IT Lessons Offer Clues To Reaching Climate Change Goals

The fact that the 26th United Nations Climate Change conference (COP26) has set “keep 1.5 degrees within reach” as its goal reveals how challenging it has become to deliver on the promises of the Paris Climate Change Agreement.

And one of the biggest challenges is that the world is plowing through its natural resources at a stunning pace. According to the Global Resources Outlook 2019 report, half of total greenhouse gas emissions come from natural resource extraction and processing. Also, while the world’s population has doubled in the past 50 years, we have more than tripled our use of natural resources.

That’s the reason why, as an example, the European Green Deal is calling on all countries — and not just the largest producers — to make considerable progress to achieving a circular economy, which is essential to realizing climate neutrality by 2050.

Unfortunately, instead of growing the circular economy, it is declining. In fact, according to the Circularity Gap Report 2021, the global economy was only 8.6% circular in 2020, down from 9.1% two years previous.

This is because the transformation towards a circular economy is very hard for individual companies. For example, it requires a costly and complex transformation of the entire design and development process to ensure that the components used in production are more durable and suitable for repairing, reconditioning, and — ultimately — refurbishing.

More importantly, a circular economy also requires a shift in the way we do business, from purchasing and installing vast amounts of underutilized equipment to an as-needed model. Adopting a “product-as-a-service” business model is one of the most impactful changes we can make today. It not only makes our economy more circular by breaking established patterns of mismatched supply and demand; it also has the potential to generate significant growth opportunities for any industry.

As-a-service is a radical departure from a commoditized business model whereby companies sell a product and consider their job done. Instead, the producer retains ownership of – and responsibility for – the product throughout its entire life cycle. The customer has full use of the product for as long as is needed, paying only for when it is used, instead of for the product itself or its upkeep.

The producer, in turn, is responsible for building a quality product that lasts and is energy and material-efficient. Their role is also to take the product back and prepare it (or its components) for reuse.

Consider this representative example of as-a-service in action in the IT space: The company that owns and manages the two largest airports in Ireland – daa – needed to upgrade its servers and storage systems and decided to leverage an as-a-service offering. As a result, rather than scrap its old technology, and purchase new equipment, daa was able to upcycle obsolete legacy systems. This allowed daa to take the residual market value of the old IT and apply it to the cost of the new as-a-service model. It also helped daa meet its sustainability objectives by extending the life of old technology rather than it becoming e-waste.

As the example shows, a product-as-a-service model is a viable option for companies seeking to achieve sustainability objectives and contribute to a more circular economy. Using IT as the lens by which to view the model, here are three typical as-a-service outcomes that are making a real difference:

1. The elimination of overprovisioning; a common practice in which companies “overbuy” IT

In the average data center, 25% of computer resources are not doing useful work, and the remaining resources are operating at a small fraction of their capacity. This means higher costs and unnecessary power, space, and cooling consumption. Consequently, by switching to as-a-service, costs and energy use will significantly decline.

2. Organizations are freed from being chained to their IT kit for the whole of its lifecycle

Thanks to an as-a-service arrangement, a company’s IT equipment can be rapidly upgraded to the latest, more energy-efficient technologies without worrying about any capital costs. That’s a critical option for companies, as inefficiencies of aging equipment mean that 65% of the power used by IT in data centers is used to process just 7% of the work.

3. Taking back IT assets at the end of their use

When looking for as-a-service providers, it is essential to consider vendors with refurbishment services in-house who can help keep e-waste out of landfills. For example, my company, HPE, has state-of-the-art technical renewal centers that processed more than 3.1 million technology units in its Technology Renewal Centers in 2020. Close to 90% of this equipment was remarketed and returned to active use; the rest was responsibly recycled. This results from 20 years of experience in the refurbishing business and a consequent shift towards an as-a-service business model.

A global trend

The seeds of as-a-service are being planted across many different sectors. For example, signify, formerly known as Philips Lighting, sells “light as a service” to customers. The company cites figures of up to 80% savings in energy consumption. Kaeser Kompressoren sells compressed air as a service. Desso, a global supplier of carpets for commercial use, designs carpets according to the cradle-to-cradle principle. The company can lease its carpet tiles and take care of their installation, maintenance, return, and recycling.

However, it’s important not to underestimate the paradigm shift that moving to as a service entails for a company, ideally as part of a broader business and digital transformation strategy that embeds sustainability within it.

Offering as-a-service requires the overhaul of a company's business and digital transformation strategy but yields significant benefits for all — most importantly, to keep 1.5 degrees within reach.

Mohan Krishnan, HPE’s vice president and general manager for PointNext Services in APAC, wrote this article.

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends. Image credit: iStockphoto/bestdesigns