Rising energy costs, increased awareness of climate change issues, pending global carbon legislation and widely available computing power have meant that more sustainability software services have emerged in recent years than online dating sites. But the next trend for these companies — which spend their days crunching data about energy consumption, water resources and carbon emissions — is to turn to cloud computing and next-generation analytics tools to manage the massive of influx of real-time data emerging around sustainability.
Sustainable Data Overload
There are a few trends driving the need for ever-better information and analytics tools surrounding consumption data. First, the growth of China and India — over the next 40 years the population will explode, adding 2 billion more people on the planet, largely in these rapidly developing countries. Managing the resources — energy consumption and water usage — of an increasingly resource-constrained world will be more necessary than ever.
Secondly, there’s the issue tightly aligned with resource restriction: climate change. Legislation mandating that companies reduce their carbon emissions in order to reduce global warming has been enacted in many countries, and there’s pending cap-and-trade legislation in the U.S. Companies will eventually have to know their carbon emissions, and reduce them, likely via one of the many carbon software providers out there.
Then there’s the emergence of smarter systems. Thanks to dirt-cheap chips and network technology, sensors, always-on communication networks and algorithms have the ability to grab and process information about anything at any time. Like IBM’s Smarter Planet initiative, (and our Green:Net conference series) have focused on, this information technology has a unique ability to monitor and manage resources for companies and make processes more efficient.
For example, the digitization of the electricity industry, by some estimates, could deliver a massive 100 petabytes over the next 10 years. Utilities are in the process of figuring out what software providers and tools will help them manage this influx in real time and some smart grid early adopters are turning to next-gen analytics tools and cloud computing. The Tennessee Valley Authority (TVA) and the North American Electric Reliability Corp. (NERC), for instance, have turned to open-source software framework Hadoop, which was developed for analyzing large data sets generated by web sites, to aggregate and process data about the health of the power grid.
Carbon Software 2.0
Players like SAP, Hara, Enviance, and ENXSuite (formerly Carbonetworks) have established themselves as leaders in the sustainability software market, and they’re knee-deep in this trend — let’s call it carbon software 2.0 — of using cloud computing and next-gen “big data” tools for on-demand data storage and analytics. The cloud can uniquely support sustainability software as a service and provide real-time data crunching for the “hundreds of millions of records” that execs like Anirban Chakrabarti, SVP and General Manager of SAP’s Carbon Impact business unit, say their services need to manage.
SAP has been acting aggressively to build out a next-generation version of its cloud-based carbon software tool. Chakrabarti, who sold his startup Clear Standards to SAP last year, told me in an interview that SAP has been working on systematically rebuilding Carbon Impact around a SAP cloud-based platform that runs on Amazon, and hopes to launch “Carbon Impact 5.0″ this July or August. Chakrabarti says that leveraging Amazon’s cloud computing service gives SAP access to a ton of cloud-based, on-demand computing power, storage, memory and hosting. In addition, Carbon Impact 5.0 will leverage “in-memory database” management systems, which use main memory instead of disk storage memory, and which are commonly used in services that need quick response times, like 9-11 operators.
“We believe this is where the carbon solution industry is heading,” says Chakrabarti. That’s because there are a massive number of data points that can be collected about resource consumption, and users are looking for complex reports, delivered in real-time, demonstrating how they can reduce that consumption. For example, Chakrabarti says that for some of its manufacturing clients it collects data about machine energy usage in six-minute intervals updates.
Startup Hara, which only officially launched last year and is backed by venture firm Kleiner Perkins, is also working with cloud provider OpSource for its database. Hara also says it plans to work with a yet-to-be-determined “data integration provider and a data analytics solution.” Hara CEO Amit Chatterjee says one day he thinks the carbon software industry will be managing 12 MB per second — the equivalent to 1 million SMS messages.
A Competitive Edge
The result of this shift in sustainable software companies looking to the cloud and next-gen analytics will mean there will be both a growing barrier for companies to enter the carbon software market and a competitive edge for the players that can already provide these heavy duty, speedy services. As SAP’s Chakrabati explains it, “We think the cloud and these analytics services are our competitive edge,” and says it’s taken no small amount to prepare to launch Carbon Impact 5.0 in the cloud. “It’s something that a smaller startup won’t have the resources for.”
Some kind of differentiator for the carbon software market is actually a relief. There’s been an overload of carbon software startups that have emerged over the past couple of years, and research firm Verdantix put together an extensive list of 22 carbon management software companies. Many of these companies have been backed by venture capital firms (that will likely lose money), and even software vets like Thomas Siebel — the guy who sold Siebel Systems to Oracle for billions of dollars — have been enticed in. His startup, C3, has former Secretary of State Condoleezza Rice and former Senator and Secretary of Energy Spencer Abraham as directors.
The good news is that when the U.S. one day actually puts a price on carbon (depends on how quickly the energy bill can get through Congress), robust, matured software as a service carbon tools will be ready and waiting for the influx of users.