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Small Businesses Cite Energy as "Biggest Cost Increase" Over the Past Two Years


IBM Global Survey Reveals Small Businesses Are Taking Measures to Reduce Energy Costs -- and Finding Going Green Is Good for Business

ARMONK, NY.- IBM (NYSE: IBM) today released the results of a global survey of nearly 1,400 small and midsized businesses identifying energy costs as the “biggest cost increase” for them over the past two years, surpassing healthcare, payroll, rent and equipment. As energy costs increase, 58 percent of SMBs around the world are expressing concern about the environment and 44 percent have put environmental policies in place.

The survey, which interviewed businesses with between 50 and 500 employees in eight countries, indicates that most businesses expressed concern for the environment and were taking steps to reduce energy costs. But U.S. businesses were somewhat less likely than their non-U.S. counterparts to be making energy-reducing decisions based on those environmental concerns. U.S. businesses were also less likely to know how much their IT systems contributed to their overall energy costs.

Regardless of the motivation, a majority of small businesses worldwide have begun to make at least basic changes, such as using more energy efficient lighting and turning off non-essential equipment after hours. But they have tended to shy away from more onerous decisions -- such as moving into a green building, using hybrid vehicles or installing solar panels -- with one exception: IT.

According to the IBM survey, 55 percent of SMBs interviewed were taking active steps toward reducing the energy consumption of their information technology, including purchasing more energy efficient technology, consolidating servers or evaluating server usage and performance. Recent research from IDC estimates that for every dollar spent on IT, 50 cents is spent on related energy costs.(1)

“Despite the different reasons for small and midsized businesses to reduce their energy consumption, what’s important is that businesses are taking action,” said Steve Solazzo, general manager of IBM’s Global Midmarket Business. “The alignment of business interests and environmental interests underscores this important point: green business has become good business.”

Just one example of a small business looking at technology as a means of reducing energy costs is Oceanic Worldwide, a supplier of SCUBA diving equipment based in San Leandro, Calif. With the help of IBM Business Partner, Meridian IT, the company consolidated its IT environment to improve efficiency and reduce the energy costs associated with running the technology.

“The nature of our business gives us a first-hand look at the impact of society on the environment,” said Paul Elsinga, chief financial officer for Oceanic. “So the fact that we could make changes in our IT environment that reduced costs, while also doing something good for the environment was very important to us.”

Some additional highlights from the survey include:

* Worldwide, energy ranked as the single biggest cost increase for SMBs, followed by payroll, office equipment, rent and healthcare. Among U.S. SMBs, energy ranked equal with healthcare as the largest cost increase over the past two years.
* Fifty-eight percent of SMBs indicated that their business is “concerned about the environment.” Of those, 75 percent had existing environmental policies in place.
* When it comes to how their businesses’ concern for the environment affects their company’s decisions on reducing energy usage, 52 percent of non-U.S. businesses indicated that it does, compared to only 38 percent of SMBs in the U.S.
* Nearly twice as many SMBs outside of the U.S. felt energy efficiency was an important criterion when making IT purchases (48 percent for non-U.S. versus 26 percent for U.S.)
* Among U.S. SMBs, more than 40 percent did not know how much their IT systems contributed to overall energy costs, compared to only 28 percent of SMBs outside of the U.S.
* Fifty-five percent of firms worldwide say they will make at least one of the following changes to reduce IT energy costs: -- Purchasing more energy-efficient IT systems (33 percent) -- Consolidating servers (22 percent) -- Evaluating server usage and performance (22 percent)

Take Action

IBM’s green IT efforts aim to remove the barriers that often prevent SMBs from adopting energy saving, environmentally friendly IT practices, by making them financially attractive and easy to implement. IBM encourages small and midsized firms to take the following steps toward improving the energy efficiency of the IT systems:

1. Make energy efficiency a priority when purchasing new IT systems. 2. Consolidate IT systems. Virtualization technology enables you to have a smaller IT footprint by pooling resources from multiple systems, enabling you to get more computing from fewer systems. 3. Have a plan for how to dispose of IT equipment in a secure and sustainable manner. Certified recycling services will ensure data is wiped clean and the systems are reused, resold or recycled, keeping harmful materials out of landfills.

For more details on this survey, tips on how small businesses can conserve energy, and more information on how IBM can help small businesses improve the energy efficiency of their technology, visit the online press kit.

Survey Methodology
A telephone survey was fielded among a sample of 1,373 SMBs; fielding was done in the U.S. from October 9-19, 2007 and the international fielding was done October 12-19, 2007. There were 500 respondents in the U.S. and 873 respondents across Australia, India, France, Brazil, Germany, Benelux, and China. In order to qualify to take the survey, respondents had to be the person who regularly makes decisions relative to IT and energy purchases for their company. The results can be considered statistically significant at the 95 percent confidence level and have a margin of error of +/- 3 percent.

For more information about what IBM offers small and midsized businesses, visit IBM Express Advantage.


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