Sustainability at the Core : Green IT Asset Management

Kris Johnson:

Hi there, welcome to another episode of the ITAM Executive. I’m Kris Johnson, Chief Product Officer at Anglepoint. With me is Ron Brill, who probably needs little introduction, but Ron is the President and Chairman of Anglepoint, and also the convener of Working Group 21 that is over the ISO 19770 family of standards.

Also Vice Chair of the ITAM Forum and the FinOps Foundation Special Interest Group leader over ITAM and FinOps. Have I got that right, Ron? Yeah, you got it right. Thanks. Ron, thanks for being here. We wanted to talk about green IT initiatives and environmental sustainability, how we’re seeing changes in the IT industry.

I think for one and we’ve talked about this before. This is a topic that is much more top of mind, shall we say, for CIOs, CTOs, and above when it comes to environmental sustainability, even more so than, you know, IT asset management, even cloud cost management. You’ve been talking with a lot of senior executives both here in the United States as well as in Europe, Ron, how have you found those conversations to be playing out?

Ron Brill:

Yeah, it’s definitely a hot topic right now. Organizations, particularly in Europe, but in the U. S. as well that’s coming, are going to be required to include carbon reporting as part of the financial statements. The EU, that’s the CSRD, Corporate Sustainability Reporting Directive, where starting Jan 1st, they need to start collecting that data to be reported on 2025 but going back to Jan 1st, 2024.

And so, this is getting a lot of attention. As CEOs and CFOs have to sign off on the financial statements saying that these are complete and accurate. And as far as carbon reporting goes, it’s a new thing. We need to know how to measure it, how to report on it.

Ensuring that what they’re reporting on is valid. And as it relates to IT, CIOs are being tasked with reporting on carbon emissions within the IT organization. And they’re really struggling to do that. There’s many organizations, even Fortune 500, where there isn’t, today, a function within IT that’s responsible for that or capable of generating complete and accurate reports on that, so it’s definitely an area that’s getting a lot of attention and it’s a current pain point.

Kris Johnson:

In the United States there are some organizations that are prioritizing measuring their carbon footprint anticipating, I think, that they’re going to be required at some point. Of course, the SEC has proposed a change to filing rules and it’s gone through a review period, a comment period.

And so, I think in the US at least, there’s a little bit of a wait and see that some organizations are taking, but it seems to me that if that does come out, we may see something like we saw with Sarbanes Oxley in the early 2000s where the legislation changed and overnight there was a reporting on IT control objectives, IT control testing and so forth that needed to happen and everyone was scrambling to figure out how to do it and comply with the new legislation.

I feel like we’ve got a longer lead up. Everyone knows this is coming. They’ve known it’s been coming for a while. And It’s not a bad idea to, even in the U. S. where it may not be required at the moment, to start putting the practices in place, get the visibility, to say nothing of the fact that it’s probably a good idea for the environment as a whole.

We not only look at what the dollar costs of IT are, the total return on technology, but also what the cost of the environment are for those technology investments and have that as part of the equation.

Ron Brill:

Yeah, absolutely. No question. Regulatory requirements are just 1 side of the equation.

There are multiple other internal and external stakeholders who are demanding this. So, it’s a hot topic for board support of directors for CEOs with a recent Gartner survey that showed that, again, it was the top 10 CEO priority and actually went up 25% from ranking quarter last year.

Employees are asking for this. Customers are asking for this; business partners are asking for this. So, there are a lot of reasons to pay attention to this beyond just the, the regulatory requirements as you see requirements and as you mentioned it’s good for the environment anyway.

Yeah. And you’re right, we’re going to see increasing demand for these types of capabilities different conferences and forums at different places.

Kris Johnson:

As we look to prepare some of those materials, we did not find really any good depiction, translation of how the Greenhouse Gas Protocols translate in an IT context what are the scope 1 emissions for an IT department or scope 2 or scope 3 emissions that a CIO needs to be able to measure?

We’ve put together a pretty good visual to help educate some people around this that and to just clarify, where do your cloud costs from your cloud providers, your, Google Cloud, AWS, Azure where should those be categorized?

Where are those factored in? And so, we’ll put a link maybe in the description here so people can go take a look at it. But we found that nobody else has done this I think we found maybe one image in a report that was pretty obscure that was not very comprehensive.

And it’s our contribution to the global effort to try and move the green IT initiatives along. How the greenhouse gas protocols apply to IT specifically and the concepts of the CO2 measures for equivalency and so forth.

Ron Brill:

Yeah. No, absolutely. Yeah. The GEG protocol, which people can find on GEGprotocol.org, is really the most common framework for measuring carbon emissions that everyone is pointing to new regulations and so forth. And for people who are not familiar with that it really is divided into three buckets, if you will, scope one is emissions that are generally directed by the organization, scope two is power consumption by the organization and scope three is upstream and downstream impact on your supply chain and so forth. And as you mentioned it’s not immediately clear how those three scopes relate to IT specifically.

There isn’t a whole lot of scope one in IT. Some fringe cases, but mostly it’s scope two or consumption and scope three and cloud for the most part fall under scope three. But yeah, there’s definitely been a gap there that we hope to fill with a little bit like that.

Kris Johnson:

Yeah. So, let’s talk a minute about where we see the ITAM industry going and some convergence that we’re seeing. We’re seeing convergence with FinOps that we’ve talked about elsewhere. But we’re also seeing some convergence from a green IT reporting standpoint. In Gartner’s Magic Quadrant this year, there was certainly more of an emphasis on environmental sustainability services as part of an ITAM managed services provider portfolio.

So, we’re certainly seeing that we’re providing services in those regards to many of our managed services clients. Where else are we seeing this convergence?

Ron Brill:

Yeah, there’s a general consensus in the industry that there’s a close relationship between sustainability, carbon reporting, and so forth, and IT asset management, software asset management.

As you mentioned, we’ve seen this with clients, we’ve seen this added to the inclusion criteria for the direct management quadrant for SAM. We’re also having discussions about this at ISO. ISO has a completely separate standard for environmental management system, 14001. But there is a growing recognition that there’s an impact within IT asset management. And so, in the next edition of 19770-1 for an ITAM system, that’s a flagship standard. It’s the next edition that’s hopefully coming out in 2024.

Kris Johnson:

You are the editor of that and we’ve all been contributing heavily to.

Ron Brill:

Yes. So, in that addition, there’ll be a whole new process area dedicated to sustainability reporting and to sustainability optimization. So, optimization of sustainers not just reporting on sustainability and corporate emissions, but also working to optimize them under IT asset management.

Yeah. So that’s I think going to be a very big change. As well to cement that evolution within the industry that you touched on.

Kris Johnson:

Yeah, just as an aside, it’s been great, Ron, to see the evolution of the 19770 family of standards, the -1 standard in particular, under your leadership, right?

It started as a software asset management standard. Recently was expanded to an IT asset management standard. In this next edition I think we’re going to see it be inclusive of a lot of FinOps principles and cloud resources as included as, by definition as IT assets. And now, with the incorporation of green IT reporting, it’s great to see the evolution of that standard evolve with the industry instead of staying kind of static and dusty where some ISO standards can sit.

Ron Brill:

Yeah, no, absolutely. And I appreciate that. Then, arguably those things were all those things you touched on were in scope in previous editions as well. But the next edition is going to call them out separately. The practitioners who are using the standard to implement those the right way.

But yeah, this is we have to keep the standards relevant, and we have to stay close to what’s happening, the changing industry and FinOps and sustainability are two of the biggest changes impacting IT asset management in the next three years.

Kris Johnson:

Yeah, for sure. Let’s talk a minute about okay, when we’re looking at what our consumption our carbon consumption footprint is within an IT organization You know we can look at hardware, obviously it’s from a scope two and scope three emissions standpoint when it comes to laptops and desktops the scope three upstream emissions are actually, when you look at the lifetime of that asset.

So let’s say a laptop has a three year life. The majority of the carbon over its lifespan is actually in the upstream. It’s in the mining of the raw materials, the aluminum, the manufacturing process, right? And the carbon that it takes for that versus the operational component.

Okay, now I’ve got the laptop, the power that it takes to power that laptop. It’s about an 80/20 split. Split right between the upstream scope three emissions for manufacturing versus the scope two emissions for the operational consumption. So, most of the emissions take place before you’ve been received.

Exactly. Versus servers is exactly opposite, right? Not that they’re a lot more efficient to mine and manufacture, but you compare their operational component, the power that it takes to run them and to cool them is 80% of the cost of carbon, if you will, over the lifespan of that server, even taking into account that the useful life of the server may be longer than three years.

And so, this is where moving workloads from on premises data centers to the cloud is an inherently green thing to do, right? There’s a carbon savings by making efficient use of the cloud, whereas the cloud providers have a much, larger economy of scale for one, but two, their servers have essentially no downtime between reserved instances and selling of spot instances to actually make use of reserved instance time that isn’t being used by the person that has the reserved instance, right?

Those servers are like 100% utilized versus what’s the industry average? I believe it’s around 40% in data centers, right? You’re not cooling and powering servers that are only used 40% of the time. The cloud service providers are cooling and powering servers that are used 100% of the time. The Cloud economy, if you will, is inherently more green as a result.

Ron Brill:

Yeah, absolutely. Just moving workloads from on prem to cloud results in a significant reduction in carbon emissions. You touched on one reason, which is utilization, process utilization or hardware utilization. But they’re just more efficient because of the economies of scale and so forth, the scale in which they operate.

This is what they do for a living, right? So, a lot of other factors are around more efficient cooling techniques that are only cost effective to implement large scale like liquid cooling and so forth. Utilization of power in countries where electricity is greener than in other countries, or locating data centers next to renewable energy sources, which, in this matter, are much better at compared to, what corporate data center will be able to do so, there’s a number of reasons why just moving workloads to the cloud is by itself already generating a very good impact on reduction of carbon emissions.

Yeah. And it’s one more reason to move the cloud.

Kris Johnson:

Yeah.

And that’s why in the FinOps work that we do helping our clients achieve cost savings by moving workloads to the cloud getting better rates through rate optimization and better utilization through FinOps practices.

There’s also a great carbon emission savings that we were able to report along with that CIOs are much more attuned to these days, which is a great development. There’s also the software component which I think is a little bit less known. Let’s talk about that for a second.

So the efficiency of the source code, if you will not necessarily the efficiency of the code in that it’s fewer lines of code per se, but how that code actually uses the hardware can be more or less efficient depending on, how it’s written and there’s a kind of an emerging standard in those regards

Ron Brill:

Yeah, absolutely there’s an organization that is set a goal to try to quantify that for software.

It’s the Green Software Foundation, and they come up with a model called the Software Carbon Intensity Model, the SCI, which is essentially a formula where you use to put a number on a piece of software that will tell you how well that piece of software is engineered from a carbon emission standpoint.

So, there’s a number of factors that they take into account. It’s not an exact science, and it’s not a formally adopted standard. It’s still early days. It’s still very early days, but it’s probably the most sophisticated tool I think there’s currently out there. to try to quantify the impact of software and how to tell if one piece of software is greener than, an alternative for sure. And software has a huge impact, on how green IT is.

I think there was an analysis that showed that only about 25% of the power consumption of the server is driven by the hardware in the operating system.

The remaining 75% of the software in the workload that’s running on the software. If you’re able to optimize that component you’re going to make a big impact. And if you’re ignoring that component, you’re going to make a big impact on address. Software is definitely a big element.

I know when people talk about green IT and there’s the perception that it’s all about hardware. It’s only about hardware. Circular economy and so forth. And maybe that was the case five years ago or more. But I think nowadays where things are trending as far as what generates the most impact on the environment within an IT organization and how to control it, I think that the focus is shifting from hardware to software and cloud. So those two are going to, receive a lot more attention in the next few years and focus on hardware for most organizations is going to continue to decline in the overall mix of the environmental impact.

Kris Johnson:

Yeah, it’ll be great to see that that standard kind of come into its own and gain popularity and software companies may be being measured against that at some point, or at least the consumers can know, how they stack as far as that goes, as well as developers learning, even going back to university programs how to teach the next generation of coders, how to program in ways that will make the most efficient use of hardware. And therefore, carbon energy.

There’s another element we haven’t talked about yet, and that’s storage, right? So, a lot of people don’t realize that there’s a cost of carbon just to store data in different formats, right? Maybe less so on a tape backup, if it’s in a database, if it’s in a data store and it needs to be available there’s energy that’s used to make that available.

I know to celebrate Earth Day Anglepoint every year, we encourage our employees to go out and clean out your filing cabinet, right? Clean out your old emails. Of course we have some rules set where it’s automatically cleaned out, but cloud storage, file storage, go through and find the stuff that you don’t need to keep around anymore and just, archive it, delete it.

And every year we are able to save a lot more from a storage size standpoint, but we can also take a look at and report it on the carbon savings as a result, so a lot of people don’t realize just, even like their personal email on, Gmail, whatever platform you’re on, all those old emails are taking up space on a server somewhere, and there’s energy required, and carbon emitted is all part of that from an organization standpoint, it can be a bit harder to, it seems like storage is always increasing and storage needs are always increasing, but whether it comes from using different compression or different applications that allow you to, identify multiple versions of a file, and get rid of all the duplicates those sorts of things. It can all add up and storage is another area in addition to hardware and software that there can be green IT savings.

Ron Brill:

Yeah, absolutely. And whether the storage is on prem or in the cloud both of these scenarios.

Carbon emissions to be saved by optimizing the tech.

Kris Johnson:

Yeah. It also feels good to just clean out the filing cabinet on a regular basis. Earth Day is a good time to do those initiatives right.

Ron Brill:

Yeah, that’s right. So, cybersecurity benefits as well.

As far as cloud, you touched a little bit of Harvard software just to expand a bit on the cloud side and how you measure things.

I think the holy grail there is it will be in a position where cloud service providers like the Azure, AWS, GCP, will provide us with monthly reports. Okay here’s all your emissions that were generated last month. That’s the actual utilization of cloud assets. We’re not there yet.

Some providers like Azure are a little bit ahead of the others as far as generating that information, but we’re not there yet. Right now, the gold standard is an open source tool called Cloud Carbon Footprint. It’s a, you can go to cloudcarbonfootprint.org or open source is available on GitHub and what you essentially do there is you upload your cloud utilization data that you get from AWS or Azure, you upload that tool and it approximates what your emissions are based on that utilization data and it’s a bit clunky to work in that fashion but, this is the most complete and accurate tool and kind of the gold standard right now for this.

And we know a number of companies that are either already utilizing that or looking to utilize that. But again, I think the long-term solution here is definitely for the cloud service providers to be providing that information. And that’s certainly true for lots of AWS, Azure, and so for, I think also for SaaS providers, I think there’s going to be a growing demand that they provide that information.

Kris Johnson:

Yeah, transparency.

Ron Brill:

Transparency to their customers. So, if you’re a customer of Salesforce or ServiceNow or Workday or any of those, you’re going to be able to get monthly reports that show what your carbon emission impact has been during that period. So I think that whole space is differentiating the two.

Kris Johnson:

I can see us also moving to an era, especially, if the FCC approves or moves forward with their proposed changes that we move into a world where there’s like a SOC 1 and SOC 2 attestation. Along those lines where they’re a third party audit that SaaS provider as to, it’s free IT practices.

In fact, we could see that, across a number of different industries and suppliers, right? So that buyers can differentiate not just on price and features and those sorts of things, but also on how sustainable their practices are.

Ron Brill:

No, absolutely. I agree. I think in one area we’re seeing more and more interest, which I think is a natural evolution of things is around almost like a carbon chargebacks and show backs and so forth.

As when your organization use IT financial management framework like TBM or others to allocate IT costs to business units and applications and solutions, I think where we’re seeing more interest is in finding a way to allocate carbon emissions in the same way. It generates these many tons of CO2 equivalents per year or whatever, but how is that allocated to the business units and applications that are being supported by IT?

And you can almost argue that the same mechanism that is used to allocate dollars, like at IT costs and resulting in their chargeback or show back or whatnot could be used in sometimes even with the same weightings to allocate emissions generated so you know we’re an organization using AWS is generating X tons of CO2 per year for us. How do we allocate this to the inner organization that leverage AWS directly?

Kris Johnson:

Yeah, I’m hopeful we’ll get there. It’s like what I was saying before, if you really look at it in terms of cost has at least two dimensions, right? There’s financial costs, dollar costs, but then there’s also costs to the environment, the carbon costs that can be two sides of the same coin in some regards.

Ron Brill:

And I think the demand is going to be not just from internal or regulatory, I think customers are going to demand that as well, because they don’t want to know I’m using their company. I’m using application A. You’ve got 20 other applications. I don’t care about those. I care about how much carbon I’m consuming from my scope 3 by using your application A.

And so, the organization should be able to be in a position to have that information available to their customers.

Kris Johnson:

Yeah. The point you raised earlier, new college graduates, you know, this is a factor for them, they’re asking their employers, their would-be employers, are you reporting on carbon? How much of a priority is this? As we know from a generation standpoint, there’s a lot more emphasis on those sorts of things.

Yeah, which is good.

Ron Brill:

Yeah. Absolutely. So, I think the one thing I want to mention is that I think it’s a really big opportunity for IT asset management to step up and help resolve that pain point for the CIO. If ITAM doesn’t do that, SAM doesn’t do that, somebody else will.

There’s going to be a vacuum. And somebody else will step in to do that. But I think it’s ITAM and SAM are really uniquely positioned to help with this problem for IT because they already are the function that has the best information about IT assets. It’s IT assets – hardware, software, cloud that generate the carbon emissions, right?

Yeah. So, if you could have best data about IT assets, and you have access to controller lifecycle and so forth you’re best positioned to capture the carbon emission that generated right, to get generated for that lifecycle. And so, I think it’s a really big opportunity for ITAM and SAM to step up in the industry before somebody else does.

Kris Johnson:

Yeah, that’s certainly been our message to our clients that look what is an IT asset, by definition, it’s sort of an IT resource that you care about tracking the life cycle of, right? So why do you care about tracking the life cycle of, because there’s costs associated with it.

There’s risks that it can generate and there are environmental costs associated with it as well, right? So, from cradle to grave, how it comes into the organization, how much carbon that required to bring it into the organization to, going back to our scope three, upstream versus the cost of the environment.

One of the easiest or simplest conception at least to, get a carbon savings is just to expand the useful life of an IT asset itself, right? So sometimes that’s repurposing, maybe your really fast laptops need to go to say your developers that have more processing needs, right?

They have a useful life of say two or three years, but then can be given to maybe a call center in the same geographic location. So, it’s not shipping costs associated with it, right? So, extending that useful life gives you that benefit and savings. But the point is because IT asset managers are used to managing the life cycle of cost and risk association standpoint. Environmental costs are just another dimension within that same sort of life cycle.

Ron Brill:

Yeah, I completely agree.

Kris Johnson:

To the ITAM executive then please start having these conversations if you’re not already with your finance organization, with your, sustainability program within the organization and driving that agenda, those topics at all levels of leadership under the CIO and beyond.

And certainly, if you have any help that you need in that regard, we’re available. We’ve put some links in the description to a couple of resources that we’ve created to help you with that conversation and good luck in this journey. It’s still early days for some parts of it, but we’re seeing it accelerate and certainly should be on the ITAM executive’s agenda.