Green IT is efficient IT and it requires careful governance. The good news is that you don’t need new governance tools to go with your shiny new data centre. Aligning IT goals with business goals is a vital step to both cutting costs via energy efficiency, and also pleasing your company’s shareholders (and a not-too-shabby by product is saving the environment!). The current tools that are available for achieving this seemingly daunting task are the COBIT framework and the IT Balanced Scorecard (IT BSC).
COBIT 4.1 provides a framework to link business goals to IT goals, focusing on selected processes, and the IT BSC is a performance management tool that translates those IT goals into an effective measurement system.
Business-IT alignment is a game of two players. The business itself has to show a clear strategy and direction that the enterprise’s supporting functions can follow. To ensure effective business-IT alignment, IT has to adapt according to the dominant value discipline present in the business, which is usually determined by outside pressure groups, such as those in figure 1.
The IT Balanced Scorecard
Kaplan and Norton (1992) introduced the concept of the balanced scorecard as a framework to translate strategy into operational terms. They developed a scorecard that consisted of a balanced set of tangible objectives and measures that complemented financial measures of past performance (achievement of financial objectives) with measures of the value drivers of future financial performance.
These objectives and measures are derived from a top-down process driven by the mission and strategy of the organisation, as shown in the following four points:
- Financial perspective: Defines the financial performance expected from the strategy, and serves as the ultimate target for the objectives and measures of all the other scorecard perspectives
- Customer perspective: Identifies the customer and market segments in which the organisation has chosen to compete
Internal business process perspective: Identifies the processes that are most critical for achieving customer and shareholder objectives. These processes are not just existing operating processes, but should be identified for the complete organisational value chain.
- Learning and growth perspective: Defines the organisational capabilities to be able to achieve the objectives in the other perspectives
The balanced scorecard of Kaplan and Norton was positioned at an enterprise level, whereas Van Grembergen, Saull & De Haes (2003) cascaded the scorecard down to IT. Recognising that IT is an internal service provider, they changed the four perspectives of the balanced scorecard to: corporate contribution, customer (user) orientation, operational excellence and future orientation.
Business-IT alignment Approach for Green IT
The approach to accomplish business-IT alignment is the following:
- Determine the business drivers for a firm, taking into account the current environmental- oriented stakeholder pressure, and then translate those business drivers into business goals.
- Link business goals to IT goals and select the relevant processes to address that relationship, using COBIT 4.1 guidelines.
- Implement an IT BSC to measure the achievement of the IT goals, choosing satisfactory metrics from the selected processes.
This article shows some specific solutions of this approach that can serve as a starting point. The final IT goals, processes and BSC depend on the strategy of each individual enterprise.
Green IT Governance
The increased attention to green IT has come from a number of factors: rising energy costs, increased concern regarding climate change and global warming, and increased legislation surrounding energy efficiency, toxic materials, and greenhouse gases. Figure 1 shows the environmental pressures for a company by its stakeholders, which, in turn, forces the organisation to take action.
Figure 1: Stakeholders’ pressure for environmental concerns
The result of external pressure forces organisations to launch green IT initiatives, which might take the form of replacing old equipment with more efficient hardware, using efficient cooling methods, consolidating servers, moving to server virtualisation, implementing SaaS, encouraging adoption of energy-saving settings on computers, altering purchasing practices for IT assets, or practicing proper disposal and recycling practices.
Initiatives are all well and good; however, an organisation must understand the human element. The right expertise to identify the business drivers, along with the right leadership to implement the necessary policies, is vital for an organisation to truly respond to environmental pressure. Looking at the claims of the stakeholders, the following business drivers can be identified:
- Cost-reduction due to efficient energy use
- Public image aligned to environmental concerns
- Environmental regulatory compliance
The above points can only be achieved through a holistic approach that creates new structures and relationships: tuning the processes to cover the environmental life cycle from the design to the disposal of processes, defining a new culture and attitude through the right communication and training.
The IT BSC is a management and communication tool that can be used to define and communicate the strategy and to measure the attained results against targets. That’s why the IT BSC establishes the corresponding mission statement and objectives for the four perspectives. For those objectives, consider using the metrics in COBIT 4.1 and taking into account the previously selected processes (table 3). This IT BSC is just for green IT topics. The final IT BSC has to be completed with the remaining IT strategic themes.
COBIT 4.1 and the IT BSC are useful tools for achieving business-IT alignment and implementing a green IT strategy. The aim is to show how to cascade business drivers into business goals, IT goals, IT objectives and the appropriate metrics to measure the achieved outcomes. We have seen how COBIT 4.1 can be applied to develop a Green IT BSC; however, COBIT 4.1 is just a piece inside the COBIT tool set, which includes a very comprehensive set of guidance to help CIOs in the IT governance area.
Juan Ignacio Rouyet is an engineer in telecommunications and a consultant at Quint Wellington Redwood. Since 2005 he has delivered strategic consultancy services in IT governance and IT service management.
Willem Joep Spauwen is a consultant at Quint Wellington Redwood. With over ten years of experience specialising in the fields of IT management and IT governance, he has participated as an advisor in many projects in the Netherlands, Mexico, United States and Spain.