Green IT at Washington Mutual saves lots of green

Written on 2:04 PM by Right Click IT - Technology Services

Like her CIO peers, Washington Mutual's Deborah Horvath has that unfiltered, end-to-end view of her company's operations that all IT executives possess.

To her credit (and perhaps as a result of her accumulated experience), Horvath is drawing on every bit of that enterprise-wide visibility to help her in another critical role she plays at Washington Mutual: chairing the bank's burgeoning environmental council's efforts to cut its carbon emissions, reduce power costs and become a greener business.

While some in IT may be inclined to overlook what's happening in their own backyards, Horvath is not. For starters, she notes that 50% of most companies' carbon emissions are electricity related. "And data centers are electricity hogs," she says. (For more, see "Six Ways to a More Efficient Data Center.") Add to that the PCs, copiers, printers and phones, which, Horvath says, drive the lion's share of the electricity demands coming from the employee base. Basically, she reasons, IT has got everything but HVAC, lighting and other building systems under its umbrella.

"So the smarter you get about specifying and determining your standards around energy consumption," Horvath says, "the more progress you can make for the company."

These days, the hype surrounding green initiatives is also an opportunity for IT to step up and aid interested but uninformed executive peers. IT-driven environmental and sustainability initiatives can "be a way for IT leaders and organizations to gain strategic influence by acting as an enabler for improving the environmental footprint of other business operations, beyond the IT infrastructure," notes Christopher Mines, an analyst at Forrester Research, in a May 2008 report "More Green Progress In Enterprise IT." (For more, see "Can IT Make Your Company Green?")

Deborah Horvath, CIO at Washington Mutual, uses green policies to cut costs.

"Because of the universal nature of IT infrastructure touching every location and almost every employee," he writes, "IT has a unique capability to substitute (low-carbon) infrastructure for (carbon-intensive) processes."

Washington Mutual's green successes

Since taking on the chairmanship of the brand-new environmental council in 2007, Horvath and her business counterparts at Washington Mutual, or WaMu, have made significant progress. The Seattle-based consumer and small-business bank -- with nearly $320 billion (U.S.) in assets -- has cut its PC-related greenhouse gas emissions by 60%, saved millions on IT-related electricity costs for its PC fleet, and in one recently completed pilot reduced the legal department's paper consumption by 15%.

In the desktop computing space alone, WaMu has seen huge savings. For the environment's sake, Horvath reports that WaMu went from emitting 24.5 metric tons of CO2 down to 8.6 metric tons this year. That decrease in electricity usage is chiefly derived from energy-saving power-management software installed on 44,000 PCs, which powers them down when not in use. (Horvath declines to name the vendor, citing WaMu policy.)

IT first rolled out the software in a spring 2007 pilot to 100 PCs. Horvath was concerned that the software might introduce latency issues or bugs that could cause WaMu's systems to crash. It did not. The software, she says, is highly customizable with lots of options for IT and users to figure out. For instance, the application can lower a PC's power settings when it's not in use for a certain amount of time (if, say, an employee goes to a meeting). Or the PC can be powered down at a specified time, say, at 6 p.m. every night. (A warning message pops up before a PC powers down, and an employee who is working can delay the software from powering down.)

Horvath and her team worked out the specifics of its program, incorporating rules from all of those situations and has applied them enterprise-wide. For example, during business hours (8 a.m. to 6 p.m.), PCs and monitors in WaMu's retail branches remain on at all times. At WaMu's back-office locations, however, monitors turn off after 20 minutes of inactivity, and PCs go into standby mode after 30 minutes of inactivity. And, at 6 p.m. every night, if there is no activity, the PCs go into standby and the monitors turn off.

From the savings on the pilot and enterprise-wide rollout thus far, Horvath projects that the program will deliver $3 million in savings this year. WaMu has also received $230,000 in rebates from its electric utility.

In addition, WaMu is enabling its customers to become greener through WaMu's products. One notable example is WaMu's "Make a Statement, Plant a Tree" campaign. Born out of the marketing and e-commerce departments, the program aimed to help the Arbor Day Foundation's efforts to plant a million trees by getting WaMu customers to switch from paper to online banking statements. For every consumer that switched, WaMu donated a dollar to the Arbor Day Foundation. In spring 2008, WaMu presented a $1 million check to the foundation for 1 million trees to be planted.

So not only did WaMu's efforts do well for the environment, but WaMu now has a total of 2.7 million customers using its e-statements. The savings on paper itself as well as postage and "handling the paper," Horvath says, is approximately $18 million a year.

"We're going to continue to drive this hard," Horvath adds. "If we can take it from 2.7 million, currently, and add another 3 million this year, then our savings will be closer to $36 million in 2009."

Does going green actually help business?

Why are companies embarking on green IT initiatives? The Forrester report describes the results from an April 2008 survey of more than 1,000 IT personnel: green motivations range from corporate strategy and sustainability, to improving the brand, to complying with regulations, to reducing IT operational expenses. (For more on this, see "Power Costs Drive Moves to Virtual Servers" and "UPS's New Telematics System Cuts Fuel Costs and Makes Drivers More Efficient.")

In particular, Forrester's survey results showed that U.S.-based companies were more likely to cite cost-cutting as a prime motivator for green IT rather than more environmental or brand-related motivations.

WaMu and many other companies in financial services are hurting right now and can use any reductions in operational costs to offset losses related to downturns in credit, mortgage and other markets. (For more, see "Does Your Work in Information Technology Matter to Wall Street?") WaMu reported a net loss of $1.14 billion in the first quarter of 2008, due to deterioration in WaMu's home-equity and home-loan portfolios, and increases in delinquent loans.

Unfortunately, Horvath says, green initiatives tend to be viewed as adding expense. "It's very difficult to suggest that you are going to increase the company's overall expenses at this time," she says. "There is a concern by people on the peripheral that trying to become environmentally friendly is just going to increase costs, because environmentally friendly products come with a price premium, initiatives take project teams [away from what they're doing], and they cost money. That's the pushback you get early on."

From the get-go, Horvath's environmental council set out to "foster and support green initiatives that could be self-funding," she says. As an example, Horvath mentions office paper. "If we could reduce the amount of paper that we utilize, we would save enough money to then consider buying paper that was more environmentally friendly," Horvath says. "And if the paper is more expensive, it still might be a net reduction [in cost] because we've reduced our volume" of paper consumption.

WaMu's legal department, for instance, had been the company's biggest consumer of paper. IT already had reduced the legal department's use of dedicated printers and moved the group to multifaceted printer-copier-fax machines, which saved on paper-related costs. "We then asked them to go to duplex printing," she says, which is printing on both sides of a piece of paper. "And then we asked them to think twice about all the things they're printing."

In a short time, Horvath reports that the legal department had reduced its paper usage by 15%. From the legal department pilot, plans are now underway to replicate the program throughout the rest of WaMu's operations. Even just a 5% reduction in paper usage spread out across the rest of the bank's operations would make moving to more environmentally friendly paper, which can be more expensive, "quite easy to justify," Horvath notes.

"How we get everybody to think about green is that it doesn't have to be more expensive or increase our costs," Horvath says.

To its customers, research showed that a more environmentally friendly WaMu is a big selling point. In 2007, WaMu's marketing department conducted an online survey of 500 customers in areas where WaMu has retail branches. The goal was to find out how important green-related corporate initiatives and services mattered. The findings showed that 38% of those surveyed thought it was important for their bank to be passionate about environmental causes, and 45% said their bank should operate as a green company, Horvath reports.

"We then went deeper into finding out just how many of those customers would actually be more prone to buy products or do more business with a company that had green products and a green agenda," Horvath says. "We found that most of them are not looking for companies that are not 'green washing' but actually have it embedded in their company."

How to get green going

Green was not always top of the mind and well-thought-out in the executive ranks at WaMu.

When Horvath "stepped up" to chair the committee in early 2007, as she puts it, she was hoping to "get us better organized around being green, because we already had a lot employees with a lot of good ideas incorporating it on their jobs," Horvath recalls. "But we weren't well-organized around it. We weren't reporting on it. We didn't know our baseline of our carbon emission. We didn't have metrics or measurements around reducing our carbon emissions. And we didn't have strategies or visions for what we were going to do, relative to green."

Her self-imposed agenda was to "build a framework that could not only increase our velocity of change relative to environmental concerns," she says, "but to increase the overall awareness of customers, employees and other vendors and stakeholders. That's what I set out to do."

Forrester's Mines recommends that companies just starting out should create a comprehensive document or action plan "that details the goals, priorities and activities that the company will undertake." (For more on this, see "Can You Build a Carbon-Efficient Supply Chain?") According to Forrester's survey results, 45% of respondents said they are either implementing or creating such a green IT plan.

In just over a year, Horvath and the team on the environmental council have realized many successes. To other CIOs and IT staffers, she offers three points of advice for getting started.

1. Be inclusive.

"The best way to approach this is not with the traditional approach," Horvath says. That would be, "let's create an organization and put a few full-time dedicated people in it. And it's their responsibility to be environmentally friendly and the rest of us are all off the hook."

WaMu purposefully structured the green initiatives as something that every employee could participate in. "It could be part and parcel of all their jobs," she says.

2. Tap into employees' ideas and passion.

Horvath says that one of the smartest things her group did at the outset was opening up an online discussion board on the intranet where WaMu's 50,000 employees could offer up green-related ideas. Launched in 2007 and called "Go Green," the site was also used as an opportunity to increase awareness to all employees on the overall topic, important issues and corporate possibilities.

WaMu then ran a contest that awarded environmentally friendly prizes for the top three personal-related and top three work-related green ideas. The ideas are still flowing strong today. "There were more ideas than you could implement in a year, and I don't think we could turn [Go Green] off if we wanted to," Horvath says. "For CIOs who say, 'I don't know where to start,' that is a great place to start."

3. Think green when making IT purchases.

To reduce electricity costs and, ultimately, carbon emissions, IT executives need to examine their utility bills, Horvath points out. In addition, there are statistics from PC manufacturers on the electrical usage of their equipment.

"When you go to make an equipment decision, either for PCs and especially for storage devices because some consume very high energy," Horvath notes, "you should be asking your vendors what are the electricity requirements of the equipment and comparing them across the board with others."

Posted in Business, Forrester Research, Information technology, Washington Mutual

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