Sanja Heyken

Management consultant, Business Transformation

Digitalize in a sustainable way!

2019-mar-17 13:00:00

Nowadays, sustainability and digitalization are making headlines everywhere, but for some reason, they seldom appear together. It is generally accepted that more digital solutions tend to have a positive impact on one’s carbon footprint – simply by making processes more resource efficient. Yet the impact of the way we implement only gets minimal attention.

Sustainability is often defined as a triple bottom line: Good for the environment, good for society and good for the business. In today’s world, decision makers nearly always look at the return on investment. Stakeholder interests are generally considered at least from the perspective of employees and customers. But the environment drops off the table in nearly all digitalization investments. And one question seldom makes it into the steering group decisions: How can we digitalize our processes in a sustainable way?

Common Challenges to making the Environment a Decision Factor

  • Digitalization is seen as a means to reduce costs – so price is all that really matters in the vendor selection
  • Vendors are perceived as vastly more powerful than one’s own company. When dealing with a behemoth like Microsoft or Dell, you generally only make up a minuscule fraction of their sales, and have no power to make demands
  • Information about environmental measurements and standards is not available from suppliers or internally. If you don’t know what you should benchmark against, it is very hard to enter a discussion with a potential business partner

Digitalization & Cost reduction

Often a budget is set to procure a new software, and vendors are compared, after initial confirmation that they meet the functional requirement, based on price for implementation and a short period of actual use, where for example license costs are considered.
Asking about their metrics in sustainability can give a strong insight into the long-term cost of a software. Especially when it comes to servers and cloud data storage. Nowadays energy cost to run a data center make a large share of the cost for the whole operation – and a huge share of global energy demand. By increasing energy efficiency, one effectively slashes costs, making it possible to follow the principle of “doing more with the same”.

Following up on key metrics such as PUE (power usage efficiency) and WUE (water usage efficiency) are no longer only for the environmentally minded. Asking for them makes for sound business decisions, as they directly influence the bottom line of providing the requested service to you. 

Powerful Vendors

When dealing with a company with considerable negotiation power, it can feel daunting to raise the bar for them. However, it is only if we dare to challenge that innovation will grow.  If negotiations are already difficult or not skewed in your favor, environmental demands can internally be perceived as threatening to the process and outcome. However, with wide acceptance of the existence of the climate challenge we are facing, the acceptance that these factors are important is spreading too and are more and more likely to be a part of your company's business strategy. At least attempting to bring them into the discussion is a worthy effort. And if you are serious about it, defining standard questions around the environment, can happen well along overhauls around data security, GDPR concerns and a generally more formalized approach to procurement. It is considerably easier to include environmental questions into an RFP if they are part of a “must-do” list for internal compliance and part of Code of Conduct policies.

Lack of Information

Once you have taken the decision to be more ambitious in your environmental requirements, you face the next challenge: What should you ask for? PUE has been established more or less as a standard, but has only limited value when standing alone – as it does not cover what kind of energy is used (for this, try out GEC – Green Energy Coefficient, or the more advanced CUE – Carbon Usage Effectiveness). Neither does it talk about how waste heat is reused (see ERF – Energy Reusage Factor) or what happens to water (WUE – Water Usage Efficiency). At the same time, it is a good start, as it is the most likely value to be provided to you.
Once you have decided what to cover, another issue arises: Many vendors don’t have an answer to this question, so your requests for information may return unanswered. But if enough customers raise these questions, eventually vendors will have to address them – and in the process you can already identify who is serious about the environmental policy they are touting.

What to do next?

Often, when considering to replace software with a more modern, cloud-based version of itself,  understanding of how environmental measures can safeguard the triple bottom line is limited. There are several steps to be taken

  1. Review Energy costs in the agreement – The more environmentally conscious the data center is the software is serviced from the more likely are you to make considerable savings in the long run.
  2. Inform decision makers about this effect, and discuss options to consider a longer period of time for the business case – to not overly weigh implementation costs versus a lower maintenance cost
  3. Define internal guidelines on which questions to always ask. These may contain KPIs such as PUE but can cover many other areas such as Data Security and Catastrophe Resilience
  4. Start the dialogue: By asking potential suppliers about details in their environmental policies you make a statement as a company that cares and can induce more consideration of the topics at even the most powerful vendors in the long run.

Are you interested in finding out more about how you can digitalize in a sustainable way? Get in touch with Sanja Heyken!

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Tags: Hållbarhet Digitalisering Hållbart_företagande