Wednesday, 20 January 2010

Emerging leaders in Enterprise Carbon Accounting

Groom Energy Research has released a report into the Enterprise Carbon Accounting (ECA) software market.  The report says that more than $46m in venture capital was invested in ECA start-up companies, with big-name players such as Computer Associates and Microsoft entering the market as well as several acquisitions, including SAP (Clear Standards) and IHS (ESS).

The report cites three main factors in the ECA market growth:
• Increased pressure from customers and investors for companies to create a ‘greener’ public image.  This was found to be a more important driver than pending GHG regulation;
• Cost and energy savings from sustainability investments;
• Mandates from buyers, like the Walmart Supplier Sustainability Assessment Program that was implemented to measure the environmental impact of supplier operations.

The increased pressure on companies to report emissions is clear and is demonstrated by the number of companies reporting to the CDP, which increased over 50% last year, as the chart below shows.


“In light of the economic climate, sales growth for ECA software shows the importance of this emerging category,” said Paul Baier, report author and vice president of consulting
services for Groom Energy. “Our on-going customer and vendor research reinforces our belief that the ECA market will see explosive growth in size and global importance in 2010 and 2011.” The number of organisations using ECA software is expected to increase five fold by 2011.

This is the third report on the subject from Groom Energy.  In 2008 the company identified 40 vendors in the market but that has increased to 60 this time round, which the report splits into four categories: environmental health and safety vendors (EHS), new products from large firms, start-up companies and energy management firms.

Eight companies are highlighted as 2010 ECA Emerging Leaders, based on number of customer deployments, technology features, market vision and financial stability. These are:

  • Enablon
  • Enviance
  • Hara
  • IHS
  • Johnson Controls
  • PE International
  • ProcessMAP
  • SAP.

This very much supports the views expressed in this blog over the last year.  Carbon accounting software (which comes under a variety of names, including Carbon Emissions Management Software – CEMS) is perhaps the most visible new market opportunity in green ICT.  Eventually almost all companies will be obliged to report emissions – even if legislation is slow stakeholder pressure is growing by the minute – so it has huge market potential. 

The vendor landscape is following the usual trajectory of a new ICT market, with small start-ups having paved the way and the big players, seeing the opportunity, have now weighed in.  The number of vendors may grow this year, but this is a market not that far from maturity.  Features and functions are pretty much known and innovation is slowing.  I would expect significant consolidation to start by the end of this year, with the lucky start-ups finding a big-name buyer.

© The Green IT Review

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