Will best-of-breed carbon accounting software flourish?

In the more than 12  years I’ve covered enterprise software, new software niches typically have been subsumed by the large enterprise software suite vendors. Lately, I’ve been wondering whether the market for carbon accounting software will follow this familiar pattern.

Already this year, we’ve seen one carbon accounting software specialist (Clear Standards) acquired by enterprise software powerhouse SAP. Once again, it appeared, the familiar pattern was beginning to play out. But on closer examination, the carbon accounting solutions market remains fresh and far from subsumed by big ERP vendors.

For one thing, there are small, independent vendors that remain focused on this market, such as Planet Metrics. Another small vendor, Future State Solutions, pairs value stream mapping with energy use tracking. You’ll be hearing more about these vendors in upcoming posts.

Secondly, even if a vendor were to get acquired, the nature of carbon accounting makes it necessary for supporting software to be open to different data sources. This is because a single ERP implementation isn’t going to contain all the base data needed to track a company’s carbon footprint, much less the footprint for that company’s supply chain. It’s likely any solution will have to tie into spreadsheets, multiple ERP systems,  transportation and logistics systems, as well as data from suppliers. So maybe it’s moot if a carbon accounting vendor gets acquired, since the solution still needs to work in concert with many types of systems and data sources.

Third, the market is still coming to grips with what it takes to track carbon emissions, plan for emissions, and how to manage energy use and emissions in real time. So the carbon footprint challenge is actually spread across different types of software for carbon accounting, real-time energy monitoring, and playing “what-if’s?” with supply chain network design. For real-time energy monitoring, plant automation, manufacturing intelligence, and enterprise asset management software vendors are providers to watch, and when it comes to carbon footprint planning for the supply chain, vendors of supply network planning software (like IBM’s ILOG unit) can offer solutions.  It’s unlikely all these functions will coalesce under one type of vendor anytime soon.

To sum up, I think the carbon accounting market is still new and diverse. Stay tuned.