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Environmental Management Information Systems: Making the Business Case

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June 2011

Fueled by the comingling of data for business administration, regulatory compliance, environmental management, and corporate social responsibility (CSR), Environmental Management Information System (“EMIS”) software has evolved from an unwelcome expense and liability to an essential asset to leverage for competitive advantage. Because of its elevation in the evolutionary chain, the archaic EMIS moniker is being quickly replaced by the more appropriate EERP (“Environmental Enterprise Resource Planning”). As your organization looks for ways to gain competitive advantage, EERP software, not an old-fashioned EMIS, will facilitate the optimal flow of business and environmental data across the internal and external boundaries of your organization to help drive improvements in operational efficiency, differentiation of products and services, and enhancement of corporate brand value.

In this article, we will look at the evolution of EMIS and ERP to EEPR and the value of EERP software including the added benefits of a cloud-computing solution. We will also consider how to extract the most value from your EERP software.

Evolution to EERP

Over the last two decades traditional Enterprise Resource Planning (ERP) software has been modernized in response to advances in information technology and business management as well as demands for greater transparency and accountability by regulatory agencies, customers, suppliers, credit rating agencies, and other key external stakeholders. Initially, ERP software focused on automating “back office” functions that did not directly affect customers and the general public. Later, as the World Wide Web and Internet matured, ERP software offered the ability to manage real-time data related to customers, suppliers, and regulators, giving employees and partners real–time access to “front office” information.

Traditional EMIS software encountered similar advances and pressures. Initially, clunky client-server EMIS software automated air, water, waste and chemical regulatory reporting. Later, Internet-based EMIS software platforms offered cheaper, more readily available access for environmental regulatory compliance data and incorporated capabilities for environmental management (e.g., auditing, ISO-14000), sustainability metrics, and greenhouse gas and carbon emissions.

The emergence of fully integrated, cloud computing EERP software enables an organization to readily consider the impact of its business on the environment and vice versa. Given this insight and opportunities for sustainable and profitable business development, measuring, managing, and reporting data about a firm’s impact on the environment is becoming increasingly critical to core business operations and financial outcome.

The Value of EERP in the Cloud

Cloud computing provides a fundamental differentiator for EEPR software. Cloud computing moves computer processing and storage off your desktop and back office servers into “cloud,” the cloud referring to that billowy shape displayed in flow charts and whiteboard drawings that depicts the Internet. The principle behind the cloud is that any computer connected to the Internet is connected to the same pool of IT resources (e.g., applications, files, processing, storage, etc.).

EERP software delivered on demand over the Internet offers the most advanced yet simplest way to measure, manage, and report highly-distributed, complex environmental data across an enterprise. Through cloud computing, EERP software is delivered as a service without any need for hardware and software beyond a modest personal computer. As compared to traditional on-premise, installed software, the cloud computing software service requires fewer resources to operate, reducing IT costs. Furthermore, Web services make it very easy to safely share data between cloud computing applications and legacy, mission critical on-premise systems.

Environmental and financial information is now readily available from a centralized relational database system via an Internet browser – all essential elements to meet the increasingly demanding needs of EHS requirements right there for the asking. The major benefits derived from the above approach to EERP are as follows:

  • Time Savings and Productivity GainsTraditional on-premise ERP and EMIS software often requires lengthy, complicated and resource-intensive deployments. Web-based cloud computing EERP software means quicker and easier deployments, helping companies meet even the most difficult reporting deadlines in a shorter time span. As all maintenance, security and upgrades are the responsibility of the service provider, organizations can spend less time and have fewer resources performing system administration, maintenance and support, and more time on core business functions. Moreover, secure anywhere, anytime access via the Internet allows company personnel to access their data and information from corporate offices, production facilities, remote offices, airports, coffee shops, etc, increasing productivity and operating efficiencies.
  • Reduced Costs and IT BurdenCloud computing software is architected to be multitenant. Multitenant architecture allows many customers to operate from a single software instance. This delivers higher economies of scale over traditional single tenant software, where every customer operates from its own separate and distinct software instance, because it combines IT infrastructure and application software into a single, yet highly secure operating environment. Cost savings are recognized when you purchase access for only the amount of that single software instance you use; you do not pay all the software and hardware costs for the entire system.Furthermore, without the need to purchase or install application software, operating systems, databases, and servers, the upfront installation and deployment costs of cloud computing are dramatically reduced and the time to value is much shorter.

    The good news in all this is that the cost savings are passed on to the customer making multitenant, cloud computing EERP software more cost effective than traditional ERP and EMIS software. Given the pricing model of most cloud technologies, in which customers typically lease the software in one, two or three-year increments, cloud-based EERP has a very compelling business case.

  • On Demand and Up-to-DateCloud computing providers are responsible for upgrading the software, so customers always have access to the latest technology and richest features without having to either employ personnel to continuously re-install upgrades or install new modules. Cloud computing providers and their multitenant applications release a single version of their software to all of its customers. The upgraded software including bug fixes and product enhancements are available to all customers, not just those who have specific versions or modules. Thus, IT and Procurement resources do not have to purchase more hardware and software. The upgrades, maintenance and product enhancements occur automatically, instantly and invisibly, at no additional cost. This “on-demand” approach focuses your organization’s time on the measurement, management, and reporting of environmental and financial data, not the procurement and deployment of new or upgraded software.
  • Secure and AvailableAs companies adopt new technologies and services, especially if potentially sensitive data is stored off premise, security is a serious concern. Best-in-class EERP cloud computing services offer important security elements such as:
    • stringent physical access controls at co-location facilities using state of the art biometric scanners;
    • redundant power sources with backup generators capable of indefinite operation;
    • redundant Internet connectivity to maximize network availability;
    • complete fault tolerant network infrastructure and redundant systems to offer 24/7 system uptime;
    • encrypted communications to ensure safety of data and information during transit;
    • regular testing of systems for vulnerabilities;
    • active content including document uploading that is scanned for viruses;
    • user access and authentication via unique username and password with configurable password policies for each customer; and
    • comprehensive disaster recovery planning.

    In addition, the most trustworthy and reliable EERP cloud computing vendors obtain SAS-70 certification. SAS-70 (Statement of Auditing Standards No. 70) is an American Institute of CPA’s standard for auditing service organizations such as cloud computing service providers. It is widely recognized, because it represents that the service provider’s control over information technology and related processes have been through an in-depth verifiable audit. The service provider demonstrates that it has adequate controls and protections in place when they host and process data belonging to their customers. Moreover, for EERP software service providers, the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 make SAS 70 audits crucial for reporting on the effectiveness of internal control over financial reporting.

  • Scalable and ExtensibleAs an organization and its environmental data management needs grow, its EERP software needs to grow as well. Cloud computing platforms are typically N-tier, service-oriented, multi-tenant architectures, enabling the service provider to rapidly offer more computing power and functionality without increasing the burden on overworked IT professional with installation, deployment, and maintenance. The service provider just adds new or upgraded servers, storage, operating systems, security patches, etc. The architecture also allows the service provider to enhance the application with new features, functionality, and services that increase the value of the EERP software.

Enhanced Data Analytics

The unique nature of cloud technology enables greater understanding of data as part of a broader context. Cloud computing allows for peer to peer comparisons or the ability to create a greenhouse gas, energy or sustainability index for an industry or market segment and then compare performance to that index. For example, available cloud computing solutions can create an energy consumption index factored by revenue, number of employees, production output, or any other operational or financial variable necessary to allow the organization to measure their performance to their peers.

New Opportunities for Collaboration

As an enterprise planning tool, cloud-based EERP software provides data and information from a centralized database accessible to employees and partners via the Internet. Many people across the entire enterprise can access the same environmental and business data and information. Environmental personnel can share reports and dashboards with executives, enabling the incorporation of environmental data into key business decisions.

EERP data and information will empower CEOs to directly and frequently interact with environmental managers, engineers, and scientists as critical resources for the organizational and financial planning. These new business alliances will collaborate on strategy, competitiveness and shareholder value. And, COOs and CIOs will appreciate secure, centralized environmental and financial data that are readily available anytime, anywhere.

Getting the Most out of Environmental ERP

Several key elements are necessary to make EERP software truly an asset to the business. While we’ve been focusing mainly on the evolution and value of an EERP, a comprehensive, reliable system truly depends upon the scientific foundation on which it’s based. Because air, waste and water emissions are a matter of physics and chemistry, not just zeros and ones, reliable accounting systems must also be grounded in the physics and chemistry of emissions, and built by people with deep scientific understanding of the space. Environmental engineers and scientists become essential resources for verifying emissions data both for regulatory compliance and financial reporting.

There are thousands of environmental data points that can be monitored and managed. But for simplicity’s sake, the main categories collected and analyzed by EERP include air, waste and water emissions due to energy consumption, manufacturing and operational processes, transportation, and more.

While environmental data is complex, EERP makes it manageable. In addition to the checklist shown at the right that outlines key factors of best-in-class EERP software, other factors that should be considered include the power of insight to supply chain emissions as well as cloud computing, the optimal platform for EERP.

Supply Chain Environmentalism

The logical first step to environmental emissions management is to calculate a company’s direct emissions. Yet in order to truly assess a company’s environmental footprint, one must account for the environmental emissions produced in each step of the supply chain.

Supply Chain Environmentalism allows companies to identify, calculate and reduce environmental costs throughout the supply chain. EERP enables users to identify and dissect environmentally-related costs along all steps of the supply chain from the acquisition of raw materials to the point of delivery; rank order this environmental impact by what can be addressed economically; and execute projects to manage the cost-effective reduction of the risks identified in the supply chain.The figure shows a three dimensional snapshot of the cost of four specific environmental data points as they are calculated throughout the different supply tiers.

Being aware of environmental emissions and costs throughout the supply chain helps companies protect against cost increases associated with environmental impacts, differentiate their products as being more sustainable, and therefore increase overall competitiveness.

Summary and Conclusions

The benefits offered by managing environmental data with EERP software are immense, such as the ability to quickly pinpoint environmental weak spots along the supply chain, eliminate inefficiencies in production and energy usage, encourage greater environmental responsibility by
Author: Doug Hatler, VP, Operational Excellence, Enviance

Doug Hatler joined Enviance with over 15 years of environmental management and technology experience.

As Vice President of Operational Excellence, Doug’s focus is on delivering higher value to customers through more effective teamwork and collaboration, optimizing business processes, and leveraging technology that continuously measures, manages, and reports progress.

Doug is a published industry expert, college instructor, and featured speaker on environmental management. His expertise is leveraging information technology to assure environmental, health & safety (EH&S) compliance, and to improve organizational performance and effectiveness.

EERP SOFTWARE CHECKLIST

  • Centralized: to provide source category uniformity, intelligent and consistent calculation methods, and standard libraries of emission factors, values and other items contained in the rule.
  • Flexible: to continually adjust as protocols for GHG data collection, calculation and reporting change and evolve.
  • Valid: system should confer validity on the numbers reported and gives policy-makers and citizens alike a common basis on which to design solutions and evaluate their success.
  • Accurate: specific calculation methods depend on the frequency of data collected, missing data identification and substitution, and in some cases minimum intervals between samples used in the GHG calculations.
  • Comprehensive: system should enable a business to understand the full footprint across all environmental issues, from cradle to grave (scope 1 to 3). A key benefit is the ability to harness supply chains in reducing environmental and financial impacts.
  • Financially oriented: system should enable a company to fully comprehend both environmental impacts AND costs on its bottom line.
  • Focused on what matters: the ability to identify what truly matters in terms of environment and bottom line, enabling organizations to step away from the single topic hysteria (yesterday carbon, today energy?) to a more balanced focus on where the issues truly are.
  • Solution oriented: provide solutions that are ranked in terms of their costs and benefits.
  • Smart: issues alerts if required data is missing or if sample intervals are too short.
  • Detailed: provide information such as the name and description of the parameters, exact mathematical calculations, unit of measure, applicable dates, and more.

 

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