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The IT and IP Revolution Hidden
in Retrofits and Green
Buildings William A. Tanenbaum, Chair, Technology, Intellectual Property & Outsourcing Group GreenTech and Sustainability GroupNew York Office
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Which is Greener?
Paper or plastic bags? Plastic – if you reuse
Washed or dirty car? Dirty
Hand drier or paper towels? Electric hand drying machine
Movies from video store or online store? Online
Print or online newspaper? Paper, if reading for more than 30 minutes
Air conditioner or car windows open? A/C
Based on Nov/Dec 2008 issue of Mother Jones, article by Ben Whitford
Which is Greener?
Physical books or e-reader? Bottom line: break-even point is either
(a) 40-50 books, taking into account fossil fuels, water use and mineral consumption, or
(b) about 100 books taking into account global warming Comment
But what if your e-reader is a multifunction device, and “adding” e-books reduces physical books without adding to the original global footprint of manufacturing the device?
Conclusion: need end-to-end analysis to determine what is really Green
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Climate Change, French Wine Growing Regions and Trademark Rules
Wine Growing Areas Moving North Out of Trademark Regions
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What Does the Term “Green” Really Mean?
Substitute “energy efficiency” for “Green” to emphasize the cost saving issues that are relevant ]
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What is “smart” about the “smart grid?” “Smart” = “energy smart” technology “Smart” = computers = IT-enabled (software, hardware and
data) Water management needs to be “smart” too
What Does “Green IT” Mean?
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Business Models Will Change, and Data Will Become King
“Just-in-time” business model as exemplar Strategic use of data can increase energy efficiency and
reduce emissions without changing the underlying technology
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What Real Estate Factors Are Driving New Roles for IT and Outsourcing?
Need to implement new technology to achieve reduced energy savings and ongoing cost savings
Landlords are adopting energy smart technology in order to: Retain or attract tenants by reducing tenant operating costs Enable tenants to enhance sustainability image Increase tenant employee satisfaction Enable tenants to reduce carbon footprint – under standards
applicable to office-based buildings Potentially reduce need to buy carbon offset credits
Use of IT to introduce flexibility in place of simple on/off controls
Remanufacturing will ultimately be key
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Stimulus funding for Green building retrofits For federal, state and local government buildings For residential buildings Prediction: stimulus funding will make government buildings
laboratories of development of Green building technologies Not just office buildings – transportation, bridges,
infrastructure projects Advances in building materials
Role of Stimulus Money
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New Roles for IT Departments
Become responsible for electricity costs in data center and computer operations
Prediction 1: combination of IT and Facilities Management departments
Prediction 2: IT departments will take on responsibilities outside of traditional roles Become part of general operations Become a corporate strategic asset
Practical Steps and Traps for the Unwary in IT Contracts for Retrofits and New Green Construction
Basic structure of IT agreements: MSA – master services agreement SOWS and SLAS – technical schedules governing:
Specific projects Specific standards
Core principle - you get what you measure Litigation alert - disputes arise under SOWs more often than
under MSAs Conclusion: do preemptive planning now; spend necessary time
in negotiations and drafting It is more important to be precise than concise
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Do You Want to Outsource?
What is outsourcing? Why use outsourcing for energy efficiency and energy smart
technologies? How experienced is your vendor with energy smart
technology? Is there hidden subcontracting? Subcontractor approval rights Services vs. specific technology Potential traps for facilities management outsourcing (“FMO”)
Vendor’s price is based on Google Earth Can webcams used for security be hacked Competitive intelligence risks
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Important Phases of Green IT and FM Outsourcing Agreements
Pre-contract internal analysis of business objectives and definition of success
Pre-RFP stage RFP stage Vendor down-select stage Negotiation/Drafting Planning for transition Planning for exit
Draft the “pre-nup” carefully
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Internal Pre-Contract Stage
Analyze business objectives and cost parameters Thoughtful RFPs save time and generate better vendor
proposals, but require time and internal analysis of business objectives For example: how much transformation?
Specialty IT consultants can be valuable Learn from other industries Benchmark against best of breed, not best of peers Use internal IT staff strategically
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Confidentiality Agreements
Enter into NDA’s before RFPs Will probably need to be asymmetrical Duration
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RFP Stage
RFP stage is the time of greatest leverage, especially in this economy
Determine how to measure success and what metrics to use in contracts
Goal is to “down-select” vendors meaningfully It is acceptable if RFP causes some potential vendors to self
down-select Vendor’s pricing challenge is based on assessing risk
Consider setting up private data room and due diligence process to allow vendor to gather information to assess risk and therefore generate informed price proposal without reserve for unknown risk
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RFP (2)
Are executive dashboards desired? What information is required?
Need to establish scoring criteria for vendor proposals Establish roles in scoring proposals for customer
management and tech teams, lawyers and consultant roles in evaluating different aspects of proposal (price, technical ability, transition steps, steady-state operations, etc.)
Stop and learn from vendors during RFP process, and recalibrate if necessary
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Negotiation and Drafting Stage
Consider drafting SOWs and SLAs BEFORE the MSA Consider setting up private data room for finalist vendors to
analyze customer’s operations, determine risk, and provide realistic price based on understanding of risk
Involve technical staff, but in meaningful way, by requiring checklists and specific inputs
Be aware of potential dangers in letting IT staff control negotiations
Determine what is important about new technology and contracting for transformation
Separate services from technology
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Driving Energy Efficiency Down to Useable Contract Metrics
Adapt EPEAT and DOE’s DC PRO software tool from Federal contracts and use them in private sector Green IT and outsourcing agreements
EPEAT = Electronic Protection Environmental Assessment Tool DC PRO = Data center software assessment tool to benchmark data
center energy use and efficiency Advantages of EPEAT and DC PRO:
minimize contract negotiation time Energy Star LEED Beyond LEED
SOWs and SLAs
Ability to change KPI’s over time Ability to change scope, and notice and price requirements Does benchmarking work?
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Vendor Staffing and Subcontractors
Do you want the A-Team? Specify key personnel Is the FM outsourcing provider the actual service provider or
a general contractor for subcontractors? Subcontractor approval rights Can subcontractors work for customer’s competitors? Subcontractor confidentiality obligations
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Key Contract Features – Illustrative Examples
Agreement should serve as an “early warning system” Combine Force Majeuer, Disaster Recovery and Business
Continuity Provisions Establish temporary lower SLAS during pending of force majeuer
or DR event “Governance” provisions are important and staffing and
escalation provisions are important Customer should have step-in rights Use definitions carefully and require all parties to use them in
subsidiary documents Exit planning is key
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Using Jeopardy to Introduce Intellectual Property Rights
Here are the answers; what are the questions? Arises automatically Requires examination and government issuance 20 years Life plus 70 years or about 100 years Requires offer for sale Protects work of authorship Protects algorithm, not dependant on specific software code Protects expression of idea but not idea itself Federal court jurisdiction
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Key IP Issues
Who owns customization to existing software? Importance of ownership assignments What warranties are significant?
Treatment of “combinations” in outsourcing warranty provisions Remedies for potential infringement
Services vs. software Collaborative improvements Potential problems with joint IP ownership How to trade price for ownership, and when and why should it
be done Where does data fit under IP rules?
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New Roles for Sourcing and Outsourcing Teams
Manage compliance with corporation’s sustainability requirements, including supply chain and providers Technology-enabled sustainability improvements Green IT BPM – implementation of technology to
meet regulatory requirements Data mining and management
IT, Sourcing and Outsourcing will become part of corporate sustainability and carbon footprint reduction Two possibilities, based on GHG protocols:
(1) Sourcing/Outsourcing = outside of corporation carbon footprint, or
(2) Sourcing/Outsourcing = within carbon footprint; outsourcing expertise used to reduce footprint
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What to Do with Existing Contracts Now
Review contracts for energy inefficient provisions, such as automatic pass-through of fuel surcharges
Renegotiate or replace contracts to provide more “sustainable” provisions
Contract requirements should reflect results of “energy audit” of company operations
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What to Do with Contracts Going Forward
Identify energy efficiency and sustainability risks and requirements during development of sourcing strategy
Include requirements in RFP Assess provider ability and financial impact of
requirements as part of down-select process Due diligence – use well-defined checklists of energy
considerations to ensure operational compliance Sourcing management – conduct
audits based on established written ground rules and specific performance measurements
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Data Center Operations
Data centers are often a corporation’s single largest source of energy consumption and, for some, the largest source of carbon emissions
EDS report called data centers the “SUVs” of high tech: accomplish much, but energy inefficient
If data centers were considered a separate industry, they would be the sixth largest electricity user (The 451 Group)
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Data Center Operations
Where is the energy use? Power, cooling, inefficient use of underutilized servers
Gartner: Power and cooling expenses will increase from 4-10% of IT budget to 50% in next 5 years IT and communications industries = 2% of global emissions,
almost equal to aviation IDC: 50% of total cost of ownership of hardware is for power;
expected to increase to 71% over next 4 years (a 54% increase)
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Datacenter Conclusion
Financial incentives alone are Financial incentives alone are sufficient reason to reduce energy sufficient reason to reduce energy
costs of data centerscosts of data centers
$$$$$$
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Getting to Energy Reduction: Combine IT with Facilities Management to Reduce Energy Costs
Buildings Site location to optimize use of nature – look to LEEDS White roof, roof-top co-generation
Location Near power grid to optimize peak and
off-peak power Near telecommunications node to
enable high-speed remote access Near water requirements
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William A. [email protected]
William A. Tanenbaum is the international chair of Kaye Scholer’s Technology, Intellectual Property & Outsourcing Group, a partner in the GreenTech Group and resident in the firm’s New York office. Chambers identifies him as an “internationally recognized intellectual property, technology and outsourcing lawyer” and concluded that he “has built one of New York City’s most outstanding transactional IT law practices.” It awarded him “Recommended” ratings in both “Technology and IT Outsourcing” and “Business Process Outsourcing,” and named him as a “Notable Practitioner” at the national level in Business Process Outsourcing. He was voted one of the world’s top 250 IP strategists (IAM client survey) and he was selected as one of the country’s top 25 pre-eminent IT practitioners in the Best of the Best USA 2009. He regularly advises clients on strategic intellectual property concerns, privacy, data security, data transfer, information life cycle management and competitive intelligence matters, in both transactional and litigation contexts.
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William A. Tanenbaum(continued)
Mr. Tanenbaum is the founder and co-chair of PLI’s annual Outsourcing Conference, the founder and co-chair of its Green Technology conference, and a regular lecturer at industry outsourcing conferences. He chairs Kaye Scholer’s GreenTech breakfast seminar series and presents a monthly series of webcasts on Green law topics. He is a past President of the International Technology Law Association (formerly the Computer Law Association) and is listed in Who’s Who in America, the International Who’s Who of Business Lawyers, the Guide to the World’s Leading Litigation Experts and the Guide to the World’s Leading Patent Law Experts. He is the privacy and data protection columnist for the New York Law Journal, co-author of a book on privacy law and has been quoted in The Economist as an expert on IP law. His articles have been used at Harvard and other law schools. He graduated from Brown University (degree with highest honors and Phi Beta Kappa) and Cornell Law School.