February 29, 2008

The Dawn Of Green IT Services

by Christopher Mines for Vendor Strategy Professionals

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Includes a market sizing forecast February 29, 2008

The Dawn Of Green IT Services

A Market Overview Of Sustainability Consulting For IT Organizations

by Christopher Mines with Christine Ferrusi Ross, Eric G. Brown, Christina Lee, and Emily Van Metre

EXECUT I V E S U M MA RY
Enterprises are increasingly going green, and looking to IT operations to help them reduce corporate energy consumption and become more environmentally responsible. Some IT shops are responding by seeking help from professional services providers that assess, plan, and implement green initiatives for procurement, operation, and disposal of IT assets and processes. Strategists at a broad set of IT services providers from data center specialists like HP and Intel to corporate strategy consultants like Accenture and Deloitte are positioning to participate in this nascent market, which we project will peak at $4.8 billion in user spending in 2013 before gradually declining thereafter.

TABLE O F CO N T E N TS
2 A New Frontier For IT Services Providers Help For IT Shops Going Green 3 We Project A Peak Of $4.8 Billion In Green IT Services Spending In 2013 European Companies Lead, Asia Pacic Lags Some Industries Are Ripe Today 5 The Shape Of Green IT Services Engagements Phase One: Assessment Provides The Baseline Phase Two: Planning Detailed Initiatives Phase Three: Implementation Makes It Happen 8 Mapping Services Provider Capabilities Vendors Bring A Variety Of Green IT Services From Dierent Angles Vendor Strategists Must Address The Data Center Today, The Entire Business Tomorrow
RECOMMENDATIONS

N OT E S & R E S O U R C E S
Forrester conducted 12 in-depth vendor interviews, and drew on enterprise survey data, client inquiries, and four user company interviews for this report.

Related Research Documents Green Progress In Enterprise IT December 17, 2007

Topic Overview: Green IT November 26, 2007 Tapping Buyers Growing Interest In Green IT May 10, 2007

13 Strategists Face Positioning And Growth Decisions 14 Supplemental Material

2008, Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Forrester clients may make one attributed copy or slide of each gure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usage information, go to www.forrester.com. Information is based on best available resources. Opinions reect judgment at the time and are subject to change. To purchase reprints of this document, please email resourcecenter@forrester.com.

The Dawn Of Green IT Services

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A NEW FRONTIER FOR IT SERVICES PROVIDERS HELP FOR IT SHOPS GOING GREEN Corporate IT organizations are feeling increasing pressure, and nding growing opportunities, to improve their sustainability practices. Driven by a combination of cost savings imperatives, corporate green initiatives, and technology refresh opportunities, enterprise IT shops are going green, and looking for help to do so.1 IT services providers are responding by building capabilities, forming alliances, and positioning their resources to capture mindshare and wallet share of user companies putting green IT initiatives in place. We call this new market green IT services, and dene it as: Consulting services that help enterprise IT organizations reduce their companies environmental impact by assessing, planning, and implementing initiatives that make the procurement, operation, and disposal of IT assets more environmentally responsible. In October 2007, we conducted a global green IT survey in which we asked IT professionals whether they used professional services providers to assist in the planning and implementation of green IT policies and practices.2 Six percent of the 130 respondents told us they were currently using a green IT services provider, another 6% were planning to, and 18% were considering hiring one (see Figure 1). With just a sliver of companies currently engaging a green IT services provider, this is clearly a nascent market. The purpose of this report is to help strategists at IT services providers position for growth by sketching out the markets future dimensions and assessing the breadth of capabilities of some of the important players shaping that growth. The report concludes that:

The green IT services market will grow rapidly to nearly $5 billion. From a standing start,

we project the overall market for green IT services to peak at $4.8 billion in 2013, half that spending by European enterprises. After 2013, the market will decline, as most companies will have completed their initial round of green IT implementations.

Assessments are the hook, tech implementations the big catch. Initial assessments of ITs

environmental and energy footprint are the basis for green IT services engagements, but they are small projects relative to the technology selection and implementation that will often follow. The implementation phase of green IT services engagements will account for 65% of total market revenues in the coming years.

Services providers with a corporate strategy perspective are the likely long-term winners.

Most of the action in green IT today revolves around data center energy eciency, and there is plenty of opportunity there for focused providers like Dell, HP, and Intel. But we think the longrun winners in this market will bring a holistic perspective to clients looking to incorporate IT into a corporatewide eort to improve environmental responsibility. Such an approach is being pioneered by services providers like Accenture, Deloitte, and EDS.

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Figure 1 Enterprise Adoption Of Green IT Services

Is your organization using or considering a professional services provider to assist your planning or implementation of green IT? Yes, current 6% Yes, planning 6% No, but considering 18% No plans 70%

Base: 130 IT procurement and operations professionals Source: October 2007 Global Green IT Online Survey
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WE PROJECT A PEAK OF $4.8 BILLION IN GREEN IT SERVICES SPENDING IN 2013 From a standing start of around $500 million in 2008, enterprise user spending for green IT services will grow by 60% annually to reach $4.8 billion in 2013. After that, the market will slowly decline, as most companies will have completed their implementation of green IT practices and technologies. In the context of an estimated $170 billion North American market for IT consulting and systems integration in 2013, the $5 billion market for green IT services might look like small potatoes to vendor strategists.3 But we expect the visibility and strategic importance of green IT projects to put them near the top of many corporations consulting agendas, and that service providers will aggressively compete for such high-prole wins. European Companies Lead, Asia Pacic Lags The growth of enterprise spending on green IT services will vary considerably by geography. In particular:

Adoption and spending will grow fastest in Europe. Companies there are clearly taking the

threat of business disruption from the eects of climate change more seriously, and moving their awareness into action more quickly, than companies in other parts of the world. As a result, we expect green IT services spend by European enterprises to be roughly double that of US companies in 2009, and to continue to exceed that in the US market by a considerable margin through the forecast period, hitting a peak of $2.1 billion in 2013 (see Figure 2).

North American enterprises will start a little later. The slightly larger North American

enterprise population will begin adopting later than its Europe counterpart, but maintain the same growth rate during our forecast period, crossing the $1 billion mark one year after the European market, and peaking at $2.2 billion in 2014.
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Figure 2 Forecast: Global Green IT Services Spending By Geography 2008-2014

The spreadsheet detailing this forecast is available online.

$5,000
Asia Pacic

$4,000

Total green IT services market (US$ millions)

$3,000

Europe

$2,000

$1,000

North America

$0
Asia Pacic Europe North America
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2008 $30 $290 $150

2009 $60 $580 $305

2010 $120 $1,040 $605

2011 $215 $1,610 $1,090

2012 $370 $2,045 $1,690

2013 $570 $2,075 $2,160

2014 $760 $1,690 $2,190

(numbers have been rounded)

Source: Forrester Research, Inc.

Asia Pacic (AP) companies will lag. Adoption of green IT services in the major countries of

AP will lag that in the other geographies considerably, reaching $760 million in 2014, about onethird the spending level of North American companies that year. We expect the AP market for green IT services to continue to grow beyond our forecast period, peaking in 2015 or 2016, and then beginning to decline.

Some Industries Are Ripe Today The nascent state of the green IT services market makes detailed forecasts of adoption by industry impractical. Some clear trends about early adopters were apparent from our interviews with vendors, however. Industry segments that are likely to be among the earlier adopters include:

Government agencies. The public sector, especially in the UK, faces strict data and reporting
requirements for carbon emissions and energy usage. Similar regulations are likely to spread across the EU, and then to North America, over the next several years. Accenture and BT, among other suppliers, are seeing early demand from local and national agencies in the UK; EDS is seeing pioneering moves by government clients in Australia and New Zealand.

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Energy and resources companies. Not surprisingly given their direct participation in carbon
regulation and policy, utilities and oil and gas companies are among the early movers in assessing and improving the sustainability of their internal operations.

IT-intensive sectors. The usual suspects of nancial services, telecom, and pharma were

often cited in our interviews as companies facing limits on growth due to power provisioning, cost, and/or tight real estate in their data centers. Services providers focused on data center environments like HP, Intel, and Sun were particularly keen about their prospects in rms like nance and telecom that are reliant on giant data center operations.

Big consumer brands and retailers. Companies with prominent, consumer-facing brands

were mentioned as likely candidates for green initiatives owing to their desire to maintain and improve their social-responsibility credentials.

THE SHAPE OF GREEN IT SERVICES ENGAGEMENTS Green IT services engagements, like most consulting work, are bespoken projects tailored to clients circumstances, goals, and budgets. Nevertheless, its possible to characterize the general shape of green IT engagements in terms of three interlocking phases: assessment, planning, and implementation (see Figure 3). Assessment, the crucial rst step for any company, involves relatively small, shortduration projects. Developing a strategic plan comes next. We expect that 50% of companies that hire consultants for assessment will move into the more detailed planning phase. And 75% of those companies will move to implementation, in which projects are typically much longer and more costly.
Figure 3 Three Phases Of Green IT Services Engagement
75% of clients that do planning move to implementation 50% of clients that do assessments move to planning
Assessment Implementation

$50K/six weeks Create a baseline of energy usage and carbon footprint. Sketch an overall approach to green IT including ROI.
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Planning $250K/12 weeks Develop detailed roadmaps for specic green IT initiatives like procurement, data center optimization, and recycling.

$1,000K/80 weeks Choose and implement specic technologies for virtualization, power and cooling, systems management, etc.

Source: Forrester Research, Inc.

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Phase One: Assessment Provides The Baseline Companies green IT initiatives start with an assessment of their current situation.4 Consulting engagements in this phase typically involve:

Creating an overall green IT plan. The scope will vary depending on the clients goals. For

example, sometimes the plan is conned to data center operations, whereas other projects will involve a holistic, corporatewide evaluation along the lines of BTs carbon impact assessment that looks at buildings, IT, commuting, and travel. The key output of phase one will be an overall plan that sets the companys goals, dening priorities in terms of, for example, carbon emission reduction, energy eciency, and cost savings.

Modeling the return on investment. The plan will include an early assessment of the capital,
operating expense, and potential cost savings of green IT initiatives.

Managing a six week, $50,000 project. Vendors complete this phase in anywhere from two to

10 weeks, for price tags ranging from $30,000 to upwards of $100,000. Although relatively small engagements from the providers perspective, they are the gateway to the larger planning and implementation phases.

Phase Two: Planning Detailed Initiatives In this phase, consultants will help clients develop road maps for specic green IT initiatives, choosing and prioritizing based on the plan developed in phase one. Client companies will choose from a menu of initiatives, and end up with a second-phase engagement that might involve:

Greening IT procurement and recycling. The project team will recommend policies for

reorienting IT procurement towards greener products and greener suppliers, and draw up specic dimensions for expanded recycling programs for consumable and durable IT assets.

Improving data center eciency. Clients and services providers will choose among myriad

initiatives for optimizing energy use in corporate data centers, yielding a roadmap for implementing, for example, server virtualization and consolidation, an enhanced power and cooling infrastructure, and more energy-ecient server, storage, and network gear. For some services providers and their clients, outsourcing data center operations and infrastructure will be on the table in this conversation.

Positioning IT to support green business. Depending on a projects scope, green IT services

might involve helping the IT organization help the rest of the business go green. IT expertise and infrastructure will be crucial in initiatives for building automation, optimizing the supply chain or logistics, or setting up exible work environments that reduce employee commuting.

Running a 12-week, $250,000 project. We found an even wider range of experience and estimates
for the planning phase, ranging from six weeks to 20 weeks with $50,000 to $400,000 price tags.

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Phase Three: Implementation Makes It Happen In the implementation phase, consultants and clients work to specify, purchase, and install appropriate technology products and software. Depending on the nature and scope of the engagement, this phase might be solely about implementing new technology (virtualization in a data center for example), or include new processes, policies, and employee practices, which are often as hard or harder to implement than new server architectures or cooling infrastructure. The implementation phase is:

The longest and most costly part of a green IT services engagement. Typical timeframes run

from 30 weeks to more than 100 weeks, with price tags from $300,000 to $2 million or more. Note that this is services spending only; it does not include the cost of software licenses and new hardware.

Where the real revenue opportunity lies. Implementation projects are by far the largest part of
the market opportunity for green IT services providers (see Figure 4).
Figure 4 Forecast: Global Green IT Services Spending By Phase 2008-2014
The spreadsheet detailing this forecast is available online.

$5,000

$4,000

Total green IT services market (US$ millions)

$3,000

Implementation

$2,000

$1,000

Planning Assessment 2008 2009

$510

$0

2010
$1,015

2011
$1,815

2012
$2,780

2013
$3,500

2014
$3,580

Implementation $240

Planning $165
Assessment $60

$320
$120

$555
$190

$825
$270

$1,010
$315

$1,000
$300

$830 $240

(numbers have been rounded)

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MAPPING SERVICES PROVIDER CAPABILITIES Forrester interviewed a cross-section of IT services providers to understand their priorities in developing green IT practices. This is not a comprehensive list or evaluation of green IT services suppliers, but rather a sampling intended to oer a rst scan of capabilities of some of the prospectively important players in this nascent market. Vendors Bring A Variety Of Green IT Services From Dierent Angles Although all these suppliers are looking to leverage their internal expertise and experience in sustainable IT operations, they approach the green IT services market from dierent angles and experience bases. They can be generally categorized as:

Services arms of IT system manufacturers (Dell, HP, Intel, and Sun). These vendors

services practices are pretty tightly tied to their product oerings, hence, tend to be focused on data center design and optimization. Sun has some broader capabilities that stretch into IT procurement and recycling processes.

IT systems integrators/outsourcers (CSC, EDS, Getronics, and Wipro). Getronics and Wipro
are data center-oriented; CSC and EDS have broader visions of corporate green initiatives and ITs role within them. All see data center outsourcing as an avenue to reducing the corporate carbon footprint.

IT consulting giants (Accenture, Deloitte, and IBM). These providers take a broad, top-down
view of green IT services. Although they have data center expertise, they approach IT from the corporate sustainability and CSR perspectives, helping clients position IT as an enabler of and contributor to wide-ranging green business initiatives.

Telecom services supplier (BT). BT is seeking to leverage its extensive internal experience in
greening data centers and in planning a corporatewide approach to sustainability. More important than where they come from is the providers focus in terms of helping enterprise clients address their green IT challenges and opportunities. We have positioned each services provider along a spectrum between two poles (see Figure 5):

Data center-focused. Suppliers on the left side of the spectrum are focused on clients data
center operations. They have specic and deep expertise and experience in and tools for improving the eciency and mitigating the environmental impacts of data centers.

Corporate sustainability-focused. These suppliers usually have data center expertise, but their
green IT practice and oerings range more broadly across IT and other corporate processes. Their consulting oerings typically go beyond technology to include organizational change, procurement policies, and helping IT enable greener business practices in areas like supply chain optimization or building automation.

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Figure 5 Capabilities Chart

No capability
Partial capability (e.g., limited to data center, limited geographic availability, or oered with partners)

Full capability

Data center

Corporate sustainability

Getronics

Accenture

Assessment help clients identify and develop: An overall green IT plan Energy consumption baseline and targets Carbon emissions baseline and targets Overall environmental analysis Quick-win activities Regulatory compliance requirements Model and measure ROI of green initiatives Internal communication and external reporting
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Intel

Dell

Source: Forrester Research, Inc.

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BT

Deloitte

Wipro

CSC

EDS

Sun

IBM

HP

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Figure 5 Capabilities Chart (Cont.)

No capability
Partial capability (e.g., limited to data center, limited geographic availability, or oered with partners)

Full capability

Data center
Getronics

Corporate sustainability
Accenture Deloitte

Wipro

Intel

Planning develop a detailed approach to client initiatives in: Green procurement policies Organizational change and training E-waste recycling programs Optimizing existing data center Designing new data center Outsourcing data center Positioning IT to support green business practices Supply chain optimization
Building automation Environmental management systems Collaboration and conferencing Flexible working approaches Managed print services Carbon trading and osets Alternative energy
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CSC

EDS

Dell

Sun

IBM

HP

Source: Forrester Research, Inc.

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BT

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Figure 5 Capabilities Chart (Cont.)

No capability
Partial capability (e.g., limited to data center, limited geographic availability, or oered with partners)

Full capability

Data center
Getronics

Corporate sustainability
Accenture Deloitte

Implementation help clients choose and implement specic products and vendors for: Virtualization and consolidation Data center/power and cooling Desktop and PC systems Data center design and architecture Power management software IT infrastructure management software
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Wipro

Intel

CSC

EDS

Dell

Sun

IBM

HP

Source: Forrester Research, Inc.

Vendor Strategists Must Address The Data Center Today, The Entire Business Tomorrow Like most IT services markets, green IT will grow as more enabling hardware and software products become available and user companies look for help in choosing among and implementing them. Today, such products are in the data center (such as server virtualization and power management); tomorrow, they will spread to other parts of a companys operations (like facilities, supply chain, and IT assets outside the data center). As this evolution unfolds, the best-positioned service providers will be those with a holistic perspective on ITs role in corporate sustainability. Strategists and practice leaders at green IT services providers should anticipate these developments in the markets evolution:

The data center stays hot. When we say green IT, most enterprise clients hear data center

eciency. Its top-of-mind for most clients because problems like growth or power capacity limits, and returns like energy cost savings, are highly tangible.5 Every supplier we interviewed had capabilities to help clients optimize their current data centers and design new ones. Although this part of the market will be crowded, there will be plenty of work as a wave of data center optimization and consolidation ripples through corporate IT.6

Other IT infrastructure will heat up, too. Although IT organizations typically use (and waste)
at least as much power outside the data center as inside, capabilities to help clients improve

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BT

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PC and peripheral energy eciency were considerably less common among this set of services providers.7 Advice on managed print services, for example, is oered by fewer than half of these suppliers. The energy usage and eciency of PC populations, printers, and the like is harder for companies to measure, and harder to control, than the concentrated and tightly managed IT assets in the data center environment. This will translate over time into a signicant opportunity for consulting providers.

Procurement and recycling will get more attention. Relatively few of the services providers

in our sample oer advice and planning for clients seeking to make IT procurement or recycling eorts greener. We see green criteria in procurement as one of the most visible signs of increasing action by enterprises to reduce the environmental footprint of IT operations, but fewer than half the suppliers we interviewed oer help for companies in this area. As this market matures, we look for the services providers to broaden their focus from optimizing energy usage to include both the beginning and end of IT assets life cycles.

Management software will be a growth frontier. Much of the vendor activity in green IT is

closely tied to hardware systems like lower-power processors or storage devices. Whats gotten less attention so far is the software side of things, especially in systems management consoles that can integrate information from the growing collection of asset management, power management, virtualization, and workload management systems. Tying these IT capabilities to broader software systems for building management and carbon measuring and reporting, and linking these to mainstream corporate ERP, is another frontier for the services providers in green IT.

Linking IT to other business processes is the ultimate opportunity. We have thought for some
time that the real promise of green IT is actually outside the IT organization and asset base. IT will be an enabler for a much broader set of green business processes in supply chain, workforce management, collaboration, and facilities. The services providers oer a checkerboard of capabilities in these areas, which we expect will receive much more attention from providers and their clients as sustainability continues to rise on the overall corporate agenda and the role of IT as an enabler becomes clearer.

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R E C O M M E N D AT I O N S

STRATEGISTS FACE POSITIONING AND GROWTH DECISIONS

Enterprise clients will be pursuing green IT initiatives from one of two directions: bottomup, driven by tactical cost and availability concerns; or top-down, motivated by corporate sustainability and CSR considerations. Services providers must decide which of these avenues they can support, and how best to build a thriving green IT services practice, by:

Listening to clients. Strategists should tap into clients preferences by conducting focus
groups or informal polls. CSC recently completed a study tour of large clients in the hightech industry to help inform its resource planning for green IT services.

Deepening expertise. We expect services providers to place their bets on specic niches
through acquisitions. For example, HPs pending buy of EYP Mission Critical Facilities gives it an additional 350 experts in data center design and optimization.8

Creating a hybrid organizational structure. Most services providers are trying to

decide whether to build a dedicated green practice or infuse green expertise across their mainstream IT practices. The best approach for the next several years will be to do both, build a small nucleus of green expertise that links to other practices like data center, supply chain, and procurement.

Clarifying clients entry points. Most of the industrys green IT practices need more
coherence about what they oer, and to be clear that there are multiple ways for clients to get started on a holistic sustainability program.

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SUPPLEMENTAL MATERIAL Online Resource The underlying spreadsheet detailing the forecasts in Figures 2 and 4 is available online. Companies Interviewed For This Document Accenture Aetna BT Citigroup Credit Suisse CSC Dell Deloitte EDS Getronics ENDNOTES
1

HP IBM Intel Sun Tech Turn The Green Grid Verdiem Wachovia Wipro

For an overview of the green trend in corporate IT organizations and among their suppliers, see the April 10, 2007, The Greening Of IT report. For details about the survey methodology, and more data about enterprise adoption of green IT principles, see the December 17, 2007, Green Progress In Enterprise IT report. Forresters growth forecast for the overall IT services market estimates $140 billion in consulting and systems integration spending in North America in 2009, projected to 2013 using a 5% annual growth rate. See the July 28, 2005, Sizing The Market For IT Services Through 2009 report. For details of CIOs green IT initiatives, and the planning process for prioritizing them, see the October 19, 2007, Creating The Green IT Action Plan report. Although this situation is not nearly as universal as the vendors would have us believe. See the September 20, 2007, What Data Center Crisis? report. Many enterprise IT shops are struggling to meet business demands with existing budget and infrastructure; consolidation often oers a way to do more with less. For background, see the October 5, 2007, The IT Consolidation Imperative: Out Of Space, Out Of Power, Out Of Money report.

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There are no comprehensive statistics on corporate PC power usage, but a back-of-the-envelope calculation shows that the roughly 500 million corporate PCs and monitors use approximately 300 billion kWh annually, versus an estimated 120 kWh used by corporate data centers. For data center power usage, see Estimating Total Power Consumption by Servers in the U.S. and the World at http://enterprise.amd.com/ Downloads/svrpwrusecompletenal.pdf. For the world PC population, see the June 11, 2007, Worldwide PC Adoption Forecast, 2007 To 2015 report. And for PC power consumption, see http://www.verdiem. com/surveyor/. New York-based EYP is a consulting rm that specializes in large-scale data centers. For details, see http:// h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-newsArticle&ID=1076192&highlight=.

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