The promise of smart buildings is cropping up across the ICT industry lately. Our calendar of vendor briefings and events is crowded with announcements of new products, acquisitions, and partnerships as ICT suppliers seek to connect their digital and analytic systems with the physical world of HVAC, security, lighting, and other in-building systems.
There are a number of goals that smart building projects hope to achieve, including:
Improving customers' bottom lines by reducing energy consumption and expense.
Improving employees' physical surroundings and therefore productivity and satisfaction.
Improving sustainability metrics and perceptions by baselining and then reducing corporate carbon footprint.
It's been clear for some time that sustainability is moving from the periphery toward the center of many companies' strategic agendas, and that IT systems and software will play a crucial role in accelerating that movement.
But what's been missing -- until now -- is an overarching framework for understanding who the stakeholders (and buyers) of IT-for-sustainability (ITfS) systems are, what motivations and barriers they face, and which categories of products, services, and solutions can help them. With the research report that we will publish next month, Forrester takes a giant step towards providing that framework. Based on interviews with sustainability leaders at more than a dozen large global enterprises, we developed three company archetypes of sustainability adoption (see Figure 1):
• Marketer: Improving branding and transparency with advanced reporting. Companies that fall into this category are either early in their sustainability maturity or just do what they have to do when it comes to regulatory compliance.
I meet with about three or four sustainability solution providers each week, getting an update on their customer and product progress and sharing our latest research plans and client inquiries in the IT-for-sustainability (ITfS) space. In the past few weeks, I heard again from vendors about their excitement for new regulatory mandates appearing on the horizon.
All of us in the technology industry get caught up in the near-term fluctuations and pressures of our business. This quarter’s earnings, next quarter’s shipments, this year’s hiring plan . . . it’s easy to get swallowed up by the flood of immediate concerns. So one of the things that we work hard on at Forrester, and that our clients value in their relationships with us, is taking a few steps back and looking at the longer-term, bigger picture of the size and shape of the industry’s trajectory. It provides strategic and financial context for the short-term fluctuations and trends that buffet all of us.
I am lucky to co-lead research in Forrester's Vendor Strategy team, which is explicitly chartered to predict and quantify the new growth opportunities and disruptions facing strategists at some of our leading clients. We will put those predictions on display later this month at Forrester's IT Forum, our flagship client event. Among the sessions that Vendor Strategy analysts will be leading:
"The Software Industry in Transition": Holger Kisker will preview his latest research detailing best practices for software vendors navigating the tricky transition from traditional license to as-a-service pricing and engagement models.
"The Computing Technologies of 2016": Frank Gillett will put us in a time machine for a trip five years into the future of computing, storage, network, and component technologies that will underpin new applications, new experiences, and new computing capabilities.
Most of the suppliers of IT-for-sustainability (ITfS) solutions that we work with have one path to finding a buyer in their customer organizations: through the IT organization. Whether giants, such as SAP and HP, or newcomers, such as Hara and ENXSuite, vendors of energy management, carbon reporting and other ITfS products are typically starting their sales motion with customers' traditional buyers of software sytems: IT.
Not that there's anything wrong with that. We have long maintained that IT organizations and the CIOs that lead them will increasingly be the owner and operator of environmental systems of record, just as they are for financial, HR, and customer data systems, among others. But, ITfS suppliers will want to develop multiple pathways into customer organizations. For most, decision-making around sustainability processes and technologies is diffuse, spread across IT, facilities, operations and CSR. Finding the buyer for sustainability is oft-times the proverbial needle in the haystack.
Over the past few weeks, computing giants HP and IBM have made significant new thrusts into the market for sustainability software and services. At first look, both companies are strengthening their commitment to "IT for sustainability (ITfS)" -- the use of information technology to help their customers meet their sustainability goals.
Both are prominently featuring "energy" in their messaging in keeping with the current customer focus on that side of the consumption/emissions coupling. And both are emphasizing a combination of software products and consulting services, the two segments of the market that we at Forrester have been tracking for some time now, as regular readers of this blog know by now.
But under the surface there are more differences than similarities in the approach that these two suppliers are taking to ITfS; differences that illuminate divergent strategies, philosophies, and experiences between them. Let's take a closer look.
HP is going broad; IBM is narrowing its focus. With its initial "Energy and Sustainability Management Services" entry, HP is leveraging its data center design and implementation expertise into buildings and other assets across the enterprise. It is stressing a holistic, top-down approach, starting with assessment workshops and other methods to help customers get their arms around the size and shape of the energy/carbon/resource issues.
Let me start off this post on a downbeat note: Improving sustainability is not a high priority for companies, according to data from the recent Forrester survey of business decision-makers. The survey, part of Forrester's Forrsights research, was fielded to 2,600 executives with budget authority at companies in Europe, North America, and Asia during the fourth quarter of 2010.
When we asked these corporate decision-makers about their company's top business priorities, revenue growth was #1, customer retention #2, and cost-cutting #3 (see Figure 1 below). Improving the corporate sustainability posture? Oops, it's down at #10, with just 10% of respondents indicating that sustainability is one of their firm's high priorities for 2011. When we cut those numbers by industry grouping, utilities/telecoms and public sector/healthcare are highest, with 15% prioritizing sustainability, compared with a low of just 7% in financial services.
Now, I'd like to contrast that eye-opening data with a much more optimistic set of figures from our recent research about the growth of sustainability consulting services. My colleague Daniel Krauss and I have worked with many of the large consultancies over the past few years and seen their sustainability practices grow from practically nothing to very substantial businesses.
Among 21 consulting firms that we surveyed late last year, 17 have a dedicated sustainability practice, and five of those count more than 1,000 practitioners (see Figure 2).
My travels last month took me back to the Bay Area for client meetings and a chance to spend some time at the Autodesk Gallery, a very cool space near the ferry building in San Francisco. Autodesk uses it to show off its customers' design innovations, not coincidentally created using the company's design software. The event in January showcased how customers are using Autodesk visualization software to improve the sustainability of their product designs and implementations. This is tackling sustainability right at its core: making products that are more energy- and resource-efficient, easier to manufacture, easier to reuse and recycle, right from the start. The products we saw at the event included:
A new research facility at NASA Ames down the peninsula. This super-green building is aimed at "beyond" LEED Platinum standards, incorporating a variety of innovative design and engineering elements all captured in building information modeling (BIM) software. The Feds will use it as a laboratory for energy efficient buildings, spreading its best practices and learnings across the broad portfolio of US government buildings and research facilities. NASA is also working to make the design blueprint a working model for efficient ongoing operation of the building.
Last week, Forrester gathered its 1,200 worldwide employees together for an offsite meeting in Boston to kick off our agenda and plans for 2011 and beyond. It was the first time we had gotten the whole company together under one roof in 4 years; the company has grown by roughly 50 percent since the beginning of 2007.
Part of our offsite was devoted to research agenda planning around the big themes that we have identified for the technology industry in the coming year. And we have quite a strong research agenda in the sustainability arena, focusing on how large companies are using IT systems, software, and services to help meet their sustainability goals.
Our research agenda starts with our big-picture point of view on the state of the technology industry. And that is a good place to be! The global technology industry is at the beginning of a multi-year up-cycle of industry innovation and growth, during which investment in tech products and services will grow considerably faster than the overall economy. This was true in 2010 and will again hold true in 2011 and 2012 (see Figure 1).
My analyst duties took me to a number of industry and tech-vendor events this fall; in fact, looking back at my calendar, I have been out of my home area in Boston for nine of the last 12 weeks. The upside of all that time in airplane seats is that I get to meet and interact with leaders across the technology industry, including supplier companies, large and small, and their customers and partners.
In the first 10 days of December I spent time with five important technology suppliers, each of which has very different views on the opportunity in the broad arena of IT-for-sustainability (i.e., how information technology products and services help corporations achieve their sustainability goals).