What's a sustainable software company to do? Think cloud

Every few years or so, Microsoft picks up a new arch-enemy in business. Clearly, the software's biggest nemesis today is Google, not just terms of sheer software innovations but also when it comes to establishing a foothold on the smart grid, especially as an enabler of home energy consumption management.

I would like to suggest that it also keep an eye on a more traditional rival, SAP. Frankly, that company is eating Microsoft's lunch (and Oracle's for that matter) when it comes to evolving its traditional applications to meet the sustainability needs of its customers. SAP is the top-ranked company on the Dow Jones Sustainability Index. It also is the only one of these companies that made the 2010 Global 100, a list of top companies from a sustainability strategy point of view that is published by Corporate Knights magazine.

But this post is really about Microsoft, which is absolutely getting more serious about the sustainability subject. Its subtle but significant decision to publish its 2010 Citizenship Report in tandem with its annual report signals the stronger emphasis it is in tying corporate social responsibility to success in business.

In the opening letter, Microsoft CEO Steve Ballmer puts it this way: "We see our Citizenship and business strategies as complimentary, creating shared value for Microsoft shareholders, employees stakeholders and society."

To that end, the company's overriding goal is this: To reduce carbon emissions per unit of revenue by 30 percent by 2012, compared with 2007. The big factors it is adjusting in an effort to meet this goal: business travel, data center energy usage, facilities management and its computer labs.

The Cloud's the Thing
There are many, many data points in the report. For example, the company has a stated goal of ensuring that new Microsoft-owned building use 20 percent less energy than traditional buildings. Right now, it sources about 25 percent of its energy from renewable energy sources, which is a bit deal as it contains to build out cloud-supporting data centers.

The thing that is most striking to me, given all the hoop-la about cloud computing, is Microsoft's view on the impact of the cloud movement on its own environmental footprint. If you think about it, the cloud can have an impact on all four goals stated above.

A significant declaration, as the company gets ready to take on delivering more of its software via the cloud computing model (aka as a service over the Internet) is the fact that Microsoft's newest data centers use 50 percent less energy today to handle the same amount of work than those built just three years ago. The company's facilities in Chicago and Dublin, in particular, are the ones to watch. For now. The company's goal is to build data centers with an average power use effectiveness (PUE) of 1.125. For those non-techies, this ratio measures the amount of cooling power needed to keep information technology infrastructure up and running. A perfect ratio would be 1; the current industry average is around 2.

The cloud, specifically remote conferencing capabilities, helped it cut carbon emissions related to corporate travel by 35 percent in fiscal year 2010.

Then there are the company's research and development labs: During the past year, the company consolidated its separate lab efforts into a central Research & Development Support facility. The move should save about 12,000 metric tons in carbon emissions annually.

Do Unto Others
One could argue that the biggest potential impact for a technology company like Microsoft is how its technology helps businesses and individuals meet their own environmental goals. To that end, it is worth noting that the company's latest operating system update, Windows 7, has some serious power management capabilities. During the past fiscal year, Microsoft also launched Microsoft Hohm, which is a cloud-based application (free!) that is designed to help consumers get a better handle on their at-home energy consumption. During the upcoming year, this technology will be integrated into electric vehicles from Ford.

The focus by Microsoft on consumers is understandable, considering the fact that Google has been quite aggressive regarding its own push into home energy usage insights via the Google PowerMeter. But the reason that SAP has gotten so much attention this year has been its focus on enabling businesses to get a better handle of sustainability all the way down its their supply chain. In other words, SAP is allowing companies to better control their insight into the actions of their suppliers and business partners, which could lead to serious strategy changes. Or not.

Think about Microsoft's profile among small and midsize businesses, which have been notoriously underserved as far as technology resources and tools to help address sustainability strategy. One example of progress is the integration work being done by two Microsoft partners, Epicor and Village Green, which have come out with a way of helping smaller companies view their status. In my mind, Microsoft is missing a big chance to make this a rallying cry, especially as smaller companies are increasingly challenged by much larger companies such as Walmart to get with the sustainability program.

This post was originally published on Smartplanet.com