Why Energy Management Matters To CIOs

This article was originally featured in Forbes Magazine. It has been reposted here with permission.

With the right moves, energy can even become a profit center.

In many organizations, the role of the chief information officer is becoming more strategic. Traditionally it has been restricted to IT strategy under the direction of a wider corporate mandate, a functional “manager of IT managers” position. But today’s CIO is a corporate leader and change agent focused on enhancing the return on investment of information technology, expanding the business impact of IT, and acquiring and managing innovation. This focus on innovation is leading CIOs to more closely manage energy and carbon in the enterprise.

Companies have been managing their energy consumption for years, but only recently has it become a corporate priority. Traditionally energy and its associated business risks, such as carbon emissions, have been an environmental problem, a cost of doing business with a hard link to compliance and regulation, and managed at the facility or site level. But innovative corporations today are starting to look at energy and carbon in a different way, focusing instead on how energy management can help their business and moving the energy discussion from the facility into the boardroom.

Energy management is no longer just a cost center. It can be a profit center if managed correctly, and there is no better executive to take advantage of this than the CIO. Companies around the world are finding that they can reduce energy use by investing in projects that can earn tax incentives, create new lines of business, and in many countries qualify as a tradable asset in financial markets. Examples in the technology sector are common, from server virtualization to building energy systems technologies.
To demonstrate how pervasive this has become, let’s take an example from a decidedly non-technology sector, as far from the lights of Silicon Valley as one can get–the timber sector. Companies in the timber business manage billions of dollars in assets and have, at times, been at odds with what one would call an “environmental mandate.” But many of these companies are transforming a traditional “environmental asset” (energy and carbon) from a cost into profit by turning a waste product into a key source of energy, reducing plant energy requirements by over 25% and saving millions of dollars per year in the process. In doing so, they not only reduce their energy costs but also their waste disposal costs (which are significant). Some even earn tax incentives and qualify for credits (both carbon and energy) worth millions of dollars a year. This creates a profit center where there were previously only costs and risk–all without a climate bill in the Senate, no debate on global warming, no politics–just good business.