Clear Standards under SAP: more than a module

A natural question that arises when a big enterprise software suite vendor like SAP buys a start-up in an emerging software niche is whether the acquired solution will remain a viable choice for the market as a whole, or more of a module aimed at users of the acquiring vendor’s enterprise resources planning (ERP) suite. Last week, I got to explore that question with Anirban Chakrabarti, president and chief operating officer of Clear Standards, a vendor of carbon management and sustainability software that just this May was acquired by SAP.

The answer, says Chakrabarti, is that while the SAP customer base is an obvious target market for the Clear Standards solution, it remains aimed at any enterprise needing to manage its carbon foot print and sustainability investments, regardless of which ERP system they use.

“We sell to any and all organizations,” he says. “They may be SAP customers, they may not be SAP customers. So we aren’t bound by restrictions.”

Chakrabarti says the Clear Standards solution can integrate with SAP’s Environmental Health & Safety (EH&S) offering, but sees it as a complementary solution that needs to draw data from various types of systems. In fact, says Chakrabati, in past deployments, the biggest point of integration was with smaller repositories of environmental data often held in spreadsheets.

“The most prevailing system we see on the market is good old Microsoft Excel,” he says. “And the reason for that is that if you look at the maturity of climate-change practices in the business landscape, most organizations are beginning to ramp up organically with people who are subject matter experts, but a good portion of them are investing money with consulting companies that help them gather this [carbon footprint] data  and articulate the meaning back to the company. A lot of the time,  that resides in Excel.”

So Chakrabarti sees four basic types of competitors for Clear Standards. One is the more custom solutions developed by environmental consulting firms such as ICF International, CH2M, or other large consulting companies with environmental practices. Another set of competitors is the more traditional EH&S software players like ESS and Enablon who are expanding into enterprise carbon management The third set of competitors is the more specialist start-ups, usually venture-capital funded. Only with the final set of players in this competitive quadrant–technology giants like Cisco, IBM, and Oracle–does Chakrabarti name another provider that also is an ERP software giant (Oracle).

The fact that Chakrabarti doesn’t see ERP vendors as the main competition says something about carbon management solutions–they should not be seen as just another ERP bolt on.  They are more akin to a type of specialized, pre-built business intelligence solution. Think packaged performance management for sustainability, rather than ERP module. In the case of Clear Standards, besides analysis of sustainability and carbon trends, the solution also helps enterprises gauge the return on investment (ROI) on sustainability projects and investments, and act on policies and reporting.

Clear Standards has three main functions in its on-demand software: data consolidation; analysis; and the ability to act on policies and reporting. In this latter sense, the solution helps execute sustainability programs, so it’s more than a specialized BI offering. But the overall point is that enterprise carbon management requires a heavy dose of BI functionality. An end-user company or consulting firm might be able to build that, but the value proposition of a vendor like Clear Standards is that this functionality is largely prebuilt.

SAP also offers some real-time emissions monitoring functionality that leverages SAP’s Manufacturing Integration & Intelligence, or MII solution.  Chakrabarti says the pairing of real-time emissions monitoring with Clear Standards would be an interesting combination, but adds that Clear Standards’ users haven’t demanded that yet, because most sustainability decisions are made over a longer time horizon using aggregated data rather than real-time trends.

As I’ve noted before, the market for carbon footprint management software is rapidly evolving. SAP is now a player with Clear Standards, but the solution is more than an ERP module.  A full-scale carbon footprint management application set needs to “play nice” with many types of systems, not just one brand of ERP or EH&S software. That said, over time, it will be interesting to see what sort of product development, supply chain, and manufacturing execution data from SAP gets integrated with the Clear Standards solution. I also find it interesting that a gulf remains between the use of real-time emissions management systems and carbon footprint management solutions. On the other hand, perhaps that should not be surprising, because after many decades of trying to integrate the “shop-floor to the top-floor” for more conventional manufacturing management reasons, a gulf still remains between process automation systems and enterprise business systems.