Could carbon management software sector reach $1B by 2013?

Wish I had seen this report yesterday, BEFORE I published my item about Epicor, because it would have made that post even stronger. No time like the present, though, and here's the crux of the matter: Forrester Research is projecting that the market for enterprise carbon and energy management software (fondly known as ECEM) could reach $1 billion by 2013.

That's a pretty aggressive prediction considering that Forrester figures there are only between 200 and 300 companies in the world today that actually have a corporate-wide implementation of this sort of technology. But the thing is that the market more than doubled from 2009 to 2010, reaching $163 million. North America is the biggest piece of that market, followed by Europe. Early adopters include manufacturing, utilities and public sector.

Forrester's new report, "The Evolution of Enterprise Carbon and Energy Management Software," covers 43 different players in the category, plus it also borrows from a separate data set focused on green IT trends and spending preferences among IT executives and management types.

Forrester's definition of ECEM applications includes software that does the following things:

1. Allows business managers to keep monitor, analyze and manage carbon emissions and energy consumption across the entire company
2. Enables facilities managers to do the same with respect to specific facilities infrastructure
3. Lets IT managers focus on the carbon and energy management of information technology and communications equipment

The reason that so many businesses are interested in ECEM is that they are trying to bring some sort of order to their broader corporate sustainability efforts, according to Forrester. The report's author, Daniel Krauss, writes:

"Whether for companies or cities, carbon and energy management software will become the fundamental platform for enabling corporate sustainability strategy, as transparency into carbon emissions and other resource use is the prerequisite to setting appropriate reduction targets and identifying and prioritizing sustainability projects to reach those targets. Consistent sustainability intelligence and reporting are required to not only engage employees but also to articulate the state and progress of sustainability key performance indicators (KPIs) to investors."

Forrester doesn't offer any particular ranking, but it does offer up a number of the vendors it has analyzed, describing them as a "key vendor to watch." I'm guessing that has partly to do with the companies that these players have nailed as early customers (which I have included in parentheses by the name). The software players that earned that distinction (in alphabetical order) include:

• CA Technologies (Tesco, Datotel)
• Climate Earth (Pacific Gas and Electric, Del Monte Foods)
• Enablon (Accenture, Tyco)
• Enviance (American Electric Power, Walmart)
• ENXSuite (Morgan Stanley, Sears)
• Hara (Hasbro, Safeway)
• IHS (ArcelorMittal, Shell)
• PE International (ABB Group, Airbus)
• SAP (Casella Waste Systems, Nova Chemicals)
• SAS (E.ON, Poste Italiane-Group)
• Verisae (Costco, Target)

There is a substantial degree of overlap between this list and the one worked up by green IT researcher Verdantix. Both of these reports are invaluable for anyone investigating or evaluating this category.

One final thought on the adoption curve for ECEM software: It is likely that it will occur in stages, because it will take a while for customers to get a grip on the information. Forrester foresees three distinct phases of adoption including:

• Analyze and report: Essentially a move to automate the reporting of carbon footprint and energy consumption information, often transferring it from a process driven by spreadsheets (if there is anything at all) into the more traditional enterprise resource planning and reporting process
• Govern and act: After basic reporting is stabilized, it is likely that businesses will get more granular. For example, poking deeper into waste and water information or extending reporting into their supply chains. This, indeed, is probably one reason manufacturers seem keen on the category.
• Anticipate and align: This suggests the holy grail of business intelligence and business process management, when ECEM will actually be part of overall financial performance for a company rather than a separately reported set of information. This, however, isn't likely to happen until at least 2014, Forrester predicts, because few of the application vendors are able to offer this capability today.