Green supply chains: software’s hidden role in sustainability

Melbourne, 10 June 2009—Business applications such as supply-chain management software have a key role to play in helping organizations meet their growing environmental responsibilities, according to Ovum, the global analyst and consulting company.

The market for these solutions will be substantial, but delivering them poses complex challenges, and leadership of this emerging market is up for grabs, Ovum has found.

Businesses of all types face growing pressure from consumers, investors and regulators to be “greener” by reducing the raw materials (including energy) consumed and pollutants emitted at each step in their products’ life cycles, Ovum says. Achieving this goal creates a “green software” opportunity because measuring, analyzing, reporting and optimizing for environmental factors is a business process similar to those already managed by applications such as enterprise resource planning, business intelligence and supply chain management.

“The largest software vendors are beginning to recognize this opportunity and are moving to exploit it. But their products are far from mature, and no one has yet established leadership in this market,” explains Warren Wilson, research director at Ovum and author of this research.

Supply chain management solutions will be crucial to sustainability because of the need for accurate “cradle to grave” environmental information for products of all types. But the challenge is complex because meaningful results require common standards and methodologies, as well as coordination across industry, geographic and regulatory boundaries.

At the moment, various industries, governmental and non-governmental organizations are developing standards for aggregating environmental data over the product life cycle. But it’s not clear which of these efforts will gain traction, so both vendors and customers must familiarize themselves with as many as they can and understand the challenges and opportunities that will result.

Enterprise application vendors must acquire or partner for environmental expertise if they want to retain the role of strategic advisor. They must offer solutions that can be easily tailored to different industries’ unique requirements, which will favour service-oriented platforms to replace rigid legacy systems. Meanwhile, the need to analyze environmental data alongside financial and business-process information will favour integrated solutions over stand-alone applications. It will take several years for mature solutions to develop, but vendors with foresight are moving now to position themselves in this emerging market.