Use Analytics to Create a Greener Business

Saab Group, a defense and aerospace company with a global supply chain and customers in 100 countries, must comply with a growing set of local environmental regulations and with customer requirements that it run a greener business. Plus, the $3.7 billion company has its own goals: cut its greenhouse gas emissions by 2 percent a year, save energy and water, increase recycling and reduce its use of hazardous chemicals.

The problem is that it’s managing these sustainability initiatives mostly with spreadsheets and paper. The information is culled manually from multiple systems, says Kenth Algotsson, Saab’s environmental director.

Many companies are in similar straits, says Adrian Bowles, an analyst with Constellation Research. “A lot of data that’s out there today is manually entered and being kept on dozens or hundreds of spreadsheets,” he observes. There are many niche products for managing compliance data—which is where many organizations start—but they don’t necessarily support enterprise-level analysis of environmental performance. Eventually, says Bowles, such capabilities will be embedded in enterprise software, but “we’re talking several years out.”

Saab wants to map its use of hazardous materials and energy across business units, product lines and suppliers. The company has deployed software tools for managing chemicals, but not for climate-related data or hazardous materials. “If we were a bicycle manufacturer, we could put those maps together by hand,” Algotsson says. “But when we are manufacturing aircraft and defense materials, we have to have some kind of IT tool to handle it.”

The company’s solution to the problem is a module from its ERP vendor, IFS, called Eco-footprint Management. Saab plans to roll out Eco-footprint companywide by 2014, integrating most of its data about parts and materials, as well as information about energy consumption and carbon emissions, with its ERP data.

Because every Saab division manages financial and supply-chain data through the ERP system, company executives believe it makes sense to use that as a hub. Bowles says such thinking is one reason that SAP is already a leading player among energy- and carbon-management application vendors, and it’s why Epicor is also moving into this market. Others in this software niche include analytics vendors SAS Institute and Actuate.

The fact that enterprise software vendors want a piece of the energy- and carbon-management market suggests that sustainability will become integral to how companies are managed. Bowles has developed an Energy and Carbon Maturity Model in which a company starts with basic data capture, then moves up to regulatory compliance activity in the middle levels before reaching Nirvana at the top: systems and analytics for optimizing energy resources and even profiting from sustainability.

Unfortunately, many companies focus solely on regulatory compliance. But if you consider environmental data only from a regulatory perspective, business leaders will focus mainly on costs: the costs of monitoring and mitigating emissions and the costs of collecting the information needed to file reports.

Instead, savvy companies will use what Deloitte Consulting calls “sustainability analytics” to determine which initiatives are generating real environmental and financial benefits, so they can pour more effort into the most successful initiatives.

As companies push more broadly into the world of advanced analytics, CIOs have a chance to help their companies make the most of environmental data. So when you’re shopping for analytics tools, don’t forget to put sustainability on your checklist.

Elana Varon is a freelance writer and editor based in Massachusetts.