Reports early in 2009 about the ICT sector's carbon dioxide emissions must have caused embarrassment to senior board members. In one case, it was suggested that a North American datacentre belonging to a major search engine might need as much power as all the homes in Newcastle, UK. So the rapid development by several ICT companies of a whole range of software with an environmental theme has come not a moment too soon.
- Emerging technology
- Making informed decisions
- Counting carbon emissions
- Focus on business processes
- Sustainability and profitability
The new products are not about fun, eco-friendly features built into the latest PC, nor about their own carbon footprint. They aim to address customers' administrative headaches. Companies such as Carbonetworks, SAP and Logica claim that a new range of environmental management software could help clients slash their emissions.
By applying its SIRA (Sustainability Indicator Reporting Application) software tool to its own corporate operations, for example, software firm Logica says it has cut its travel expenditure by sliced £7m, or 30%, by extricating deeper, previously inaccessible information about staff travel patterns. Logica says there is an accompanying cut in greenhouse gas emissions, as well as an overall reduction in the travel and communications budget.
Logica is not the only company developing these kinds of tools, although it focuses more on sustainability than on greenhouse gas management alone. Carbonetworks, IBM, SAP and one or two other software developers have also created carbon or environmental management systems that they say go well beyond existing corporate environment, health and safety (EH&S) software or carbon footprint calculators, in that they are sold as decision-making, rather than inventory-building, tools.
But Michael Meehan, chief executive of Carbonetworks, admits it is early days. Most carbon management tools have only been emerging in the past year or two.
John Winstanley, technology integration partner in Deloitte's consulting division, sees this trend as an exciting new phase in the development of green IT. "Phase one was the growing awareness of the power IT uses and the need to make hardware more energy efficient. Suppliers have been alive to that for the past two-and-a-half years."
Phase two relates to the IT networks - "the distributed environment" - which goes beyond the datacentre, servers or individual computers, he says. "Green IT, in the sense of energy-efficient computers, has not really opened up new revenue streams for IT companies. It needs to be more software-based than hardware-based."
Detailed analysis throws up all kinds of surprises for companies trying to manage and cut emissions, and this can help them make more cost-effective decisions. For example, Logica's analysis of its travel behaviour revealed some unexpected data that changed its previous assumptions about how and where to spend its money.
"We were considering investing in a video conferencing room to cut down on flying and assumed we should put it in the offices where the largest number of people are working and therefore flying from," says Tony Rooke, head of environment and sustainability at Logica. "Instead, we found people were flying more to and from two other locations." This information led the company to site the conference room at a different office, cutting more airline travel in the process. These are the kinds of findings his team is making with its clients, he says.
Previously, analysis software served the accounts department and only showed the financial cost of travel rather than the origin and destination of flights. "Current reporting systems are financially based. We drill down to the deeper data to acquire better knowledge of what is going on," states Rooke.
Deloitte's Winstanley says, "These IT suppliers [provide] systems that assist clients to work out the carbon cost of the transaction as well as the business cost. It helps them decide where to spend their money to ensure the maximum return."
Most of the suppliers say they integrate their own software into clients' existing systems in logistics, accounting, personnel and other corporate departments. "The system is a data layer that sits on top of existing data," explains Carbonetworks' Meehan.
The complexities of everyday corporate business provide a maze of data to get their teeth into. For example, most companies have previously not been aware of which business process consumes the most energy because data is aggregated into utility bills. In addition, utility bills are not yet framed in CO2 terms.
"What is clear is that this is a dimension to the companies' business that hitherto they have not had to consider; carbon produced had no cost associated with it and hence no real attention," says Winstanley.
He says that will change once legislation such as the Emissions Trading Schemes deepen their roots in Europe and the USA. According to Winstanley, these kinds of software products could be applied in a range of systems, such as vehicle routing and style of driving, dynamic building management, modelling of air-conditioning use to lower demand, monitoring energy use in industrial processes, and gathering data on carbon in the supply chain.
Carbonetworks offers a software platform which aims to solve similar problems. "At the moment, people are using different software for each cost centre, but there is nothing tying it all together," says Meehan. "Companies are beginning to realise that carbon dioxide is not an environmental problem, it is a business and financial problem, but they do not have the tools to evaluate it."
He says companies may be pleased, rather than disappointed, when they rake through the carbon embedded in their everyday routines. "One of the biggest lobbyists against cap and trade came to us. When we ran our system through it, we found it had a carbon asset rather than liability. Clients think they are sitting on risk, but they don't know the inventory."
SAP is another player in the field, already widely used in corporate networks and systems. According to sustainability operations manager Daniel Schmid, 60% of worldwide transactions in finance or logistics are run by SAP systems, although he emphasises (as do his competitors) that the company also adapts its sustainability products to other systems.
When developing client systems, Schmid says SAP considers regulations and compliance, impact on the brand, and how the business's expenditure in this area is linked to the volatility of resources and prices. Eco-efficient computers are the tip of the iceberg, he says. "We are targeting the emissions produced outside the IT hardware a company uses, supporting companies in being sustainable. Our strength is that we look at the business process, which crosses silos."
Each supplier claims that clients are crying out for this wizardry - or will be once they find out what is required by looming legislation such as the carbon reduction commitment in the UK and the cap and trade scheme in the US. Certainly, companies which have been looking to improve CO2 emissions management, such as Tesco, are interested.
At a most basic level, the IT services provided by Logica, SAP, IBM, Carbonetworks and the few others in the market are housekeeping devices. Companies differ in their emphasis; some suggest they are a tool for board-level decision-making, others that they help cut the drudge out of carbon management. They all aim to create a product that can be used online. The basic principles of carbon emissions reduction are no mystery - if a company has a policy of continually investing in the most energy-efficient, low-carbon products and educates its staff, it will minimise its footprint.
Where this new breed of software may come in handy is when trade-offs have to be made, or cost-effectiveness measured. "We are helping customers connect sustainability with profitability, or they will not invest," says SAP's Schmid.
To be credible, the systems need to be fully auditable. Suppliers suggest that the way round this problem is to build evolving carbon accounting standards into their software and be clear about the emissions factors they are using when extracting energy data. Logica's Rooke says the onus is on the client. "As with financial accounting, duff data in will produce duff data out. The company will be responsible for the data they give us, the buildings they include in the data, etc," he says.
It is clear that these developments will generate a major utility that could play an increasingly important role in determining the numbers disclosed by companies in their annual report, where reporting may become mandatory. Their profile will therefore rise if sales of the products take off.
This was first published in September 2009