October 4, 2010
My research team at Forrester helps tech vendor strategists anticipate and navigate in rapidly changing market environments. We can't take a siloed view on specific product and service categories, but rather broaden our perspective in order to trace cross-market dynamics around key issues such as sustainability, globalization, collaboration, mobility, and cloud. This puts tech vendors in better positions to act on emerging demand signals, competitive scenarios, and opportunities to select best-fit partner, channel, or acquisition targets.
The market for dedicated solutions and services that help companies manage their energy, emissions, and overall sustainability strategy is still nascent. The evolution of sustainability at larger software and IT service vendors started with their internal efforts, which is an important factor framing their portfolio and go-to-market strategies.
As a result, there are still a significant number of vendors that are converting their internal capabilities to analyze, define, and implement sustainability into customer-facing software and/or service portfolios. These portfolios of services go well beyond green IT, increasingly focused to serve clients wrestling with hot topics such as enterprise carbon and energy management (ECEM), green supply chain, and sustainability performance management.
My colleague, Daniel Krauss, and I have recently completed a comprehensive round of interviews and analysis with many different players offering sustainability consulting services, including software, IT and business services, hardware, and even industrial companies (see Figure 1).
With players coming in from very different angles, it is important to look at the sustainability market in its entirety, as we see rising cross-market dynamics, especially in partnership activities. Other market developments over the past year include:
Broadening portfolios of sustainability consulting services. Service providers of all different types have tailored their portfolios, which have grown markedly beyond the core IT efficiency issues. Given the fact that business executives and budgets are becoming more influential in IT products and services purchases, most providers understood quite early that they needed to evolve their portfolio and go-to-market story.
Today, most service providers play to a different extent in all three sustainability consulting categories: green IT (e.g., data center, device management), IT-for-green (e.g., collaboration and conferencing, supply chain optimization), and green business (e.g., corporate sustainability strategy, green procurement).
Software players pushing ECEM systems partnering with IT services companies. The ECEM market is still very young, with a rising number of new players. Originally the province of compliance vendors such as Enablon, Enviance, and IHS, the ECEM market is seeing larger players such as CA and SAP revamp their portfolios and go-to-market approaches to tap into this growing market opportunity.
As the market is becoming more crowded, ECEM vendors are seeking new sales channels. For service providers, on the other hand, these solutions are key for offering integrated sustainability management solutions to their clients. Hence, we expect more partnership formation (like TCS with PE International and Wipro with SAP) in the short-to-medium term, which might, over time, morph into acquisitions.
Traditional industrial giants entering the sustainability services market. Sustainability represents the perfect example of changing dynamics that the tech industry is facing in the era of what Forrester calls Smart Computing.
Smart Computing, combining digital networks and analytical software with physical infrastructure, brings companies such as GE, Ingersoll Rand, Johnson Controls, Schneider Electric, and Siemens into the action. These companies' traditional focus is on operational energy management of heating, ventilating, and air conditioning (HVAC) systems and facilities, but they are expanding their offerings beyond this.
In addition, due to the vast amount of data and experience they have built up, some of these companies are moving to provide energy management and consulting services that have traditionally been in the hands of software vendors and service providers.
IT systems OEMs less prominent than in the past. Large systems OEMs have not made that move from green IT to broader sustainability consulting services. Dell, EMC, HP, and others are — at least so far — content to stick to the narrower market of green IT consulting, principally focused on energy-efficient data center design and implementation.
Our new research report, "Capitalizing On The Sustainability Consulting Services Opportunity," is now live and available at www.forrester.com.