Simon Ninan
Every enterprise understands the power of digital transformation (DX). Most major businesses are now diligently working on artificial intelligence transformation (AX). However – as my many trips between the U.S. and Europe over the last few years have made exceedingly clear – when it comes to green transformation (GX), there’s a significant divide. Not every business is all in.
European business leaders across sectors have talked about GX for years and tend to treat sustainability as table stakes, focusing heavily on tech policy and IT’s impact on the planet. The European Union has positioned itself as the center of responsible business, and for companies in the region, there’s no alternative to adopting green IT to achieve sustainability objectives.
Businesses in the U.S. tend to view GX very differently. U.S.-based multinational companies are assessing stringent regulations emerging from Europe, with which they must comply, and are establishing a unified, coherent approach to managing sustainability initiatives worldwide. But many U.S. companies see green IT as overhead vs. opportunities to strengthen their businesses.
America’s AI Action Plan, issued in July, highlights U.S. leadership’s belief that more regulation equates to less innovation and reduced competitiveness – as illustrated by this excerpt on page 1 of the plan: “The United States needs to innovate faster and more comprehensively than our competitors in the development and distribution of new AI technology across every field, and dismantle unnecessary regulatory barriers that hinder the private sector in doing so.”
This new plan comes in the wake of the recent push to ban U.S. states from regulating AI for the next decade, although that language was ultimately stricken from the One Big Beautiful Bill Act.
But what people may not fully appreciate is that operating and scaling AI and IT is not just a planet problem – it’s an economics problem. Sustainability is a powerful way to solve for it.
Yet, people often don’t think holistically about green IT and understand the full range of costs and benefits (some of which may not always be immediately apparent) involved.
Let’s analyze both sides of the sustainability cost-benefit equation.
The Costs
GX involves various – sometimes “hidden” – costs, including:
- Upfront investments – to transition to an energy-efficient business model
- Data and systems modernization – entailing infrastructure and process improvements
- Regulatory compliance – requiring initial planning and ongoing management
- Supply chain disruptions – shifting to sustainable materials, practices and suppliers can disrupt existing supply chains, leading to operational challenges and increased costs
- Skills – ensuring you have the right talent to execute your green IT strategy is critical
- Innovation uncertainties – there’s risk in anything new, including investing in green tech
- Sectoral differences – some industries may struggle to modernize more than others
- Geographic variations – public policy, political stances and geo-political impacts like trade restrictions vary by geography, but you need to operate as a global company
The Benefits
Most businesses understand the costs. But they may not know that green IT and sustainable practices drive cost savings, deliver revenue upside and provide organizations with other important benefits that can make them stronger – resulting in return on investment (ROI).
Green IT benefits tend to fall into one of the following three buckets.
Cost Savings
Green hardware and software can drive efficiency in your business in numerous ways, including:
- Reducing the heating and cooling you require
- Limiting your waste and packaging
- Lowering your energy costs
Green algorithms could identify code that unnecessarily consumes excessive resources and apply compression to optimize that code’s power consumption. Lowering your IT environment’s power consumption and costs in these ways has become even more important amid inflation, resource scarcity and the rise of AI, which as we’re all now aware is exceedingly power-hungry.
We find that by lowering power consumption in these ways, a business, on average, sees a:
- 20% reduction in maintenance costs
- 30% reduction in resource use
- 40% reduction in energy bills
Some companies are achieving even higher ROI.
Revenue Growth Upside
But adopting green IT and sustainable practices isn’t just about efficiencies and cost savings. Staging a green transition can actually make your business more competitive and profitable.
Companies that have embraced and undergone green transformations have found it:
- Opens up new markets
- Allows for new business models
- Enables scale – affordably and efficiently
For example, if you have the infrastructure to capture the heat generated by your data center, you can sell that heat to other organizations.
Optimizing your IT environment by reducing complexity and energy consumption also lowers your costs and, in turn, enables you to scale faster. Now you can utilize the funds saved on energy, along with your simplified data infrastructure, to accelerate your AI and IT efforts.
Intangible Benefits
Green IT can drive a range of other benefits, too, including:
- Enhancing your reputation in the marketplace
- Attracting the best possible ecosystem partners
- Creating opportunities for differentiated positioning
Bain’s 2024 CEO Sustainability Guide indicates that sustainability is a top-three purchasing criterion for corporate buyers, and it says that more than a third of companies are willing to leave suppliers that don’t meet their sustainability criteria. Companies that utilize green IT and have strong sustainability stories to tell can leverage those strengths to enhance their brand reputations, bring in valuable new partners and, in the process, increase their market share.
The Bottom Line
Digital and AI transformation are accelerating the need for GX, which can scale DX and AX responsibility and affordably. At the same time, GX opens up other exciting new possibilities.
But successful GX hinges on modern data infrastructure – with engineering innovation and sustainability baked in – and a trusted partner that combines proven IT expertise, industry knowledge with a focus on sustainability and outcomes, and deep expertise in your sector.
With these necessary pieces in place, any business – regardless of sector or geography – can apply this winning formula: Cost savings + Revenue upside = Green ROI.
Want to make calculated decisions to drive efficiency, save on costs and move your business forward? Do the math on – and embrace the power of – green IT and sustainability practices.
Simon Ninan is Senior Vice President of Business Strategy, responsible for developing and driving aligned execution of Hitachi Vantara’s business strategy for the short and long term, with the goal of maximizing customer and stakeholder value, while driving growth, innovation and market leadership.