Tuesday, 8 January 2008

2008 - The Green Year?

The year has kicked off with a lot of pessimism about the impact of the 'credit crunch', the knock-on effect of the sub-prime mortgage debacle in the US. It does look increasingly like financial problems will shape the market in 2008, with a potential slowdown in IT investment all round, particularly led by the financial services sector.

But there was another event at the end of 2007 that will have a longer-term impact on the market. On December 15th more than 180 countries reached an agreement to start negotiations to replace the Kyoto protocol on climate change, which runs out in 2012. The two-year negotiation process will set new emissions targets for when Kyoto expires.

Brinkmanship from the US delegation almost scuppered the agreement - the US is now the only developed country not to have signed the Kyoto protocol (after Australia's new Prime Minister, Kevin Rudd, signed up as soon as he was elected in November). One of the main stumbling blocks was the fact that the EU wanted to include a specific level of reduction in emissions (25-40% below 1990 levels by 2020) and this got relegated to a suggestion in order to secure agreement.

But this is where the impact lies. There is increasingly a move to quantify targets for the reduction of greenhouse gas emissions and these are even being broken down by industry sector in order to reach the overall target. In the UK, for example, the government is planning to introduce climate change legislation with legally binding targets for a 26-32% reduction in CO2 emissions by 2020 and a 60% reduction by 2050.

So how will this impact the IT market? Well for a start IT companies will have to reach these targets themselves - this will put particular pressure on the IT services sector, which is increasingly responsible for all IT delivery. Legislation and regulation, shareholder demands and employee preferences will all put pressure on IT product and services suppliers to conform.
But this also represents significant opportunities. With all industry sectors looking to cut emissions the IT companies that can help most will have a competitive advantage. On the product side, expect to see a move to thin client technology as a means to reduce manufacturing and energy costs - an advantage for Sun, which has become a green evangelist. Similarly we will see an escalation in data centre consolidation. These are the areas where going green can be a win-win situation; low emissions = low energy use = lower cost.

It will get harder, though, with more radical market changes as customer demands increase and winners and losers emerge. The UK government is already building in carbon reduction targets to BPO contracts and commercial sector demands will follow. It will have an impact on outsourcing companies and offshore resources will come into focus. Those who stand to benefit most include providers of software as a service, which is set to get a significant boost as companies decide to do away with internal resources altogether. And IT suppliers with solutions that help customers monitor, manage and reduce carbon emissions throughout their businesses will be most in demand.

These are just a few of the impacts that climate change will have on the IT product and services market. It is the aim of The Green IT Report to cover these issues in more detail in a regular series of reports and briefing papers. Meanwhile, Green IT Review will give a more regular update on what's going on.

© The Green IT Review

No comments:

Post a Comment