The green agenda, sustainability and being a responsible corporate citizen have all become fashionable over the last decade and financial firms like to parade their green credentials as much as the next, but it's not just PR 'greenwash'. These technologies, such as better lighting, air conditioning, chips, storage and so forth, can save you money. For those who take it seriously and truly introduce green IT, rather than just a vacuous publicity policy, there are potentially vast efficiency savings to be made, no mere consideration in these recessionary times. David Adams looks at best practice

The average, reasonably well-informed person, when asked to name an example of an environmentally sustainable business community, would almost certainly not suggest the City of London or Canary Wharf. The glass and steel icons of the Square Mile, like the NatWest Tower and even the swish curves of the Gherkin, seem a world away from the kinds of small-scale eco-communities in Germany or the Netherlands that might be more likely to come to mind.

But let's offer credit where it's due; the financial sector has come a long way in moving towards green IT and in cutting its power consumption and consequently carbon dioxide emissions. A decade ago, endless lines of office windows blazing with fluorescent light hours after the people who worked there had gone home was a common sight and seemed an apt symbol of how financial companies seemed happy to waste energy just because they could. Now that we live in a different world, in which the environment has become a major preoccupation for a substantial section of the population, perhaps it's not surprising that many financial companies light and air-condition their offices in a more sustainable way and are keen to publicise green IT strategies. But Corporate and Social Responsibility (CSR) concerns are only part of the reason why green IT has become a more important priority.

The economic crisis has been a big influence. As Rhonda Ascierto, a senior analyst at the Ovum/Datamonitor group and author of the Can Green IT Bloom in an Economic Downturn? report, published in July 2009, puts it: "Financial companies are among the main adopters of green IT because they have such large IT operations that they stand to benefit substantially from deploying it." Even before the recession, the usefulness of green IT strategies as a means of making cost savings had already made an impression, but the downturn has driven the idea forward. "Before the downturn green IT was typically viewed as something that would give a Return on Investment (RoI), but one that wasn't measured," says Ascierto. "It was more a vague notion, about 'this is good for our CSR agenda', good PR."

Martin Niemer, group manager, product marketing, at VMware EMEA, believes the number of financial companies with green IT strategies driven primarily by CSR is now very small. "Most companies really just see the benefits of saving money," he says. "The money being spent on energy, especially electricity, has come to the front of peoples' minds. In the past the CIO had no responsibility for power costs; often nobody was even aware what they paid for it. Today, a total cost of ownership (TCO), or RoI case, for any IT project looks much stronger if you consider energy cost savings."

There are already plenty of examples of financial companies making big savings after investing in green IT. For example, Royal Liver Assurance bought a Kbox systems management appliance from Kace to automatically power down 750 PCs in the company's head office in Liverpool and another 120 PCs in Dublin at the end of the business day, while enabling overnight re-activation for the downloading of software patches and updates. The company estimates this cut electricity costs by about £45,000 per year.

Virtualisation
Virtualisation, of servers and desktops, in the data centre and the office, is now sold in large part on the basis of the huge cost savings it can generate - particularly for companies with intensive computing needs. VMware claims that virtualisation of a single server can save about $700 in energy per year, based on saving 7,000 kilowatt hours (kWh) per year, which equates to about four tons of carbon; and consolidation ratios may leave just one physical machine where there were ten or 20 before. There's also the fact that a 500W server eats up another 500W of energy through air conditioning. In some data centres cooling can account for 40 to 60 per cent of energy consumption. Little wonder that virtualisation in the data centre now forms a major part of most green IT strategies and efficient air conditioning is considered essential (see our green data centre feature HERE).

Technology that helps companies identify and maximise energy savings via virtualisation has also improved, with solutions like VMware's Distributed Power Management (DPM) system, which monitors server use, turning idle machines on and off as required. And there are also strong manageability and disaster recovery reasons to invest in virtualisation, as data mirroring is easily achieved.

Hand in hand with the green benefits of virtualisation is a continuing trend towards thin client architecture and the virtualised desktop (i.e. blades). A drive to use thin clients and virtual desktops, with more processing moved to the data centre has led to a 75 per cent energy saving per desktop, compared to standard desktop PCs, at companies in the Barclays Group, according to Paul Baglin, head of environmental management for IBIM, the investment banking division at Barclays, which covers Barclays Capital, Barclays Wealth and Barclays Global Investors. "The key thing for me is around running costs, but thin client machines are also a lot smaller so there are production, packaging, and transportation cost savings - all reducing the environmental impact," he says. "A thin client machine also kicks out less heat than a standard PC, so office air conditioning can be reduced."

Case studies
But green IT can also have dramatic direct effects on business process performance. Over the past two years BNP Paribas has enjoyed a huge boost to the supercomputing capability of its Global Equities and Commodity Derivatives (GECD) data centre through the use of graphics processors (GPUs) instead of conventional CPU microprocessors. The technology, supplied by Nvidia, enables much faster calculations during algorithmic simulations, while consuming far less electricity than the previous system. A new platform based on two Nvidia Tesla S1070 server solutions, each consuming 2kW, has replaced more than 500 CPU cores, consuming 25kW. Altogether, the solution has reduced electricity consumption by a factor of 190. Factoring in the cost of cooling the equipment, the prototype solution delivered a $70,000 per year saving.

"The initial reason [for using the solution] is we were constantly faced with more computation demand: we need more and more and more, and we're always constrained by what we can buy and how much [power] we can consume," says Stephane Tyc, global head of equities and derivatives quantitative research and development, at BNP Paribas Corporate and Investment Banking. "There was no way to scale our current system to meet our needs. Our thinking was there was a good improvement to be made [using the GPU solution], but we had no idea of the scale of improvement we could get."

The cost savings and efficiency gains that can be achieved through consolidation are also available in other types of applications. Barclays Wealth won this year's FST Award for the Environmental Initiative of the Year for work with HP developing a new print network for its UK operations that has reduced annual print-related energy consumption by 73,000 kWh (25 per cent), paper consumption by 20 million sheets (another 25 per cent reduction) and CO2 emissions by over 500 tonnes, leading to a cost saving of about £1.25 million per year. That project is just a part of an environmental programme that has been developing for over ten years. Paul Baglin's IBIM department at Barclays has input into new building and office design, as well as the development of green IT strategies, helping to ensure that the new Barclays Capital office in Canary Wharf, which opened in January 2008 was built to high environmental design standards, with lighting controls and advanced cooling systems for the air conditioning. The building now uses about 35 per cent less energy than a comparable office elsewhere.

Greener IT is also delivering benefits to the branches of retail banks, as at HSBC, where energy management technology supplied by t-mac as part of a mini-building management solution is delivering energy savings of 20 per cent and above. It's currently being rolled out across the bank's 1,600 branches. Other financial companies using the technology include Axa and the Principality Building Society.

Green IT
Elsewhere, it's interesting to note the extent to which IT vendors are 'greening up' products. "People need firm RoI models. Every item in IT budgets is being analysed and justified [during this recession], so vendors have made products even more sustainable, knowing that there's no other way they're going to sell this technology," says Ovum/Datamonitor's Ascierto. "It used to be that a company deployed a piece of green IT and they would expect an RoI in three to five years. Today, vendors say customers want RoI in 12 months."

But the way the technology is used is often at least as important as its inherent green qualities. Ascierto's research uncovered growing trends in refurbishing and leasing IT assets as well as outsourcing, all of which can deliver useful up front cost savings for end users, while helping to comply with increasingly strict guidelines on the disposal of old IT equipment.

There are also environmental gains to be enjoyed through the use of all sorts of remote working technologies, and from extending some of those benefits to the clients or customers of a financial provider. For example, in the US, GreenChoice Bank, a Chicago-based institution which prides itself on its environmental credentials, uses Fiserv technology to offer customers as paperless a banking service as possible, including electronic statements, mobile banking and e-signature capture. Processing is outsourced to a Fiserv data centre, enabling the bank to operate in a smaller space with less IT hardware on site.

Green taxes
Of course, there is another crucial factor helping to drive green IT strategies in financial services - the regulatory environment. This is set to become even more important, as many multinational companies will be affected by legislation covering the US, individual European states and/or the EU. The top item on the agenda in the UK is the Carbon Reduction Commitment (CRC), a UK-wide carbon emissions trading and energy saving scheme, which comes into force over three years from 2010. It will apply to companies and their subsidiaries, not already covered by carbon trading policies, consuming more than 6,000 MWh of half-hourly-measured electricity per year (equating to an annual electricity bill of about £500,000). Participants will also be ranked in public league tables, which the government hopes will incentivise good environmental performance. Those who save money by cutting their emissions won't face any additional penalties and can make more money by potentially selling their 'pollution permits' on to others. The EU Emissions Trading Scheme (ETS) already does a similar job for large industrial locations across Europe but in the future smaller players - and FS firms with their power hungry data centres - will increasingly be covered by these green tax schemes (see our carbon trading feature HERE to learn about the opportunity for brokers, traders and exchanges).

Michael Meehan, CEO at carbon management solution provider Carbonetworks, believes the CRC is already having an impact, in the UK and beyond. "We call the CRC the tip of the spear," he says. "It has pushed all kinds of initiatives in companies, even if they're not based here." There are other pieces of legislation elsewhere, such as carbon reduction rules covering New York, that are also pushing financial companies to take action in this area. Further national green regulations and carbon taxes are anticipated in markets including the US, France and Australia over the next few years.

But there are barriers to overcome. The recession has not boosted every green IT project. "One thing that has suffered because of the downturn has been the design of new green data centres," says Ovum/Datamonitor's Ascierto. "New green data centres are being opened today, which may seem surprising when everyone's reeling in spending, but the reason is that they were designed, commissioned, probably even paid for, three to five years ago. "From late 2007, as budgets have been cut, organisations have switched to squeezing more out of existing data centres, doing more holistic virtualisation, reassessing how to place hardware in a way that prevents electricity bills going up. Because a brand new data centre is not going to give you RoI in 12 months, however efficient or 'green' it is."

Even so, green IT has acquired powerful momentum in the financial sector, certain to be maintained for the foreseeable future by a combination of economics and regulatory pressure - regardless of CSR considerations. "The CSR element is embedded in what Barclays does, but really, it's all about good business management, about running your business effectively," says Baglin. "The environmental strategy is not only ensuring we are prepared for increasing environmental legislation but is also helping us to be leaner and more efficient."

But even if green sentiment isn't what forces decision makers' hands, it is still important to staff implementing green IT initiatives on the ground, according to BNP Paribas' Stephane Tyc. "The fact it helps the environment is something which helps a project to be successful and well-regarded internally," he says. "We work a little bit better when we think we're doing something for the greater good - even us finance guys!" Who knows, it could even help improve public perceptions of the sector too post-crunch. Maybe the City can become a sustainable community after all.

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