To better illustrate the path from tactical to strategic management of energy, let’s jump right into it, using the same scenario as yesterday:

Situation: Budget Deficit

Mission: Develop Fiscal Sustainability

Goal: Cut Operating Expenses across Agency Facilities

Objective: Reduce Total Energy Consumption

Level 2: Focus on the People

Air conditioners don’t burn energy; people using air conditioners burn energy.

After you examine the equipment (Level 1), the next step is determining who is behind the machines that consume power.  Heating and cooling systems, lighting, computers, and Information Technology (IT) infrastructure are all designed to allow people to accomplish tasks.  Therefore, it is insufficient to examine only “the machines” without also asking who is using them and why.

“It takes five minutes for the printer to warm up before I can use it.  So I just keep it turned on for when I need it.” 

This is a common response to a perceived personal cost. Without taking into account the motivations and subsequent behaviors of stakeholders in a system, an energy management program will not only under-achieve in meeting its objectives, but also fail because the people will find ways to circumvent restrictions to meet their needs. 

Level 3: Focus on the Process/System

If energy consumption can be measured by “plug load” and “plug load” is driven by people who have goals, then a complete strategy for energy management must account for why individuals are doing the things they do.

People are rational to a large extent and typically make choices that increase their benefits and decrease their costs; even if those benefits are merely perceived and not actual.  In the example above, there is both a perceived and actual cost for having to wait five minutes for a printer to be ready for printing.  Therefore, it is a predictable outcome that the person will leave the machine on to avoid “paying” that cost.  But what if the value equation were presented differently?  What if the cost of leaving that printer running is much greater than the cost of five minutes of time for the individual? 

How can we redesign the system so that organization costs are minimized without constraining the individual?

First, the governance structure must account both organization and individual motivations.  In this case, the organization benefits when the machine is powered down; while the individual benefits from having the machine available on-demand.  The first obvious control point is to maximize printer downtime when the individual does not need the machine, e.g. weekends, and maximize availability when printing needs are highest, e.g. on Friday afternoons when expense reports are submitted.

Wherever possible, the governance structure of an organization should seek to maximize the benefits of both without incurring additional costs for either.  When organization-level and individual goals are considered within the same strategic context, there is a rich set of opportunities to improve structural governance and automate controls to the benefit of all.

Second, the organizational “map” of mission, motives, and consumption patterns can be leveraged to identify wasteful practices and design more efficient practices.   Can we “accumulate and consolidate” our printing requirements into larger batches that occur within small windows of time?  Can we eliminate the need for printing entirely, now that we understand the organizational context?

A robust energy management strategy requires a nuanced understanding of the organization consuming that power.  “Who” is using “what” and “why” is it being used is two very simple questions with complex answers. But those answers can lead to enormous value for the organization.  In the final analysis, energy is like any other asset class and must be incorporated into the overall strategy.

Coming Up Next:

Next week we will get into how energy strategy is environmentally prudent. Stay tuned!

Let Us Hear From You:

What do you think about these three approaches?

Tim Fain is an Associate Partner and Service Area Leader within IBM’s Global Business Services Public Sector. Mr. Fain has more than 30 years of technical, managerial, and consulting experience. Specifically his experience involves developing organizational, economic development and environmental and energy sustainability strategies; improving business models and processes; and helping organizations develop transformation roadmaps. He uses his extensive knowledge of Federal regulatory and budgetary processes, e-Government principles and methodologies, and strategic planning to help public sector clients address policy, service, and transformational challenges.

Prior to joining IBM, Tim spent eight years at the Office of Management and Budget where he worked on a broad range of Federal government information technology and policy issues. A former US Navy Submarine Officer, Tim holds a BS in Metallurgical Engineering, a MA in National Security Studies, and a MPP in International Trade and Finance.

Tim Fain (tfain@us.ibm.com)

Joe DellaTorre is a Senior Managing Consultant in IBM’s Strategy and Innovation practice. He has over 20 years of sustainability strategy, operations strategy and program management experience. Mr. DellaTorre writes and lectures on sustainable practices frequently, is accredited as a Leadership in Energy & Environmental Design (LEED) Professional by the U.S. Green Buildings Council, and holds an MBA in Strategy and Operations from Vanderbilt University.

Joe DellaTorre (jdellatorre@us.ibm.com)

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