March 6, 2007 4:00 AM PST
IBM sees green in environmental tech
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The computing and consulting giant is building up a business to chase "green dollars," or money spent by corporations that are looking to conserve natural resources and reduce waste.
The program, called Big Green Innovations, takes aim at everything from creating "carbon dashboards" that help corporations lower their supply chain's carbon emissions to designing energy-efficient data centers and more powerful solar cells.
IBM's pursuit of green, or clean, technology reflects the increasingly corporate face of environmental protection. Businesses, from incumbent energy suppliers to hopeful start-ups, are investing in products that preserve environmental resources and reduce pollution.
Like other corporate giants such as General Electric, Big Blue's "big green" push is not about being a good corporate citizen; it's about finding new sources of revenue.
"From an overall business opportunity perspective, this is absolutely huge, though I couldn't put my finger on how big now," said Sharon Nunes, the vice president in charge of developing the Big Green Innovations business. "I don't think we know truthfully all the problems that are to be solved."
Big Green Innovations was the brainchild of Innovation Jam, IBM's companywide online brainstorming sessions that occurred over two three-day periods last year.
Because companies in all industries need to deal with environmental matters in some form, Nunes expects IBM's Big Green Innovations business will be larger than its life science program, which she helped start in 1997 and which became a $1 billion business in three years.
Greens on the menu
IBM has a long track record--going back to the 1970s--on environmental stewardship, noted John Davies, vice president of green technology at AMR Research. Converting that internal experience, such as measuring carbon emissions or lowering packaging waste, into consulting services is a natural thing for IBM to do, he said.
"There is a demand for people to understand how to account for carbon, how to reduce energy usage, because IBM's already done a tremendous job internally," Davies said. "I haven't seen too many people offering services focused on how you do this on the ground."
An obvious application for that internal experience would be consulting services that address pressing environmental problems such as water use and energy management. Longer term, IBM is seeking to apply its expertise in materials to improve water purification and solar photovoltaic cells.
Nunes said the business plans to initially focus on services that forecast water usage for municipalities and industrial customers.
Water management is becoming increasingly complex due to global warming. In California, the snowpack of the Sierra Nevada mountains is expected to decrease because of global warming, which will have an impact on water usage, she noted.
"What if the Sierra Nevadas have 'x' percent less snowpack? What if you want to start a new industry and do not have enough deep water resources to distribute?" she said. "Many people are not aware of the problems they will be facing 5 or 10 years out."
As it ventures into green products and services, IBM plans to combine the skills of its business consultants in the energy and utilities industry with the computational power of its supercomputers.
For example, IBM workers could devise models to measure and forecast carbon emissions generated by a company's supply chain. Using its supercomputers, IBM could run calculations that recommend ways to restructure a partner network to lower energy consumption.
Similarly, the company is looking at how computing horsepower now used for weather and climate forecasting, could be used to speed up the development of biofuels.
Other projects the company is eyeing include software and sensors to make electricity distribution grids more efficient and reliable.
IBM's route in the materials technology market is less clear than services.
Nunes said it is unlikely that the company will sell advanced solar cells or water filtration equipment directly. Rather, Big Blue is exploring different business models where it could license a specialized nanomaterial, for example, or co-develop a product with a customer.
The company plans to explore its options this year, devising new businesses and seeking out customers without attaching a specific budget to the initiative, Nunes said. She hopes to create a pilot service this year as a way of getting a better feel for customer demands.
Meanwhile, environmental regulations aimed at reducing electronic waste are expected to create demand for such services. But there is also a growing understanding that environmentally friendly practices, such as reducing energy use, are economically beneficial to corporations, Nunes said.
In addition, many companies are expecting that carbon emissions will be regulated in the United States in order to address climate change.
"Companies have to start looking at risk around climate change issues," Nunes said. "Financial institutions are very concerned about this, and there is a growing awareness of the risk associated with it."
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