In my experience Chris Mines at Forrester is the top analyst covering the green enterprise, but I think he's slightly off the mark on his latest article "Five Reasons Why Carbon Management Software is the Next Big Thing".
Before I talk about where he's wrong, let me say that he's right on the money that ECEM is an important function in the enterprise going forward, and as I'll cover below, I think its just the tip of a larger iceberg.
But saying its an important function isn't the same as saying there's an opportunity for a major new software market, and here's why:
Today the 'M' in ECEM isn't really management, it's monitoring. Unlike HCM and ERP (and, to a lesser extent, CRM), the energy and carbon software can tell you what's going on, but you can't use the software to affect change. In ERP I can order more parts, in HCM I can give someone a raise or a new title, but I can't use ECEM to swap out incandescent light bulbs or upgrade a truck fleet. In other words, a separate ECEM application can tell you where you might want to look for changes, but that's where its functionality ends. Look through the list of top 100 software companies, and you won't find any businesses centered around monitoring.
There's no cost center in enterprises that can successfully pay for and push for ECEM as a major new application. ECEM spans two large corporate functions, operations and facilities, as well as a number of other functions, including sustainability, legal, CSR, risk, finance, audit, etc. From a budget perspective operations has the biggest one, so would appear to be a good candidate. Facilities is a cost center, and in every business I know is under major budget pressure, and the other functions are even less likely to finance a major application purchase. But the problem is that operations already has a monster investment in ERP, and would need a compelling reason to bring in a major new application (more on this later), and facilities and the other functions rarely have the clout to push a new enterprise-wide application on operations.
But I said that ECEM would be a major corporate function, and here's how I believe it will play out.
First, the enterprise function will be much bigger than energy and carbon. Within a few years companies will find that they need to track, manage and report water, a wide range of chemicals, and various forms of recycling at the same level of detail. Similar to energy and carbon this will span facilities and business operations, and will reach out through the supply chain. This trend will be driven by environmental and natural resource concerns, but will also have huge financial drivers as our supplies of energy, water and other natural resources are further stressed.
Second, the ECEM market as we see it today will split into two, and in doing so will turn the 'M' from monitoring to management. In the case of operations, enterprise carbon, energy and natural resource management (ECENRM) will become a feature of the major ERP platforms. Last year SAP bought Clear Standards, and they and Oracle have been touting their growing feature list. For operations this is the right place for the functionality to be, since not only can you see what's happening within the ERP system, but you also have the controls to make changes. Want to optimize the amount of product shipped by rail instead of air? The logistics package in your ERP system is where you'll have the data and control to do that.
Facilities will absorb the second fragment of the proposed ECENRM space. Today this is a much smaller market than the ERP market, and will remain so. But the part of ECENRM that falls into facilities management will be able to both monitor and management the energy, water, etc. Much of this will be manual today, but will become increasingly automated.
As for the 70+ (and I've heard 100+) companies who were started up in this space, they will find that they need to focus on either operations or facilities, and that in both cases its tough to convince either group that they need another, separate application. A few lucky ones will be bought by existing ERP and facilities management companies, some will find small, profitable niches, and the rest will have a tough go of it.
Where will that leave the sustainability professional, charged with reporting enterprise-wide carbon and energy? They'll have to talk to both operations and facilities and integrate the two sets of data into a final report. Is this ideal? Probably not, but the functions are so different that dealing with each of them on their own turf probably makes the most sense anyway.