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Green IT – Making the Big $witch Greg Rowntree Manager Technical Support Services Who is Insurance Australia Group? PAGE 2 As an Insurer, Sustainability relates to everything we do... In 2006-07 we paid over $5b in claims. Our aim is to get customers back on the road, back at work, or to replace their goods as quickly as possible. We set premiums before the cost of claims is known. Our challenge is to anticipate the potential risk and price it accurately and fairly, ensuring our customers receives consistent value for money. Expertise in managing risk is vital to our long-term viability. Reducing risk in the community ultimately helps prevent claims from happening in the first place. This not only makes good commercial sense, but fewer risks mean customers can avoid unnecessary hardships, and can benefit from lower premiums while our communities are much safer. The economics of the Group’s business are based on scale. Scale allows access to volume discounts across the supply chain, without sacrificing quality. For customers, that means better, more competitively priced products and services. Our aim is to leverage this scale to keep to a minimum the “friction” costs between premiums and claims. PAGE 3 ... And therefore we have an important role to play in leading discussions on climate change… PAGE 4 … with Climate Change linked to CO2 emissions, what contribution does Information Technology make? “The Australian Computer Society has undertaken an emissions audit on the amount of carbon dioxide being generated by ICT usage by Australian Businesses. The results of the audit indicate that ICT use by Australian Businesses generated 7.94Mt of carbon dioxide in 2005, equivalent to 1.52% of total national carbon dioxide emissions. To put this figure in perspective road transport accounts for 12.6%, industrial processes 5.3%, metal production (mostly iron and steel) around 2.3%, the cement industry around 1% and civil aviation just under 1% of total national carbon emissions.” Source: ACS, Green ICT Policy, August 2007 PAGE 5 …And within Financial Services organisations, IT is the biggest direct contributor to environmental footprint… PAGE 6 …Providing the impetus to develop and maintain a policy around managing the environmental aspects of our IT operations… Greener IT Policy • IT significantly impacts the environment throughout its entire life cycle. • It should not be a one-off programme, but form part of the organisation’s overall IT governance and decision framework. • Initiatives have to align and support the organisations corporate goals and objectives. • IT's environmental impact can be significantly reduced by behavioural changes, alongside technology changes. • Many green IT initiatives can be easily tackled at no incremental cost. PAGE 7 Within IAG, we have focused on a couple of key areas… • Office locations • Widespread use of teleconferencing and collaboration technologies, reducing air travel. • Installation of automatic light switches. • Utilising energy efficient light bulbs. • Usage of 5 Green Start energy efficient buildings. • “Work from home” pilots underway across Australia & New Zealand. • Data Centre and computing environments • Regular proactive monitoring of environmental attributes across all datacentre sites. • A continuous improvement programme. (Not just for when environmental limits are being approached) • Virtualisation of our IT infrastructure has significantly reduced our physical footprint across all server, storage and network infrastructure, significantly reducing energy consumption. PAGE 8 % of total data center electricity use Where does all the energy get used in the Data Centre? Cooling systems 35 Electrical and building systems 30 25 20 15 10 5 0 Chiller/ cooling tower Humidifier Computer room airconditioner Information technology Power Uninterruptible distribution power unit supply (UPS) Switch/ gen Lighting Power use Chart and data source: American Power Conversion Corporation (APC) white paper, Implementing Energy Efficient Data Centers, #114, by Neil Rasmussen, 2006. PAGE 9 What the analysts predict … Spending (US$B) Installed Base (M Units) $300 50 Power and cooling costs x8 Today, across industry 50 cents is spent on energy for every dollar spend on hardware. $250 45 Server mgmt and admin costs x4 New server spending 40 35 $200 30 $150 25 20 $100 This is expected to increase by 54% over the next four years. 15 10 $50 5 $0 Source: IDC, Virtualization 2.0: The Next Phase in Customer Adoption, Doc #204904, Dec 2006 Source: IDC, Virtualization 2.0: The Next Phase in Customer Adoption, Doc #204904, Dec 2006 0 PAGE 10 Example: Managing environmental controls: Warming the Data Centre to cool the Earth … • Power o • A 3 C increase in data hall temperature represented a $300K pa reduction in electricity. • Delivered upon double digit % reduction in energy use 2 years in a row. • Using less now than 4 years ago, but with more hardware computing capacity installed. • Water • Current consumption only 20% of that used 4 years ago. • Reduced FY 06/07 water consumption to only 47% of FY 05/06 volume. This equates to 1,000,000 litres a year. PAGE 11 … using innovation developed by the IAG team • Enthusiastic team gathered to innovate. • Not just about saving energy – Team is very aware of the finite capacities of the Data Centre. • Applying a longer term view to business cases. PAGE 12 Server Virtualisation assists with obtaining better utilisation from the hardware platforms… Used Wasted Mainframe UNIX® x86 PAGE 13 … but can often be justified against more immediate business benefits … • Improvements include • Business agility & flexibility through speed to market (reduce or even eliminate the procurement cycle) • Real-time adjustment of workload sizing • Improved Disaster Recovery capability • Increased number of devices or capacity managed per FTE resource • Efficient use of Hardware & Software resources • All whilst reduce the Carbon Footprint • Less power usage directly improves upon IT carbon footprint • But be aware • Check software licensing terms before virtualising • Ensure adequate operational training • Consolidating 1:1 will not necessarily reduce software maintenance effort PAGE 14 Example: Server Virtualisation – reduce costs, improve speed to market and green ... • Challenges • Data Centre capacity • Aging equipment • Limited time to migrate • Minimal staff capacity • Approach • Investigation • Virtualisation in Production • Extending solution to DR • Benefits • Reduced physical server numbers by 40% • Corresponding financial saving • Greater flexibility in provisioning for new workload PAGE 15 Example continued …. Storage Virtualisation • Challenges • Every increasing requirement for storage • Approach • Migrate all datacentre hosted storage to Storage Area Network (SAN) • Virtualise storage • Benefits • Isolation of server hardware from storage hardware. • Reduced vendor lock-in • Less “wasted space” • Enables IT Service Continuity & Business recovery. • Eases pain to migrate workload by avoiding business outages. PAGE 16 Pitching the case … • Done properly, each initiative can be self-funding, using a traditional ROI/TCO or your preferred financial model, so long as they are built to consider the whole lifecycle of the assets. • The examples given above, provided a financial return, assisting with organisational sustainability, not just environmental sustainability. • In the last 12 months, CO2 emissions in our Australian businesses have dropped by 18%, and we reduced our electricity consumption by 14%, avoiding significant electricity costs in an climate of rising energy prices. “Green is the new Black” PAGE 17 ... translating to improved customer satisfaction & staff morale, and reduced costs & business interruption IT Spend IT Spend Business Interruption Business Interuption (IT related) Quarterly 400 350 300 250 200 150 100 50 0 FY02-03 FY 03-04 FY 04-05 FY 05-06 FY 06-07 IT Service Customer Satisfaction Staff Engagement 70 60 50 40 30 20 10 0 2003 2004 2005 TS 2006 2007 2008 Target IAG PAGE 18 And so, in summary… As insurers, we all work hard at assisting our customers in the aftermath of a natural disaster, and IT certainly has a role to play here – but prevention is always better than cure. Example: Newcastle Storms 2007. Satellite Communication equipped caravans deployed directly into the affected areas around Newcastle Live connection back to core IAG network, providing Claims and Assessing access to all the core applications, avoiding unnecessary paper forms. Provided Voice over IP (VoIP) telephony extensions with full IAG contact centre functionality out to affected areas. Provided onsite IT support from day one PAGE 19