Hello everyone, as promised, here is the second installment of IT Cost Management – additional functionalities: Green IT scenario. In case you missed the introduction to the topic, you can still check the blog post by my colleague Vanja Jovanovic: Introduction to IT Cost Management. There she is explaining how SAP Profitability and Performance Management solution can help companies to achieve their goals of increasing transparency and minimizing costs by gaining deeper insights into granular cost information at different levels. Additional functionalities such as integration with two Cloud billing systems, a project dimension with its WBS elements, and Green IT scenario are also available.
This time, we will focus on the journey to carbon neutrality. Companies are under pressure to reduce their environmental impact as more consumers demand green products and sustainable operations. As you plan for your Green IT future, SAP is here to help to support the environmental transition by optimizing resources within increased understanding of sustainable consumption, elimination of waste and improved margins.
Green Information Technology or Green computing is a practice relevant for numerous companies and organizations in the software industry. It focuses on using computers and IT resources in an optimized and environmentally responsible way. Main objectives of the concept are to reduce the amount and use of hazardous materials, increase energy efficiency, and promote and maintain proper recycling habits.
The digital technology shift has fundamentally changed our world. Information Technology is now integral part of all business processes, but with reliance on IT systems the energy consumption need is growing every day. The success of more and more businesses depends on server networks around the globe which rely on each other to store, provide, and share the information and services they need. Data centers require power 24/7 to run systems, and this results in higher CO2 emissions. Powering their cooling and ventilation systems also requires energy consumption. Servers need to be cool in order to prevent the reduction of their reliability and take actions against data loss. Energy costs are rising steadily resulting in increased business costs that directly impact profit margins. Green IT implementation can help companies lower their overall power usage.
As longstanding environmental issues in business intensify, software companies are feeling growing economic pressure to tackle this problem. Our solution helps business to accelerate progress towards sustainable practices and goals, decrease carbon footprint and potentially lower energy costs by improving server utilization. It also enables companies to make the best of their resources by establishing environmental and commercial value of proper IT equipment utilization. It helps you understand and assess your company’s sustainability impacts, through creating a strong foundation for measuring, monitoring, and controlling the carbon footprint of the IT systems. In doing so, you not only ensure business success, but also contribute to the environmental protection. As a result, carbon footprint is reduced, and unavoidable emissions are offset.
Green IT scenario implementation in SAP Profitability and Performance Management
Let me explain how the Green IT scenario is implemented in the SAP Profitability and Performance Management IT Cost Management sample content. Firstly, two model tables serve as a reference to make the environmental data available in our environment.
Then, GHG scopes are derived based on the environmental data in the model tables – the scopes derivation is in line with the Greenhouse Gas Protocol Guidance (GHG Protocol). The GHG Protocol Initiative develops and promotes international greenhouse gas accounting and reporting standards. The guidance classifies the GHG scopes into three scopes. Scope 1 refers of the direct emissions of company’s personal or controlled sources like servers and storage. Scope 2 covers indirect emissions like purchased electricity, steam, heat, and cooling which companies consume. And Scope 3 covers all others indirect emissions which occur in company’s value chain, upstream and downstream.
As it was explained in the previous blog post, our allocation process follows standard methodology in combination with activity-based costing. Allocate Carbon Emissions function is used to allocate effect value and consumption from derived GHG Scopes, according to the emission factor or energy source portion from the emission factors model table.
Finally, Carbon Intensity function calculates the carbon intensity and converts into TCO2e. Power generation remains the largest GHG-emitting sector in Europe. Carbon intensity of electricity refers to the number of grams of carbon dioxide (CO2) that it takes to make one unit of electricity a kilowatt per hour (kW/hour). The various energy sources produce different quantity carbon dioxide emissions. Electricity generated using coal power stations has higher carbon intensity value, with most CO2 emissions produced during plant operation. Nuclear and renewable forms of generation produce almost no emissions, so their carbon intensity is very low. The lower the carbon footprint, the greener the electricity.
Sustainability reporting has been more and more frequently used by corporations worldwide given the demand of shareholders for greater transparency on both environmental and social issues. IT Cost Management comes with predefined reports where interested parties can review and analyze the deployed results in detail, utilizing the available powerful features like drill down, drill through, and slice and dice. Business also can align their IT infrastructure and services with their environmental goals and targets by complying with the global environmental standards for managing CO2 emissions and energy consumption.
KPIs dashboard draws attention to CO2 emissions and energy use. Management can focus on reducing CO2 emissions and optimizing the energy use by investing in renewable energy and reducing the internal energy consumption drivers.
The geo map report empowers you to document IT CO2 across different geographic locations, analyze the data from different angles by drilling down into the towers – the IT view, or cost pools – the finance view.
IT CO2 emissions reporting by BU and GHG scope acts as an important communication tool within companies. Areas where improvement is needed can be quickly identified and further analysis on their data might be conducted to find out necessary optimization potential. This optimization potential might occur in a particular country or business unit, or in a certain country-business combination.
CO2 emission development over time report offers complete transparency of the CO2 emissions change over a year time frame.
Value chain emission impact can be assessed by the integrated Sankey chart which depicts IT greenhouse gas emissions in a powerful visual way.
The additional analyses of the energy consumption and the share of renewable energy over time promote a broad overview of the energy performance. Moreover, the top causes of IT emissions and waste over time can be easily identified. IT sector can create transparency by accessing IT related emissions and energy consumption using our content that includes predefined taxonomies, objects and layers, allocation rules, as well as the reporting and tailored matrix.
Hope this blog post helped you understand the relationship between environment and IT business. I fully believe that environmental protection and business success can coincide in harmony. Of course, if you have any question, please leave a comment.