Carbon accounting software embraces SaaS model

According to the study from Groom Energy Solutions discussed in my last post, the market for enterprise carbon accounting (ECA) is nascent, with just 300 deployments so far worldwide. But perhaps of greater budgetary interest to potential end-users: it’s also a class of software that’s relatively inexpensive to go live with thanks to the software-as-a-service (SaaS) model used by most vendors.

This insight comes from Paul Baier, VP of consulting with Groom Energy, and the principal author of the report, who I interviewed today. Baier estimates that about 95 percent of the 300 ECA deployments are hosted solutions as opposed to conventional “on-premise” installations that require end-user run servers, database software, and IT support. This hosted model is prevalent, he says, because most of the ECA vendors have a SaaS-delivery model, which takes out the big upfront costs of running the system in-house.

“Almost all of the vendors offer their solutions under the software-as-a-service model, so annual subscription fees might range from $25,000 to $150,000 depending on number of modules used and the number of end-users,” says Baier.

While costs can vary beyond this range, adds Baier, it’s possible for ECA solutions to start at a relatively small price tag with SaaS.  “You can get into [an ECA solution] for under $100,000,” he says.

So bottom-line, carbon accounting software isn’t nearly as pricey as an ERP system. But there are concerns with carbon accounting, especially when enterprises try to build their own solutions based on spreadsheets. To date, says Baier, most of the 3,000 or so carbon footprint efforts have been done using spreadsheets, which leads to classic problems on the data management side, such as maintaining a single version of the truth. “The biggest problems right now is data gathering,” he says. “How do you get 95 different facility managers entering data [accurately] into a spreadsheet.”

Packaged ECA solutions are driven by centralized databases, points out Baier, and often boast features such as audit trails and pre-built reports. Other desirable ECA features include workflow, ad-hoc reporting, and reports that meet the format requirements of various organizations and entities that need corporate carbon data. These entities may include the U.S. Environmental Protection Agency, state agencies, the European Union for its cap & trade program, or other organizations such as the Carbon Disclosure Project–a non-profit organization that gathers carbon footprint profiles of participating companies  for assessment by the investor community. While an end-user company could potentially build a sophisticated ECA solution using a business intelligence platform, they would still need to have or hire the content expertise necessary to meet the shifting reporting requirements of these various entities.  “Increasingly, the ECA vendors have packaged, out-the-box forms for this,” notes Baier.

There remains some end-user confusion in the market, says Baier. Specifically, some enterprises are waiting to see what sort of ECA solution their major ERP or business intelligence vendors come up with.

Overall, Baier calls ECA a “very early, early” market with diverse vendor backgrounds. With just $10 million spent through last year on ECA packages, it’s still a small market, but one that is getting noticed by vendors and end-users alike.  “It’s a small market, but big enough that SAP made an acquisition a few months ago with Clear Standards. So it’s clearly on the radar screen as a promising market.”