Supply chain sustainability software needed for green IT strategy

While there isn't much sustainability software out there, companies are -- and should be -- factoring it into their IT strategies, along with green supply chain management.

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Many companies are factoring sustainability software into their IT strategies, seeking cost savings and anticipating regulations that will eventually force green supply chain management, according to an Ovum report.

The trouble is that supply chain sustainability software is still immature. Several vendors, including SAS, IFS and SAP, currently sell some sustainability software geared to the supply chain, but the industry is a long way from developing software that will enable a green, end-to-end view of manufacturing, mainly because there are no prevailing standards and methods for what should be tracked and reported.

In the meantime, many environmental compliance initiatives are already afoot. In the United States, for instance, the EPA proposed in March the first comprehensive national system for reporting emissions of carbon dioxide and greenhouse gases.

"The market is so embryonic that long-term leadership is up for grabs," said Warren Wilson, research director at Ovum and the report's author. "There's a big opportunity for the software vendors that they're just in the early stages of recognizing and responding to."

For this reason, customers should push their vendors on what they're offering now for sustainability software, and what their product roadmaps look like.

Sustainability software will need to look a lot more like ERP software -- able to monitor, measure, aggregate and ultimately analyze data on environmental parameters, just as it does on financial, inventory or raw materials, according to Wilson.

"We are really far away from that goal today," he said. "It's all about manual data-entry and very crude systems. There's no standardization to how the information is going to be monitored or recorded."

What's available now for sustainability software?

SAP said it will develop more sustainability software -- most recently buying ClearStandards, which sells an on-demand carbon emissions management application.

In March, SAP named its first chief sustainability officer and announced its intention to deliver sustainability software. It's also partnering with TechniData to deliver a line of environmental, health and safety applications, some of which are already available. For instance, it sells an application for REACH compliance, a set of European Union regulations around the use of hazardous chemicals in products.

"SAP appears to be on the cusp of a significant push into sustainability management," the report states.

According to Wilson, however, the two vendors with the best supply chain management sustainability software are SAS and IFS.

SAS launched its sustainability software in April 2008. It includes dashboards, templates and analytical tools that help companies track various environmental indicators and study costs, forecast future performance, and weigh alternatives, according to the report. Its templates are based on the Global Reporting Initiative, a non-governmental organization that is working to develop global sustainability reporting guidelines. The data it analyzes mainly comes from customers' building management systems, which track temperature and power consumption.

IFS, an ERP vendor that targets aerospace, heavy manufacturing, energy, IT and life sciences, recently launched Eco-Footprint Management, which integrates with its supply chain modules, the report says.

Oracle has announced partnerships with ESS -- which makes environmental, health and safety, and crisis management sustainability software -- and Zogix, which sells on-demand carbon management software.

In turn, Microsoft recently released a free, add-on sustainability dashboard, Dynamics AX ERP.

What's on tap for environmental compliance?

In the meantime, voluntary compliance initiatives are already being launched. Wal-Mart has launched an effort to get its suppliers to reduce packaging and use more sustainable resources, with the goal of reducing packaging by 5% by 2013, according to the report.

In turn, the Obama administration has been talking about cap-and-trade requirements, and the European Union is developing directives regarding eco-friendly design of energy-using products and the performance of buildings.

But just developing the right green supply chain management software presents major challenges.

While there are several initiatives underway, it is unclear which standards for what should be tracked through the supply chain will prevail, Wilson said. Interest groups such as the Supply Chain Council and non-governmental organizations like the Carbon Disclosure Project and Global Reporting Initiative are working to come up with standards that will enable the sharing of environmental data across organizations, Wilson said. In turn, the International Organization for Standardization (ISO) addresses supply chain issues, and its 14044 standard defines a product-level lifecycle analysis.

Companies will need to deploy end-to-end systems, and supply chain management software now really encompasses only a few tiers upstream and downstream from the core manufacturing of products, according to the report. Environmental compliance may require tracking of products from raw materials, through consumption, disposal and recycling.

The software must provide the right information to the right people. It must provide detailed information in real time and be flexible enough to support wide variations in data-gathering requirements, according to the report. All of this needs to be integrated with the financial data in ERP systems.

For this reason, flexibility is paramount, and SOA will be a key element to developing and deploying sustainability software, Wilson said. Components of existing systems can be reused and additional capabilities added as services on top.

"That integration is going to be very important," Wilson said. "Environmental compliance has a financial effect. They need to be able to do what-if scenarios."

Next Steps

Read more about SAP's sustainability strategy

Read what SAP CEO Leo Apotheker had to say about sustainability software

Dig deeper on SAP SCM software

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