generally via face-to-face methods. The product provides customized advice to the client about its objectives for green IT and explains how this relates to each of the five dimensions of green IT. This consultancy service can focus on calculating the index across all five dimensions, or it can focus on one dimension. Typically the service results in a report, prepared for the individual client, reflecting on their performance in terms of industry and national averages. Connection Research also provides green IT training services to client organizations based on the G-readiness framework, Report Card and Readiness Index. The next section provides a brief summary of how the G-readiness index is derived. 10.4.2 Calculating the G-Readiness Index via a Survey Instrument As foreshadowed in Section 10.4.1, a simple application of G-readiness is its use by practitioners to measure the current green IT capabilities of an organization and to identify areas that need improvement. Such an assessment is inherently subjective. If it is done by a group of managers for a single organization, it first requires developing a shared understanding of G-readiness items. An initial instrument to measure G-readiness is reported in Molla, Cooper, and Pittayachawan (2009). In this study, measurement items for the five G-readiness constructs – attitude, policy, governance, practice and technology – were generated via a literature review. These items formed an initial instrument to survey CIOs of large organizations in Australia, New Zealand and the United States to test the validity and reliability of the developed model and instrument. Ultimately, 10 factors (subcomponents) and 32 items were confirmed using confirmatory factor analysis (CFA), the LISREL 8.8 programme and convergent validity, discriminant validity and factorial validity tests (for further information, see Molla, Cooper, and Pittayachawan, 2009). The resulting instrument can be implemented as a tally sheet with which managers (either individually or as a group) can evaluate their performance across the 32 items on a scale from 1 (low ) to 7 (high). The item scores can be averaged to produce the average scores of 10 subcomponents. On the basis of a 7-point scale, the maximum value of a subcomponent is 7. The subcomponent score can then be averaged to produce a score for the five basic components of G-readiness. Aggregating the five components will yield a G-readiness score out of a maximum of 35. In this study, there were 143 respondents and their G-readiness score was calculated at 19.3, which can be interpreted as average (Figure 10.3). Individual firms could therefore use the instrument to calculate their score and compare their result to the average results of the 143 firms that participated in the survey. 10.5 Conclusions Businesses are under increasing pressure from customers, competitors, regulators and community groups to implement sustainable business practices. Balancing economic and environmental performance is therefore a key strategic issue for businesses. G-readiness is a critical organizational capability to make our environment ecologically sustainable. 208 Harnessing Green IT Governance 7 6 5 4 3 Attitude Policy 2 1 0 Practice All Australia Technology New Zealand United States Figure 10.3 G-readiness results for Australia, New Zealand and the United States (Molla, Cooper, and Pittayachawan, 2009). In this chapter, we presented a theoretically grounded definition and model of Greadiness as a capability. The G-readiness model will allow IT managers to approach green IT from not only the IT technical infrastructure but also the human and managerial perspectives. In addition, the model, rather than viewing green IT from one domain of the IT activity chain, is based on a life cycle approach covering IT sourcing, operation and disposal. Illustrated with a brief case study, this chapter has demonstrated the use of G-readiness in practice. The case study highlighted how the metrics provided by the G-readiness framework can be turned into a series of indices, which then allow organizations to be compared to each other and to themselves over time. Future refinement and evaluation of the proposed model will be useful to advance knowledge on green IT. Firstly, research that develops a measurement instrument to operationalize G-readiness would be extremely valuable. This contributes to the cumulative tradition of green IT research, which is inseparable from measurement. Secondly, additional empirical validation of the proposed model by testing the hypothesized relationship among the different G-readiness factors, and by exploring the relationship between the G-readiness factors and other antecedent and/or consequent variables of interest, can be another opportunity for research. An enrichment of the proposed model such as adding a construct or a relation or alternative ways of organizing the net constitutes offers another avenue for research. Review Questions 1. Discuss different strategies and approaches for green IT and their managerial implications. Enterprise Green IT Readiness 209 2. Describe the strengths and weaknesses of the G-readiness framework. 3. For your study, identify an organization. Using the framework suggested in this chapter, analyse it to assess its G-readiness, and compare your findings with the examples discussed in this chapter or presented elsewhere. Discussion Questions 1. Discuss the importance of environmental sustainability in IT management. 2. What are the differences and similarities of green IT and IT for green? Is it possible to assess an organization’s capability to use IT for green by the same framework and indicators as green IT? 3. 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