Reconsider your enterprise energy management strategy as policies loom

U.S. policy changes could be the impetus for innovative enterprise energy management and carbon management strategies. Consider changes now to stay compliant in the future.

In his State of the Union address, President Barack Obama presaged new compliance and governance requirements for IT based on policy goals. Even if all these plans are thwarted in Congress, smart IT executives will make IT governance changes soon to benefit business now and facilitate compliance in the future.  

Although the president was circumspect when calling this “our Sputnik moment,” there were hints of impending policy changes that would drive new enterprise energy management policies that require IT support. Motivated by our international loss of stature in education and technology -- specifically alternative energy technology -- and relatively low ranking in communications technology, we see some interesting developments on the horizon.

Obama talked about investment in IT and clean energy technology, and set a goal that 80% of America’s energy come from clean energy sources by 2035. Additionally, he set a 25-year goal to provide 80% of Americans access to high-speed railways, and targets for putting a million electric vehicles on the road. While 24- to 25-year goals are way too long -- the Apollo missions went from concept to the moon and back in a decade -- the signs are clear that new policies -- and demand for energy -- are inevitable.

Focused attention on energy management, high-speed rails (with a clear impact on greenhouse gas emissions) and electric cars means that energy and carbon management will likely become mainstream in the next few years for the U.S. In addition, increased energy demand will lead to higher prices in the short term.

One thing is already clear from our research: Energy and carbon management solutions, currently fragmented, will become integrated and affect all aspects of business IT. As supply chain management issues typically account for more than two-thirds of an enterprise’s carbon output, firms with SCM products, services and cultures (as end users) are well-positioned for carbon management leadership.

As we noted previously, drivers for adoption of enterprise energy and carbon management (EECM) solutions are either financial or regulatory. Stakeholders include regulators, nongovernmental organizations (NGOs), competitors, customers, suppliers and the sales channel (the Wal-Mart effect). Buying habits of customers, affected by NGOs and competitive positioning vis-à-vis sustainability, affect the bottom line. Regulatory pressures have not had a huge direct effect on U.S. operations due to ongoing uncertainty regarding policies, but the other factors have led to widespread study and adoption of  EECM solutions.

Any policy-based support for Obama’s goals of clean energy, high-speed transportation, or electric vehicles -- which will stress the current grid and force more effective energy management -- will only accelerate the trend we have already noted. It will also drive acceptance by firms primarily serving domestic U.S. customers, which have been slower to embrace EECM in the past.

These trends indicate that integrated EECM solutions, which help firms move from low-level monitoring to managing, then to monetizing energy usage and carbon output, will be the next killer app.

Three steps for U.S. businesses to take today

  • Make sure you plan for access to accurate carbon and energy data. Eventually, you will have to measure production of carbon and consumption of energy. Organizing data now for measurement and management later will simplify that task, so don’t approve new initiatives unless they can be measured in these terms.
  • Evaluate your supply chain software to ensure that your vendor can provide the required data, or can link to third-party systems that can.
  • Energy and carbon management solutions, currently fragmented, will become integrated and affect all aspects of business IT.
  • Start evaluating enterprise energy management and carbon management software now, while it can help the bottom line but before it becomes a compliance requirement. The market will consolidate, but the market-leading technology will survive and probably never be simpler or cheaper to acquire.

Carbon management is still a political hot potato in the United States, but it’s gaining traction worldwide and global firms must be concerned now. Following these steps will position firms well if and when the United States adopts new regulations, and in the meantime it prepares them to participate in global markets to monetize their carbon reduction efforts.

Less controversial is the push toward electric vehicles. As charging stations pop up to support these vehicles, even a smarter grid will be stressed with no relief in sight for energy costs. That means that even without direct regulation requiring compliance in the next few years, managing energy use and participating in a demand response pool to take advantage of price fluctuations will be a hallmark of smart corporate governance.

Adrian Bowles has more than 25 years of experience as an analyst, practitioner and academic in IT with a focus on IT strategy and management. He is the founder of SIG411 LLC, an advisory services firm in Westport, Conn., and director of the Sustainability Leadership Council.

This was first published in February 2011

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