Business and IT, does BT deliver on IT's sustainability promise

BIT,
does BT deliver on IT‟s sustainability promise?

Version 1.1
Maarten J. Gubbens
June 20th, 2011

BIT, does BT deliver on IT‟s sustainability promise?

Table of Contents

Executive Summary .................................................................................................. 3
Green IT hits the CIO radar ......................................................................................... 3
Challenge..................................................................................................................... 3

1. Scientific modelling ........................................................................................ 4
1.1 Competitive Advantage & CSR ........................................................................ 4
1.2 Governance and Sustainability ......................................................................... 5
1.3 Green-IT – what makes a difference? .............................................................. 7
1.4 Green-IT – the extend of adoption .................................................................... 9
1.5 Green-IT and Governance .............................................................................. 11

2. BT Group practices ...................................................................................... 12
2.1 CSR strategy and governance ....................................................................... 13
2.2 Business Conduct ........................................................................................... 14
2.3 Green-IT portfolio development ...................................................................... 16
2.4 Recognition ..................................................................................................... 18

3. Confrontation ................................................................................................ 19
3.1 Competitive advantage and CSR ................................................................... 19
3.2 Governance and Sustainability ....................................................................... 19
3.3 Green-IT.......................................................................................................... 21
3.4 Conclusions and suggestions for improvement .............................................. 23

APPENDIX I, References ...................................................................................... 24

APPENDIX II, Risk Assessments ........................................................................ 25

APPENDIX III, CSR KPI’s ...................................................................................... 26

Nyenrode Business University, MBA Business & IT Page 2 of 27
Ownership of Governance and Enterprise


Executive Summary
As one of the most influential developments, IT is quickly transforming today‟s
enterprise infrastructures and reshaping the way people work and live. Enterprise‟s
are under pressure to consider their impact on the environment. Governments,
shareholders, management boards and customers are beginning to expect
increased visibility of business environmental impact and measures taken to
minimise this. IT leaders, as representatives of major e-waste producers, are
obligated making green-IT-strategy mission critical.

Green IT hits the CIO radar
Greening IT is attracting a huge interest among IT vendors and consulting services
providers mainly due to the increasing demand to power data centres. Green IT
encompasses IT‟s overall role in causing and tackling emissions and covers policies,
Green IT is now being technologies and practices from sourcing to disposing. Eco-friendly computing
driven as much by an practices have gained significant CIO mindshare. In an independent survey
element of business conducted by Datamonitor, over 75% of respondent enterprises considered eco-
strategy as by a sense friendly computing as an important element in their IT strategy, while a further 15%
of corporate social rated it as their top IT priority. IT organizations face the dual challenge of shrinking
responsibility
budgets and increasing infrastructure footprints. Enterprises are now beginning to
realize the full potential of eco-friendly computing practices; namely, significant cost
savings, increased flexibility in managing IT resources and compliance with
environmental regulations.

Challenge
Many industries and enterprises are initiating strategies or policies to reduce
greenhouse gas emissions, there are many more that simply do not have the
capacity, commitment or money to act today. This paper highlights the current status
of business strategy of Corporate Social Responsibility from a competitive
advantage perspective, Governance & Sustainability and Green IT adoption which
can be used to benchmark for future development and improvements for BT.

Discussion

BT is going to deliver on its sustainability promise in 2020 rather than 2015. Delays
are due to the financial and following economical crisis. BT is the global leader
among leaders. Sustainability, for BT, is a means of survival. This has been
recognised in the early ‟90 of the previous century. Governance, business conduct,
and portfolio development is mature. BT has a competitive advantage and is well on
its way to taste the benefits. Internal reporting and measurement however, can be
improved. Suggestion is to follow the Eric G. Olson model of “Creating an enterprise-
level green strategy”.



1. Scientific modelling

1.1 Competitive Advantage & CSR
An enterprise framework, Porter & Kramer (HBR 2006), can be used to identify all of
the effects they have on society and determine which ones to address. License to
Enterprises should operate, moral obligation, sustainability and reputation are themes for CRS
integrate a social according to Porter & Kramer. The triple bottom line (economic, social, and
perspective into the environmental) has a tendency towards Enterprise self-interest rather than the
core frameworks it mutual dependence of enterprises and society, the conflict between society and
already uses to business rather than on their interdependence. Enterprise and society have a shared
understand interest and goal with respect to CSR and business decisions and social policies
competition and guide should follow the principle of shared value.
its business strategy
Inside-out linkages
Enterprise activities have an impact on society in which they are active, creating
positive or negative social consequences. Monitoring the obvious social impact by
enterprises alone is not good enough anymore. Firm‟s very survival might be at risk
when ignoring carefully identifying evolving social effects of tomorrow.

Outside-in linkages
Enterprises operate in a competitive environment with strong influence on the ability
to carry out strategy, especially over longer periods of time. Of importance are social
conditions hence competitive context is divided in four areas:
1. the quantity and quality of available business inputs
2. the rules and incentives that govern competition
The essential test that 3. the size and sophistication of local demand
should guide CSR is 4. the local availability of supporting industries
not whether a cause is
worthy but whether it Three generic social issues affect the enterprise: Generic social issues, Value chain
presents opportunities social impacts and Social dimensions of competitive context.
to create shared value



Porter & Kramer define responsive and strategic CSR as:
Through strategic
CSR the enterprise Responsive CSR: act as a good corporate citizen, open to evolving social
will make the most concerns of stakeholders, and mitigating existing or anticipated adverse
significant social effects from business activities.
impact and gain the
greatest business Strategic CSR choosing a unique position – act distinct from the
benefits competition in a manner that cuts costs and/or better serves customer needs
moving beyond good corporate citizenship. Address enterprise harmful
value chain impact by initiating endeavours which benefit both society and
business significantly and distinctively. Strategic CSR involves both inside-
out and outside-in dimensions working in conjunction.
Strategic CSR unlocks
shared value by
investing in social
aspects of context that
strengthen enterprise
competitiveness

1.2 Governance and Sustainability
According to Aras G. & Crowther D. (2008), corporate governance is an environment
of trust, ethics, moral values and confidence, a synergic effort of all ingredients of
society stakeholders. This involves government, the general public, professional
service providers and the corporate sector. Sustainability issues in relation to
corporate governance is a topic of growing concern and is put on the board agenda.

Ackerman (1975) concluded enterprises acknowledged the adaptation to a new
Sustainability implies social climate of community accountability however orientation of business to
that society must use financial results was inhibiting. Financial performance is an essential aspect of
no more of a resource corporate sustainability adding a further dimension for analysis of sustainability
than can be including a focus shift towards enterprise accountability to society (Aras & Crowther,
regenerated 2008). Rubenstein (1992) explains the need for a social contract between a business
and its stakeholders. Crowther‟s (2002) definition of sustainability; The concern of
the effect which action taken in the present has upon the options available in the
future. A sustainable enterprise can only exist by recognising environmental and
social issues and incorporating them into its strategic long term planning Aras G. &
Crowther D. (2008),



Financial performance, as an integral part of sustainability is not recognised by most
analysis of sustainability (e.g. Dyllick and Hockerts, 2002; Spangenberg, 2004).
Güler Aras et all (2008) find financial performance is an essential aspect of corporate
sustainability adding an extra dimension to the analysis of sustainability. Hence four
An enterprise which aspects of sustainability must be considered as key dimensions of sustainability:
has a complete
understanding of 1. Societal influence
sustainability and impact that society makes upon the enterprise in terms of the social contract and
corporate governance stakeholder influence
will address issues
more completely 2. Environmental impact
effect of the actions of the enterprise upon its geophysical environment

3. Organisational culture
relationship between the enterprise and its internal stakeholders, particularly
employees, and all aspects of that relationship

4. Finance
terms of an adequate return for the level of risk undertaken

The four elements of enterprise sustainability and governance performance are
represented on a two-dimensional matrix along the polarities of internal versus
Creation of value external focus and short term versus long term focus. Aras & Crowther (2008) argue
within the enterprise is that sustainability is the distribution of effects – positive and negative – eliminating
followed by the conflict between all of these and pays attention to the future as well as the present. A
distribution of value to short term approach for enterprise is no longer acceptable for sustainability issues.
the stakeholders and
shareholders of that
enterprise and adds to
welfare for society at
large

Good performance in
the financial
dimension leads to
good future
performance in the Sustainability can be defined as; consciously addressing planning for the future
environmental concerned with resource utilisation choices today. Enterprises should consider:
dimension and vice generating and utilising renewable resources, minimising pollution and using new
versa techniques of manufacture and distribution. Present sustainability costs are an
investment for the future. Aras & Crowther (2008); management from a financial
perspective and its external environmental management coincide in this common
concern for management for the future.



Economic downturn and big corporate scandals have raised corporate governance
as a topic of attention. In order to provide funding investors demand that enterprise
implement rigorous corporate governance principles in order to achieve better
returns on their investment and to reduce costs. Beiner et al (2004) find that
investors are ready to pay a premium for enterprise to have good governance
standards. Report‟s on corporate governance is a main tool for investor decisions.
The amount of Enterprises are not able to ignore the pressure for proper governance from
information regarding shareholders, potential investors and other markets actors.
the relationship
between governance Transparency, accountability, responsibility and fairness are corporate governance
and sustainability will principles related to CSR. Corporate governance is vital for business performance.
also increase, not just Enterprises must understand the rules and learn how to improve strategy to apply
as enterprises gain a these principles.
clearer understanding
of that relationship but Enterprise senior management must develop and adhere to corporate governance
also as they procedures balancing both shareholder value and satisfy other stakeholders. Sethi
understand the (2002), governance is balancing enterprise economic and social goals including
benefits of greater aspects as efficient resources use, energy accountability, and the social behaviour of
disclosure in this the corporation..
respect
Good governance & sustainability will address the:
societal influence aspect of sustainability
environmental impact aspect of sustainability
organisational culture aspect of sustainability
finance aspect of sustainability

1.3 Green-IT – what makes a difference?
The trend towards green IT is a result of both the environmental impact of IT and the
role IT plays as a potential source of solutions to environmental concerns.
Enterprises are under pressure to act sustainably, environmental considerations are
taking greater importance for organisations and IT.

Environmental considerations form important dimensions in corporate sustainability
(PricewaterhouseCoopers & SAM 2008), corporate social responsibility (St James
Ethics Centre n.d.), corporate strategy (Enkvist & Vanthournout 2008) and the “triple
bottom line‟ measure of organisational success, which is comprised of economic,
social and ecological sustainability (Elkington 1998).

Enterprise IT is a source of, and a solution to, organisational environmental
degradation. CIO‟s expect that Greenness of IT suppliers become important (IDC
2008). Gartner (2009) predict green IT to be one of the top strategic technologies.



Factors influencing green IT are:

1. Motivational, understanding the motives for enterprise‟s environmental
initiatives assist in predicting environmentally based behaviours (Bansal &
Roth 2000) and can be a significant factor in the development of green IT in
organisations. Bansal and Roth (2000) found three basic motivations that
induce corporate environmental responsiveness:
Competitiveness, focuses on profitability, reduce cost, generate
revenues or efficiencies.
Legitimation, is survival. Initiatives are based on satisfying
government, local community, stakeholders and compliance &
regulations to avoid penalties and lessen risk.
Social responsibility, act from a sense of obligation, responsibility or
philanthropy rather than out of self-interest (Bansal & Roth 2000)

2. Organisational, as green IT initiatives have impacts on human resources
and organisational capabilities (Sayeed & Gill 2008), the extent of green IT
will be influenced by organisational factors. An enterprise‟s human
resources and capabilities must be leveraged to manage environmental
performance (Russo & Fouts 1997). Senior management support has been
identified as the important internal organisational factors, they facilitate the
requisition of resources, and environmental policy seems to follow a top-
down progression.

3. Technological (constraints), James (1999) identified technology facilitation
as a factor in the decision making process towards environmental
strategies. Molla (2008) suggested that technological context may also
influence the extent of green IT in organisations.

Research model showing the proposed factors which influence the extent of green IT
in organisations:

Enterprises that support IT to improve environmental performance are motivated by
employees - in an environment capable of change - as a sense of social
responsibility rather than responding to external pressures or pursuing competitive
advantage (Ben N. Kuo & Geoffrey N. Dick, 2009)



1.4 Green-IT – the extend of adoption
IT is a factor in causing and resolving sustainability issues (Green-IT). Policy makers
and IT managers recognise the importance of IT as a means of greening the
enterprise. Two main and interrelated streams of thoughts can be identified in the
discussion on Green IT:

1. Reducing of carbon emission and IT assets waste
A PC running for 2. Deploy IT in measuring, reporting and reducing greenhouse gas emissions,
around ten hours per waste and water usage
day produces 1200
pounds of CO2 which
is almost 1/10 of what Adoption Green IT can be influenced by 3 generic sources of influence could be
an a car generates identified as economical, regulative and, normative (Molla, 2008; Chen, Boudreau, &
annually (Weiss, Watson, 2008):
2007)
1. Economic forces, the need for pursuing internal efficiency and market
performance, the main motivator of Green-IT adoption. Compliance,
business continuity strategies and global expansion increase the need for
more data storage. More data implies larger server farms and more demand
for power (Rasmussen, 2006).

2. Regulatory forces, demand compliance to green or environmentally
responsible regulation. Government bodies should force the adoption of
Green-IT by rules and laws that allow or prohibit certain practices. E.g.
limitations on greenhouse gas emissions, institutionalising emissions
trading, banning the use of hazardous materials and imposing restrictions on
e-waste disposal.
Rasmussen, the need
for reducing the 3. Normative forces, the pursuit of legitimacy within the wider social context
power, cooling and (DiMaggio & Powell, 1983). The need to meet social obligations and enforce
real estate costs and moral governance can induce certain Green-IT practices.
increasing data centre
efficiency might drive
some organisations to These forces are not necessarily mutually exclusive. The preference of a dominant
turn to Green IT force can influence the adoption and extend of Green-IT activities and favour certain
Green-IT practices.



Green-IT is an enterprise‟s ability to systematically apply environmental sustainability
criteria (such as pollution prevention, product stewardship, use of clean
technologies) to the design, production, sourcing, use and disposal of the IT
technical infrastructure as well as within the human and managerial components of
the IT infrastructure (Molla, 2009).

The definition can be split into 4 different but interrelated perspectives of Green-IT:

1. Sourcing, procurement practice of environmentally preferable IT purchasing
through analysis of the Green track record of software and IT services
Initiatives to replace providers, incorporating Green issues in vendor evaluation, and inclusion of
equipment with more social concerns
energy efficient
equipment would 2. Operations, improving energy efficiency in powering and cooling corporate
generate a surge in IT assets and reducing greenhouse gas emissions.
electronic waste and
consume additional 3. Services, the role of IT in enabling an enterprise's overall sustainability
resources if equipment initiatives including analytical IT tools, for Green supply chain management,
is replaced before the environmental management and carbon foot print analysis and low based
end of its natural life carbon business solutions (among others; video-conferencing, thin client &
web business service, desktop virtualization, corporate-wide PC power
management).

4. End of IT life management, practices in reusing, recycling or disposing IT
hardware and consumables in an environmentally responsible manner.

Hoffman and Woody (2008) argue that the costs of being Green are high and costs
must be seen in light of competitive, market and economic opportunities of becoming
Green. Regulatory requirements and legislative actions play very significant roles in
the adoption of Green technologies and can force some businesses to accept a
technology (Olson, 2008; Gonzalez, 2005). Factors that influence the adoption of
Green-IT, effort should be exerted to cover economical, regulatory and ethical
issues.



1.5 Green-IT and Governance
In a grim and green economic era information technology has an important role to
play in creating sustainable businesses. Recovery from the economic crisis is going
to demand and eventually lead to more greener and energy efficient industries. It is
the technology–sustainability connection that “Green-IT” has emerged as a topic of
concern for IT and business leaders.

Alem Molla (2009) defined Green-IT as follows (Organizational Motivations for Green
IT: Exploring Green IT Matrix and Motivation Models, page 4):
Responses to
environmental Green-IT is an organisation’s ability to systematically apply environmental
challenges differ sustainability criteria (such as pollution prevention, product stewardship, use
from of clean technologies) to the design, production, sourcing, use and disposal of
environmental the IT technical infrastructure as well as within the human and managerial
policies for public components of the IT infrastructure.
consumption to
green-washing Green-IT has 2 dimensions:
their strategies
through recycling 1. Reach, the extent to which Green-IT touches an enterprise‟s IT activities
practices from sourcing through operations to end-of-IT-life management.

2. Rich, the extent of maturity of Green IT polices practices and technologies.

The Green-IT Definition Matrix:

Maturity in Green-IT Reach and Richness provides evidence of an enterprise Green-
IT strategy and commitment to the main goals of eco-sustainability, pollution
prevention, product stewardship and use of clean technology (Hart,1997).



2. BT Group practices
BT‟s present challenge originate from its previous crisis in 2002, after the dotcom
crash, loaded with debt BT sold most of its international assets and span off its
BT has a huge
mobile operation, leaving a fixed-line telecoms operator under pressure from both
pension burden in the
competitors and regulators. Former BT Group CEO, Ben Verwaayen, championed
UK. Its underfunded
Global Services, which serves governments and big companies. In the financial year
scheme has 340,000
to March „08 sales reached £8 billion, almost rivalling BT‟s traditional business.
members. Trustees
Global Services margins were under pressure. In 07/08 Global Services contributed
expect scheme‟s
almost 40% of sales but just 4% of operating profits. Global Services lost £800m in
liabilities reach £40
the financial year 08/09.
billion gross

In 09/10 BT generated about £1.3 billion which had to support dividend payments
and underwrite the giant and underfunded pension scheme. Hence BT Group,
Global Services especially, is scrutinized by analysts from the City on financial
performance. Investments are under pressure to satisfy shareholders and the
pension scheme.

BT is pushing cash
flow above the £1.3-
billion mark resulting
in cutting costs. In
fixed-line telecoms
that means cutting
labour and focussing
capital expenditure

Sources: internal reporting and BT communications

1. The Economist - BT’s Pension Problem - Aug 20th 2009
2. Accountability Report - The Materiality Report, Aligning Strategy: Performance
and Reporting, November 2006



2.1 CSR strategy and governance
BT Global Services Benelux has ambitious goals for reducing the CO2 footprint for
fiscal 2011/12. The governance aspects will be researched by interviewing the CFO,
(guardian of CSR endeavours) and Jan Willem Leguit (senior consultant within BT
professional Services) responsible for the ISO 14001 certification for BT Benelux.

A program to reduce BT Group‟s global carbon intensity by 80% by 2015, from 1997
levels is delayed to 2020. On the other hand, in California, the solar array powering
the offices and datacenter is in its first full year of operation.

Eliminate, Reduce,
Reuse & Recycle for
electronics devices
ER3 principle is the
most efficient rule
making control for
enterprise green
projects (Taylor, R.
2009)

BNL is ISO 14001 certified and is following the PLAN-DO-ACT improvement
scheme. Significant progress has been made on reduction of waste, car millage, air
travel, use of natural gas for heating and use of water, see Appendix II. This is,
however, mainly due to the downsizing since the beginning of the financial and the
following economical crisis. Ambitious targets from London were met automatically.
For the next fiscal 2011/2012 BT anticipate an increase of business volume and as a
result an increase of the use of resources. This will affect BT‟s footprint negatively.
Without additional measures, investment and financial commitment, the CSR goals
will likely not be met.

Green decisions are taken by and governance is performed on ad-hoc bases by BNL
employees often without senior management being aware. One FTE for CSR
governance is the BT Group norm, due to stringent cost reduction programs this
function is not fulfilled. There is a definite need for a dedicated FTE for governance
and ownership of “Green Development” within BT Benelux.

Sources: BT PLC Sustainability Report 2011
http://www.btplc.com/Responsiblebusiness/Ourstory/Sustainabilityreport/index.aspx


2.2 Business Conduct
BT‟s CSR strategy translates in the following day to day practices:

e-waste
98% of the IT equipment (mainly Cisco) is returned to the manufacturer at
end of life.

Green energy / CO2 reduction
All energy used in BNL is nowadays green. Data centers are transformed to
energy efficient operations in terms of cooling, energy used and supplying
heat to nearby greenhouses. Here significant investments are made. As a
simple measure the cooled environment temperature is raised from 21 to 25
degrees Celsius and the heating lowered to 19 degrees Celsius.

Procurement
BT is engaging suppliers to deliver products that operate effectively up to 50
degrees to reduce cooling cost in data centers.

Eat for own dog food
Benelux employees started using the BT mobility services enabling them to
work flexible, experiencing the possibilities and limitations, and addressing
ways for improvement.

Right First Time
RFT is about fulfilling our customers‟ expectations and our promises
perfectly as perceived by the customer. For BT Global Services it implies
improving the delivery and quality of services, removing the cost of failure
and reducing cost to serve. RFT has had a positive impact on BT‟s global
carbon footprint.

Travel
Due to telepresence solutions in Amsterdam and Brussels BT reduced air
travel with 60% (CO2 reduction of 70 tonnes and savings of 300,000 euro)
and car travel for BNL meetings (reduction of 81,259 Km, 15 tonnes CO2).



Flexible working
Survey suggests that home working is reducing BT‟s work-related CO2
emissions by around 7,000 tonnes a year, on a net basis, professor P.
James University of Bradford “Home working at BT - The Economic,
Environmental and Social Impact “, 2008. BT is benefiting from higher
employee productivity and morale, lower absenteeism, and reduced property
costs.

BT closed an office building in Amsterdam in 2009. Over 400 employees
had to find a new way of working without much guidance from senior
management. With only little disturbance the flexible working scheme had
been adapted resulting in lowering cost for renting office space, less car
millage and energy reduction.

Sources: Proposition papers, product information, marketing analysis, published
interviews, reporting by research institutions and interview CFO.

1. BT - Changing world: Sustained values: Our 2010 Sustainability Review
2. BT - Planning For A Sustainable Future: Helping Organisations Reduce Their
Carbon Footprints, Dr Daron G Green
3. HOMEWORKING AT BT - The Economic, Environmental and Social Impacts
Final Report June 15 2008 Professor Peter James, SustainIT and University of
Bradford

http://www.globalservices.bt.com/AboutusHubAction.do?id=corporate_social_respon
sibility



2.3 Green-IT portfolio development
BT Global Services is a Networked-IT business delivering hosted ICT commodities
from 24 data centers via a global MPLS network to customers. Data centers are the
Power and cooling is a fastest growing part of the ICT footprint (14% CAGR in USA) and have a large
pandemic in the world potential efficiency gain. The principal measure of data centre efficiency is known as
of the data center, the Power Usage Effectiveness (PUE) metric. This is defined as:
said Michael Bell,
Gartner research

An ideal PUE measures 1.0 when all the facility power is used to power the IT
equipment. A PUE of 2.0 implies 50% of the power is wasted – usually in cooling
systems and uninterruptable power supplies. A typical legacy data centre has a PUE
of 2.5.
50% of the data
20 years ago chips consumed 8 watts of power compared to 110 watts today. This
centers are obsolete
phenomenon - underbelly of Moore‟s Law - along with blade server developments
due to insufficient
can increase the concentration of processing power, and therefore power demand, 8
power & cooling
times per square foot. A report by the American Society of Heating, Refrigerating,
capacity to meet the
and Air-Conditioning Engineers (ASHRAE) revealed that between 43-65% of data
demands of high
center energy is used to power equipment, between 20-25% is used to power
density equipment
cooling systems and between 1-3% devoted to lighting. BT recognized the above
issues and is developing sustainable data centers delivering green cloud services to
global customer taking the following approach:

1) Audit and learn
Discovery contributed to BT‟s consolidation of 3,000 servers and reduced electricity
consumption by 23GWh a year while reducing CO2 emissions by 3,300 tonnes.

2) Renewable energy
BT Group is leading the largest enterprise wind power project outside the energy
sector, which aims to produce up to 25% of its UK electricity consumption by 2016.

3) Switch to fresh air cooling
Imtech is building BT‟s Data centers have enormous cooling requirements, which can amount to an
Green data centers in enormous energy drain. BT data centers are able to channel the air that circulates
Nieuwegein en outside the building into the data centre to help keep temperatures at an optimal
level. Using fresh air instead of air conditioning to cool hardware is becoming a real
Amsterdam, CO2
option. It's highly energy efficient, but it implies that datacenter equipment has to
reduction 40%,Dec ‟10 tolerate a wider range of operating temperatures - 5 to 50 degrees Celsius, rather
than 20 to 24 degree standard of today.

4) Move from AC to DC
Computers operate of DC voltages, yet power is delivered in higher AC voltages.
Avoiding the power conversion results in a 30% power saving. BT is introducing this
power scheme globally.



5) Turn to multi-core processors
Consolidate systems, multicore processors combine 2 or more processors into a
single package. BT consolidated many small servers on to fewer, more powerful
systems and thus cut power consumption and energy spend.
BT‟s Virtual Data
Center is a green 6) Virtualisation
virtual networked IT The most exciting of all the emerging technologies is virtualisation, a technique that
infrastructure that uses idle network power to use resources more effectively and efficiently. BT
enables customers to reduced a 1,500-server data center down to just over 100.
create, deploy,
7) Reduce infrastructure
monitor and manage
Development of data centers which interact with the technology they house. By
their own service on
building resilience and disaster recovery functions into the applications that manage
demand through a self
server hardware, the need for separate hardware to take care of these functions is
service portal
removed hence the need for power and cooling for those systems.

2.3.1 Carbon impact assessment, an example
SWIFT, The global provider of secure financial messaging services, planned to
reduce carbon emissions by 60% towards end of 2012. BT performed a data center
sustainability assessment to investigate its overall carbon footprint. The purpose of
the audit was to support the following key business drivers:

Reduce overall carbon footprint

Reduce server population resulting in decreased infrastructure capital
expenditure

Leverage the existing investments in technology

Provide cost-efficient high available technical infrastructure

BT performed the assessment on Swift‟s data center hosting a large server base
(rack mounts and blade systems) both Wintel and UNIX, storage and networking
devices. The assessment resulted in a roadmap for Swift providing a comprehensive
TCO and ROI study, implementation and an investment plan. BT provided a solid
business case achieving a 72% reduction in server population. The reduction would
not only reduce up to 851 MWh/Year in energy consumption and 177 Metric tonnes
of CO2 emissions but also save up to €2.3 million over 5 years with a very positive
ROI.

Sources: Interview Senior Consultant Professional Services, study CSR reporting,
Green-IT portfolio development material and IDC report (October 6, 2009): BT's
Sustainability Practice Facilitates Green IT Initiatives for Enterprise Customers

1. BT - A realist’s guide to green data centres (whitepaper)
2. BT - Are ICT emissions running ahead of expectations? Produced by Chris
Tuppen, BT Chief Sustainability Officer and Chad Raub, Dawn Capital



2.4 Recognition
BT has been awarded the “2010 European Telecoms Corporate Leadership
Green Excellence Award”. This award recognises BT‟s leadership in environmental
initiatives designed to reduce carbon emissions. BT is giving top priority to projects
that bring emissions reductions by changing behavior engaging employees to reduce
energy use is one of the most effective ways to cut emissions, whilst reducing
operational costs.

In 2008, BT launched a new global energy saving campaign to save 75,000 tonnes
of CO2 emissions and £15 million by March 2011. This resulted in new measures
that will reduce the company‟s energy consumption by more than 53 GWh per
annum and its carbon footprint by 20,200 tonnes a year.

BT has done a remarkable job leveraging internal successes by turning them into
solutions, including energy efficiency management, remote working/collaboration
practices, virtualisation designs, use of conferencing facilities and datacenter
optimisation. BT Global Services has managed to grow a strong consultancy
business focusing on sustainable solutions.

Dow Jones Sustainable Index, BT has ended number one on DJSI for seven years
running, until 2009 after which Telefonica has taken over de top position since. KPN
has entered the top five in 2010.

Business Week & Boston Consulting Group, BT is one of the most innovative
companies in its sector, 2008.

Telemark (Platinum Award), acknowledges BT‟s success in capturing the hearts
and minds of customers with excellence and ahead of global rivals.

Gartner, BT Global Services is positioned in the "Leaders" quadrant in 3 key Gartner
Magic Quadrants: the Global Network Service Providers, the Pan-European Network
Service Providers and the for Communications Outsourcing and professional
services worldwide. BT have a strong vision that includes adopting more information
and communication technology (ICT) capacity which is a strategy they articulate
clearly and openly."

Accounting for Sustainability (Elaine Cohen CSR Wire, 2010), the case study
that I found most impressive was BT who published a first Environment Report in
1992. The study of the sustainability evolution at BT shows how the Business Case
for CSR was developed, the business benefits BT expects from its sustainability
programs, the drive to assess materiality and the application of a more quantitative
assessment of BT's sustainability performance in financial terms.

In its 2009 annual report BT includes a table of the 'Non-financial corporate
responsibility KPI's as a high level connected reporting summary of the most
material sustainability issues and shows both direct and indirect enterprise impacts,
most of which are translated into a money figure. Accountants will clearly love this,
as will investors and analysts, and indeed, it does remove some of the fogginess we
find in many Sustainability Reports around sustainability initiatives.



3. Confrontation
This section of the paper confronts the scientific modelling with BT‟s strategic
planning, governance, business conduct and Green-IT developments with respect to
BT‟s competitive position.

3.1 Competitive advantage and CSR
Responsive CSR => BT has enormous pension scheme liabilities in the UK. BT has
to generate enough cash flow to fulfil its obligation to society resulting in never
ending mitigation of risk, hence seeking efficiencies in the value chain.

Strategic CSR => BT started reporting its impact on the environment in 1992,
understanding that its energy consumption and raising demand would impose
strategic challenges in terms of sourcing and growing carbon foot print. Consuming
about 2% of the nation‟s energy, saving and sourcing of reliable, affordable and
greener energy became crucial and got boardroom attention.

Competitive advantage => Due to the constant crisis it‟s in, BT was forced to
rethink its position and strategy with respect to CSR in the early ‟90. It set some big
hairy audacious goals with respect to energy production and consumption, 21
century network and involvement of employees.

3.2 Governance and Sustainability
Societal influence => As one of the largest employers in the UK, the extend of
wholesale and retail telecommunications and other services it‟s delivering, and
financial obligations BT‟s impact on society in the UK is significant and vice versa.
BT has an unwritten social contract to lead innovation and act as an example of
good (corporate) citizenship and ownership thereof.

Environmental impact => BT‟s actions take immediate effect on the geophysical
environment in terms of e-wast, carbon footprint and the landscape due to the build
of a wind farm generation ¼ of BT‟s energy demand in 2020. BT is scrutinised by
environmental organisations and governments (local & central).

Organisational culture => Employees have the ability to work flexible, this is
strongly promoted by BT, to save time and energy resulting in less pollution and
stress. In 2009 75% of the BNL staff worked from home during the “BT Beating the
Queue DAY”. The CSR culture, expectations and behaviour, is unwritten but lived.

Finance => BT constantly has to balance finance (investments, dividends & pension
scheme liabilities) satisfying many stakeholders among which the government and
society at large. Due to the 2008 financial and following economical crisis BT had
less funding for achieving its very ambitious sustainability goals.



Mapping BT Group behaviour to the 4 sustainability aspects results in the following
diagram:

Red is before October 2008.

Blue is after October 2008. BT is focussed on financial performance, cutting internal
cost but maintaining the commitment to the sustainability promise.



3.3 Green-IT

3.3.1 The difference
Motivational => Green-IT is an instrument for survival for BT Group and
differentiates BTGS from AT&T, Verizon and Orange Business Services.

Competitiveness => Applying Green-IT is instrumental in BT‟s quest to
reduce cost, increase profitability, generate cash and develop a sustainable
networked-it portfolio and grow domestic market share against KPN and the
black sheep.

Legitimation => BT is under pressure from UK government(s),
environmental organisations and Ofcom (the regulator). An overwhelming
amount of rules, regulations and public expectations have to be met. Early
initiatives with respect to greening IT are set over a long period of time to
avoid cost and reduce risk.

Social responsibility => BT Group‟s impact on British society is
tremendous. It‟s doubtful if BT acts from a sense of obligation or
philanthropy rather than out of self interest. At best it can be defined as “BT
understood the rules of the CSR game”.

Organisational => BT has the human and organisational capabilities to make the
difference. At BT Group awareness and attention is urgently present as a means of
survival. At BTGS Green-IT is a much needed portfolio ingredient. BT BNL sees
Green-IT as one of the business goals, it‟s present, but financial targets are more
demanding.

Technological constraints => Technologies are developing quickly and are readily
available. Due to the size of the BT organisation and its presence in 178 countries
the adaption of new green technologies is a constraint as portfolios (development)
are commoditised which takes “some” time.

3.3.2 Adoption Influence
Adaption Influence:

Economic => BT is in need of cash. Reduction of energy consumption is an
effective tool of cost reduction. BT has been successful in taking measures and
applying Green-IT in making BT Group financial thresholds by reducing cost of
operations (energy, travel, housing, IT-infrastructure estate, delivery and number of
staff).

Regulatory => Vision more than regulatory forces have driven BT to sustainability.

Normative => In many ways BT Group is normative for its sustainability endeavours.
BT is seen as seen the leader among leaders by Ovum (2009).



BTGS ability to systematically apply Green-IT is described in the following
perspectives:

Sourcing => BT‟s sourcing strategy is about efficiency and effectiveness; more for
less, reduction of energy usage, joint communication & marketing, free pilots, better
services, available stock and reliable delivery. Strategic partnerships are key with
e.g., Cisco, Microsoft, HP and Cap Gemini.

th
Operations => On April 29 2010 BT BNL joined the MJA (Meerjarenafspraak
Energie Efficientcy, Ministerie van Economische Zaken) committing to an energy
reduction of 2% annual YoY. ISO 140001 certified following DO-PLAN-ACT.

Services => The Professional Services branch of BTGS has several enterprise
assessments services, based on internal BT experiences, analysing carbon impact,
reporting and propositions for improvement. BT has introduced Green Bill (no more
paper invoices, only at an additional cost).

End of IT life management => 80% of the equipment goes back to the original
supplier.

3.3.3 Governance
A demonstration of BT‟s strategy and commitment, as a measure of governance,
can be demonstrated by scoring the Green-IT definition matrix.

Rating: X infant, XX in place needs improvement, XXX mature



3.4 Conclusions and suggestions for improvement
According to Porter & Kramer‟s CSR Competitive Advantage Enterprise Framework
BT is definitely green in its strategy, governance, reporting, business conduct and
Networked-IT portfolio development. BT has a competitive advantage. Until Q3/2008
BT was the unchallenged leader.

The financial perspective of Aras & Crowther with respect to Governance and
Sustainability is indeed present and leading in BT. The financial and following
economical crisis forced BT to slow down programmes, postpone new programs
start-up and cut costs significantly. (Very) ambitious CO2 reduction and energy
saving goals were pushed-out in time. The last 2 years this has resulted in losing the
global lead to Telefonica and BT BNL being challenged by KPN. Even though
financial commitment is more balanced towards pension liabilities and share holders
BT invests vast amounts in greening data centers globally, green-IT and professional
sustainability services. BT‟s 10/11 cash flow will approximately be 1.7Bn £.

BT‟s employees are consciously aware of sustainability issues and are driving
greening of IT and energy reduction fulfilling Kuo, Geoffrey & Dick‟s requirements for
making the difference in Green-IT. The extent of adoption of Green-IT, following
Molla‟s Green-IT enterprise‟s ability definition, is applicable to BT‟s ability to adopt
and drive sustainability practises. With respect to Green-IT and Governance, Molla‟s
Organisational Motivations for Green IT, there is room and need for a Business
Consultant Sustainability Practises advising both BNL senior management as well as
(prospective) customers on CSR opportunities translating propositions in actual
reduction (cost) and generating new business.

3.4.1 A maturity assessment
BT is a complex organisation with many stakeholders, legacy systems, procedures
and reporting mechanisms not to mention the (Ofcom) regulation pressures. With
respect to the “Sustainability Promise reporting” and measuring progress against the
competition there is Maturity Level dashboard developed by Eric G. Olson, IBM.

I recommend that for further BT internal research on the subject the above model is
examined and tested. Is can be used as a dashboard filling the gap between
awareness and action and as a means of reporting.



APPENDIX I, References
Watson R.T. et al. Department of MIS University of Georgia Altanta U.S.A. “IS and
Environmentally Sustainable Development: Energy Informatics and New Directions
for the IS Community” MIS Quarterly vol. 34 No. 1, pp 23-38/March 2010.

Eward T. Chen U. University of Massachusetts U.S.A. “Enhancing corporate
environmental management with green IT and Virtualization” Northeast Decision
Sciences Institute Proceedings, pp230-235/March2010.

Molla A. Et al. RMIT University “An International Comparison of Green IT Diffusion”
International Journal of e-Business Management, vol. 3, no. 2, pp 3-23/2009

Porter M. Kramer M.R. Harvard Business University. “ Strategy & Society: The Link
Between Competitive Advantage and Corporate Social Responsibility” Harvard
Business Review, 17 pages/December 2006.

Lozenz M. Hilty L.M. Ruddy T.F. Empa, Swiss Federal Laboratories for Materials
Testing and Research. “Sustainable Development and ICT Interpreted in a Natural
Science Context” Information Communication & Society, February 2010

Olson E.G. Management Consultant, Strategy and Change Practice, IBM Global
Business Services. “ Creating an Enterprise-level „green‟ strategy” Journal of
Business Strategy vol. 29 no. 2, pp22-30/2008

Vykoukal J. Goethe University, Frankfurt Germany. “Grid Technology as Green IT
Strategy?: Empirical Results from the Financial Services Industry” 18th European
Conference on Information Systems. 2010

“Green IT hits the CIO radar” Datamonitor/April 2008

Aras G. Crowther D. Yildiz Technical University Istanbul & Leicester Business
School, De Monfort University UK “Governance and sustainability: An investigation
into the relationship between corporate governance and corporate sustainability”
Management Decision, vol. 46, no. 2/2008

Kuo B.N. Dick G.N. University of NSW Sydney Australia “ The Greening of
Organisation IT” What makes a Difference?” Australian Journal of Information
Systems, vol. 16, no. 2/2009

Xing R. Wang J. Chen Q. Montclair State University “The Contemporary IT
Transformations” Operation Research and Management Information Systems/xxxx

Molla A. School of Business Information Technology RMIT Univesity “The Extent of
Green IT Adoption and its Driving and Inhibiting factors: An Exploratory Study”
Journal of Information Science and Technology/2009



APPENDIX II, Risk Assessments



APPENDIX III, CSR KPI’s
BT Group Corporate Social Responsibility Key Performance Indicators


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