CIO Compensation May Soon Be Tied to Green Data Centers

Like it or not, the potential of green data center savings puts CIOs on the front line in the fight for sustainability.

Mary E. Shacklett, President of Transworld Data

July 3, 2024

6 Min Read
Corporate businessman, financial chart, plants and newspaper in a briefcase: green business and sustainability concept
luciano de polo stokkete via Alamy Stock

More corporate boards are thinking about tying CIO compensation to sustainability achievements such as moves to green data centers. At the same time, a growing number of IT job candidates are making their employment decisions with corporate commitments to sustainability as a key evaluative criterion.  

Why is this happening now? 

“Global businesses have reached a sustainability inflection point. Stakeholder expectations and heightened investor scrutiny are putting organizations under pressure to articulate their societal roles more clearly, prioritize environmental and social objectives within their business strategies, and demonstrate progress to stakeholders,” according to the Harvard Business Review. “We also know that employees are prioritizing their employment decisions based on an organization’s purpose, culture, ESG goals, and diversity, equity and inclusion (DEI) priorities.” 

The pressures for sustainability are not just coming from employees and stakeholders. A growing number of large enterprises are also holding their supply chain partners accountable for environmental advancements, especially in terms of energy usage reduction and the reduction of industrial waste. Suppliers must now fill out annual “report card” questionnaires on performance, and one of the categories that they’re required to report on is sustainability, and what they are doing to improve it. 

Related:4 Big AI Sustainability Prospects, and One Big Problem

Green Data Center as Low Hanging Fruit 

I’ve asked numerous CEOs and CIOs about the pressures of making their companies more sustainable. To a person, all have said that the easiest way to show improvements in sustainability is to “green” their data centers

In one case, an east coast healthcare company was able to reduce its power utilization expenses by over one million dollars annually. It did this by virtualizing servers, moving more IT to the cloud, investing in new technologies that required less power, and reducing the square footage of its data center. The beauty of this work was that the savings could be documented right away as hard cost savings and reductions in energy usage.  

Of course, companies also have the option of going after other areas of the enterprise to obtain sustainability. They can reduce square footage in office areas by having more employees work from home; or they can overhaul distribution and manufacturing centers. However, there is virtually nowhere in the enterprise that can show more impressive and immediately impactful returns as greening the data center.  

By default, this makes the CIO, who is the de facto leader of the data center, also a de facto leader in corporate sustainability. 

Related:Intel CIO Motti Finkelstein on C-Suite Communication, Sustainable AI, and Future

I know of few CIOs who want this responsibility, and even fewer who would prefer to have sustainability linked to their salary, bonuses or base compensation. Yet, the leading role that greening data centers has taken in sustainability is encouraging more corporate boards to consider sustainability progress as a major criterion of CIO performance. 

How CIOs are Greening Data Centers 

Because data center carbon footprints and energy utilization are target areas for sustainability achievements, CIOs have been focusing on these areas for greening their data centers over the past few years. 

Most have moved more on-premises IT to the cloud. CIOs have virtualized servers and storage in their on-site data centers. Hardware vendors are making it easier for sites to replace aging equipment with new, more compact equipment that is optimized to consume less energy, and that can also aid in reducing the square footage of data centers. 

However, we are now at an inflection point because many companies have already “tapped out” these initial data center energy savings areas. The goal now is to find new areas that can be “greened” for sustainability.  

Among the new areas that IT leaders are targeting are the following: 

1. HVAC systems and environmental heating and cooling optimization  

HVAC cooling systems have historically been used to keep IT equipment in dust-free, temperature-controlled, and humidity-controlled conditions. While this was going on, less thought was given to actual building characteristics, such as whether an overhead ceiling was allowing too much outside heat to be absorbed and penetrate the data center, or whether the flooring system was maximized for best cooling distribution. 

IT leaders say they are teaming with facility managers to look at these elements now.  

Additionally, more IT departments are monitoring data center heat and energy distribution and are constructing heat maps of their data centers. The heat maps can be used to identify data center “hot spots” (i.e., spots within the data center that are generating excess heat, and where the excess heat requires cooling systems to work harder). The hot spot areas typically show up where there is an abundance of CPU and GPU activity. HVAC cooling can be recalibrated, so these areas receive the most concentrated cooling, while other areas of the data center that remain cool receive less. 

Those companies building new data centers are also considering immersion cooling systems that use non-conductive water to cool computers . Immersion cooling technology is very expensive, but as prices drop, more data centers will think about adopting it. 

2. User compute optimization  

While much of the IT “greening” effort has been focused on the data center, McKinsey reports that, “The biggest carbon culprit is end-user devices, not on-premises data centers … End-user devices -- laptops, tablets, smartphones, and printers -- generate 1.5 to 2.0 times more carbon globally than data centers.”   

One reason for the excess carbon issue is that users have so many carbon-generating devices. It’s also common for users to leave their desktop computers and printers on when they leave at the end of the day. 

IT can address some of the issues by remotely turning off user on-premises devices after work hours. This saves energy, reduces the carbon footprint and improves security. A second area of potential energy reduction is ensuring that employees share printers, and even establishing a ratio for the number of users per printer.  

Finally, there is aging IT equipment that should be systematically cycled down from power users to occasional users, and finally out the door. When machines are stored in dusty closets indefinitely, they become industrial waste that should be responsibly disposed of. 

3. Taking “green” beyond enterprise walls 

IT can also take a closer look at the sustainability practices of its business partners and suppliers. Are server hardware vendors providing energy efficient machines? Are cloud service providers committed to green practices?  

By using a “report card” approach on sustainability with suppliers and vendors, and including sustainability metrics in its RFPs, IT can exercise sustainability in procurement decisions that extend beyond the walls of the enterprise.  

4. Finally, the metrics 

The metrics that IT has been using to show progress in sustainability have largely centered around reductions in energy usage and floorspace.  

CIOs should consider adding new sustainability metrics, such as the percentage of vendors and outside service providers with green practices and products, the number of employees per printer, and records of industrial waste reduction. Environmentally sensitive projects such as revamped HVAC systems and the installation of environmental sensors should also be highlighted. 

By extending the boundaries of green initiatives and making goals tangible, measurable and visible, IT can demonstrate progress on a variety of fronts. And that will delight board members, stakeholders and regulators. 

About the Author(s)

Mary E. Shacklett

President of Transworld Data

Mary E. Shacklett is an internationally recognized technology commentator and President of Transworld Data, a marketing and technology services firm. Prior to founding her own company, she was Vice President of Product Research and Software Development for Summit Information Systems, a computer software company; and Vice President of Strategic Planning and Technology at FSI International, a multinational manufacturer in the semiconductor industry.

Mary has business experience in Europe, Japan, and the Pacific Rim. She has a BS degree from the University of Wisconsin and an MA from the University of Southern California, where she taught for several years. She is listed in Who's Who Worldwide and in Who's Who in the Computer Industry.

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