The Obama Effect

President-elect's emphasis on the environment means more work for CIOs.

Ed Sperling

Rarely do national political agendas have a direct bearing on CIOs, but next year will be different.

Frank Kelly, Deutsche Bank's (nyse: DB - news - people ) managing director and head of government affairs for the Americas, told the Semiconductor Industry Association Nov. 19 that the Obama administration will look to make swift and deep changes throughout the business world. And while Obama said this is "tech's time," he also said the emphasis will be on everything green.

For many CIOs who believed they could take their time rolling out more energy-efficient changes, including postponing the purchase of new equipment, this should serve as a wake-up call. Here's how things are likely to unfold:

--Pressure will be levied on coal- and oil-fired power generation plants to shift to more environmental-friendly technology. That means new technology, as well as the addition of scrubbers (or, in the case of coal-fired plants, gasification). The problem is this stuff is expensive, which will prompt the utilities--most of which are regulated by their respective states--to apply for rate increases.

While states are likely to approve these increases, they are even more likely to scale them based upon usage. The biggest users will bear the brunt of these changes, and data centers are among the largest consumers of electricity on the planet--and in many cases, the least efficient. That means there will be huge pressure to reduce energy consumption.

--Pressure on companies to cut electricity consumption will mean putting into place long-term plans more quickly, but at a time when budgets are being squeezed by the ongoing economic downturn. The good news is that there will probably be significant tax credits applied to the purchase of more efficient hardware, and a case can be made for sales of virtualization software. The bad news is that no one has the money to speed up these purchases at the moment, which should make for an interesting shuffle of prioritization within corporations.

Ironically, outsourcing is unlikely to reap the same tax benefits, because that's viewed as just handing off the energy problem to someone else. In fact, the numbers may work against software-as-a-service and cloud computing in the short term, because there are no tax benefits. It remains to be seen exactly what benefits will be offered, but this will be an interesting twist to what was viewed as an important cost-cutting trend six months ago.