GREEN QUADRANT SUSTAINABLE TECHNOLOGY SERVICES (GLOBAL) MARCH 2013

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1 GREEN QUADRANT SUSTAINABLE TECHNOLOGY SERVICES (GLOBAL) MARCH 2013 Verdantix Ltd Reproduction Prohibited.

2 GREEN QUADRANT SUSTAINABLE TECHNOLOGY SERVICES (GLOBAL) March 2013 EXECUTIVE SUMMARY Licensed Content This Green Quadrant report provides a detailed and fact-based comparison of 16 of the leading sustainable technology service providers globally. The analysis is based on interviews with 15 buyers representing firms with revenues of $183 billion, supplier responses to a 53 point questionnaire and detailed supplier interviews. The study finds that the most popular sustainability projects today are energy reduction, environmental management and sustainability performance reporting, but leading firms now look towards enterprise-wide transformational initiatives that will increase revenue and improve their brand and reputation. The objective, factbased analysis concludes that four suppliers currently lead the market: Accenture, CGI, Deloitte and IBM. These four suppliers offer the broadest and deepest set of capabilities and can best meet firms needs as they design and implement their transformational sustainability strategy programmes. TABLE OF CONTENTS STATE OF THE MARKET FOR SUSTAINABLE TECHNOLOGY SERVICES Market Opportunities Have Evolved From Green IT To Line Of Business Environment And Energy Projects SUSTAINABILITY LEADERS HAVE BROAD TECHNOLOGY REQUIREMENTS Continuity Rules: Compliance, Cost Cutting And Sustainability Reporting Top Buyers Priorities Over The Past Two Years Most Firms Have Used Tech Services Providers In The Next Two Years Firms Will Continue To Buy From Tech Services Providers Buyers Expect Transparency, Disclosure And Leadership From Their Tech Services Providers GREEN QUADRANT : SUSTAINABLE TECHNOLOGY SERVICES Green Quadrant Methodology Evaluated Suppliers: Selection Criteria Evaluation Criteria For Technology Services Providers 2013 Verdantix Ltd. All Rights Reserved. Verdantix, Green Quadrant, Total Portfolio and Critical Moments are trademarks of Verdantix Ltd. All other trademarks are the property of their respective companies. Verdantix clients may make one attributed copy of each figure or paragraph contained herein. Additional reproduction is strictly prohibited. Verdantix Ltd Reproduction Prohibited. 2

3 Among Eight Market Leaders, Accenture, CGI, Deloitte And IBM Offer Outstanding Capabilities Investment By Atos, Dimension Data, TCS And Wipro Pays Off As They Enter The Leaders Quadrant Four Specialists Have Solid Corporate Sustainability Credentials And Proven Capabilities Four Providers Offer Focused Commercial Capabilities, But Have Weaknesses In Corporate Sustainability Performance HOW TO SELECT A TECH SERVICE PROVIDER FOR SUSTAINABILITY PROJECTS TABLE OF FIGURES Figure 1. Three Phases Of Sustainable Technology Services Market Development Figure 2. Investment In Sustainable Technology Projects In The Past Two Years Figure 3. Advisory & Implementation Investments With Tech Service Providers Figure 4. Assistance With Projects Over The Next Two Years Figure 5. How Buyers Assess Tech Services Providers On Sustainability Strategy Figure 6. How Buyers Shortlist Tech Services Providers On Sustainability Performance Figure 7. Buyers Awareness Of Tech Service Providers Sustainability Services Figure 8. Buyers Preferred Sustainable Tech Services Providers Figure 9. Capabilities Criteria For Sustainable Technology Service Providers Figure 10. Momentum Criteria For Sustainable Technology Service Providers Figure 11. Green Quadrant Sustainable Technology Service Providers Figure 12. Capability Scores For 16 Sustainable Technology Service Providers Figure 13. Momentum Scores For 16 Sustainable Technology Service Providers ORGANIZATIONS MENTIONED Abeam Consulting, Accenture, Atos, BearingPoint, BMW, BP, Britehouse SSD, BT, Capgemini, CDP, Celerant Consulting, CGI, City of New York, Clear Carbon, Cognizant, CSC, Daimler, dcarbon8, Deloitte, Dimension Data, Domani, EDF, Electricity North West, FedEx, FIFA, France Telecom, Fujitsu Ltd, General Electric, HCL Technologies, Hitachi Consulting, HP, IBM, Intel, Infosys, KMPG, LG CNS, Lockheed Martin, Logica, Louis Vuitton, Mahindra Satyam, Michelin, NASA, NV Energy, NTT, NTT Data, Origin Energy, Pacific Gas and Electric, Philips, PRIZIM, Renault, SAP, Siemens, Siemens IT Solutions and Services, SIS, Steria, TCS, Tieto, UGI Utilities, UK Ministry of Defence, UN Global Compact, Unisys, West Monroe Partners, Wipro 2013 Verdantix Ltd. All Rights Reserved. Verdantix, Green Quadrant, Total Portfolio and Critical Moments are trademarks of Verdantix Ltd. All other trademarks are the property of their respective companies. Verdantix clients may make one attributed copy of each figure or paragraph contained herein. Additional reproduction is strictly prohibited. Verdantix Ltd Reproduction Prohibited. 3

4 STATE OF THE MARKET FOR SUSTAINABLE TECHNOLOGY SERVICES Since 2006, firms with revenues of $1 billion or more have looked to technology service providers for consulting advice, technology selection support and systems implementation work linked to a variety of energy, environment and sustainability initiatives. This report helps Chief Sustainability Officers (CSO), Chief Information Officers (CIO), Chief Financial Officers (CFO), Environment Health & Safety leadership, Heads of Energy and Heads of Real Estate to select a technology service provider for projects such as facility energy management, environmental compliance, sustainability performance management and renewable energy systems integration. Major questions include: Which suppliers lead the market for technology services that enable more sustainable business operations? Which supplier is the best fit to technology-enable my firm s energy, environment and sustainability initiatives? How should I shortlist technology service providers for advice and project implementation? To answer these questions, Verdantix analysed 16 suppliers through detailed interviews and a 53 point questionnaire. Additionally, we conducted interviews with an expert panel composed of 15 customers or potential customers of technology services firms. The decisionmakers were located in Australia, Canada, France, the UAE, the UK and the US, and represented 11 industries: automotive, business services, chemicals, construction, food and beverage, high tech engineering, pharmaceuticals, public sector, real estate, telecommunications, and travel and transport. The resulting analysis is based on the proprietary Verdantix Green Quadrant methodology designed to provide an evidence-based, objective assessment of firms providing comparable products or services. Market Opportunities Have Evolved From Green IT To Line Of Business Environment And Energy Projects The financial crisis in 2008 and the ongoing economic recession created uncertainty about the role of sustainability in business strategy and operations. Implementation of Green IT point solutions, such as PC power management or server virtualization, were the dominant feature of the sustainable technology market prior to the recession. But during the subsequent downturn firms sustainability strategies changed to focus on enterprise-wide energy cost reduction, together with environmental compliance initiatives, mainly in response to both existing and new regulations. The Verdantix Green Quadrant on sustainable technology services published in February 2012 concluded that leading firms were moving beyond these limited projects towards a more holistic strategy, looking at the benefit of sustainability initiatives on their brand and reputation. This approach requires new initiatives across all business activities and departments (see Verdantix Green Quadrant Sustainable Technology Verdantix Ltd Reproduction Prohibited. 4

5 CUSTOMER SUPPLIER VERDANTIX GREEN QUADRANT SUSTAINABLE TECHNOLOGY SERVICES (GLOBAL) 2013 Figure 1. Three Phases Of Sustainable Technology Services Market Development Commercial Strategy Point solutions for Green IT Portfolio of sustainable IT business offerings Sustainability and strategy consulting units merge Sustainability Organization No formal Green IT practice areas Sustainable technology business units emerge Global sustainability practices essential for success Value Propositions Green data centres Sustainable technology advisory services Strategy, design and implementation services. Sustainability Requirements Isolated inclusion in RFPs 0-25% weightings in RFPs Suppliers with poor sustainability excluded from bidding Sustainability Budget Most industries with no defined budget Specific departmental sustainability budgets emerge Operating units have budgets and targets, CSO runs programme Executive Involvement Limited, varies by industry Sustainability councils established but ineffective All senior execs have sustainability as part of bonus targets Source: Verdantix Services (Global) 2012). Our more recent research on macro market trends indicates that the three phases of past, current and future market development consist of (see Figure 1): Isolated Green IT point solutions from 2005 to Sustainable technology opportunities first emerged in A small number of firms, such as FedEx, Intel and Renault, identified sustainability as a strategic priority, but insufficient demand meant IT services providers didn t establish dedicated practice areas. The work was largely centred on Green IT initiatives, with a focus on data centre energy efficiency. Providers, such as HP and IBM, leveraged existing data centre capabilities and marketed the energy efficiency and low carbon elements of their existing solutions. Far from being a new market, Green IT represented little more than marketing gloss on IT industry trends, such as server virtualization, that had been ongoing for several years. But growing interest in the impact of high energy costs and carbon regulation on IT spending did trigger real R&D programmes and customer traction. Rise of sustainable business thinking from 2009 to The rise of sustainability up the corporate agenda means that today, buyers include sustainability criteria especially those linked to costs in most RFPs for major IT projects. The maturity of customer pressure varies significantly by country and by industry. Firms such as BG Group, General Electric and Pacific Gas and Electric (PG&E) now link executive remuneration to sustainability performance. In response, tech providers offer a wider portfolio of sustainable technology solutions, such as IT systems for facility energy management, environmental compliance and sustainability performance management. Verdantix Ltd Reproduction Prohibited. 5

6 By the end of 2012, 11 of the leading tech service providers had established dedicated sustainable technology practice groups. During this period most work consisted of providing consultancy on technology-enabled sustainability as IT budgets stayed flat and lower energy costs eliminated the urgency to invest in implementation. Sustainability will be slowly integrated into business strategy from 2013 onwards. From 2013 the most committed firms, usually with revenues above $20 billion and a CEO-backed sustainability strategy, will incorporate sustainability into more aspects of their business strategy. Their smaller competitors will slowly follow suit. Evidence of this move can already be found: UK telecom firm BT has plans to ensure that sustainability practices are embedded into BT's strategy, products and services (see Verdantix: BT Bets On Sustainability To Deliver Business Benefits). Within firms, business units not CSOs will be responsible for ensuring that sustainability goals are met. For example, BT s Operating Committee, which consists of the CEOs of BT s business units, is responsible both for setting the sustainability investment strategy and for delivering its goals. BT s strategy is not driven by altruism, but by a conviction that its strategy will bring hard business benefits. One technology services provider told Verdantix that it had recently won a large public sector contract in the UK because of its superior sustainability performance. We predict that by 2016 firms with poor sustainability track records will be excluded from bidding for major contracts in both the public and private sectors, especially in Europe. SUSTAINABILITY LEADERS HAVE BROAD TECHNOLOGY REQUIREMENTS Technology portfolios serving the needs of business leaders who own energy and environmental operations are set to expand. But where is the market today? To get a better understanding of customer issues, Verdantix interviewed a customer panel formed of 15 current or potential buyers of technology services that support energy, environment and sustainability processes. The respondents represented firms with combined annual revenues of $183 billion. Within these organizations, we spoke with decision-makers directly involved in selecting service providers for energy, environment and sustainability projects in roles such as Global Sustainability Director, VP Environment Health & Safety, Global Energy Director and Head of Global Corporate Responsibility. These respondents are leading figures in their industries. Continuity Rules: Compliance, Cost Cutting And Sustainability Reporting Top Buyers Priorities Over the past two years panel members have focused on technology initiatives linked to regulatory compliance, sustainability performance management and energy cost reduction (see Figure 2). These priorities were confirmed by a recent Verdantix survey of 250 sustainability leaders in 13 countries, whose top three priorities were the same, although energy cost reduction topped the list (see Verdantix Global Sustainability Leaders Survey: Budgets And Priorities). Firms invest in technology projects to: Manage risks associated with environmental performance. Firms operating in the EU must comply with regulations such as the EU Regulation for the Registration, Verdantix Ltd Reproduction Prohibited. 6

7 Figure 2. Investment In Sustainable Technology Projects In The Past Two Years Which sustainable technology projects has your firm worked on in the past two years? (multiple responses accepted) Environmental Management 1 Sustainability Performance Management 1 Renewable Energy Systems 1 93% 93% 93% Water Management Systems 9 Manufacturing Plant Energy Systems 8 Real Estate Energy Systems 7 IT Portfolio Energy Systems 6 Low Carbon Transport 5 Smart Grid Energy Systems 4 Climate Change Modelling 3 Municipal Energy Systems 2 Residential Smart Meter Systems 1 80% 73% 73% 6 60% 53% % Source: Verdantix N=15 Evaluation, and Authorization of Chemicals (REACH), the Directive on the Restriction of the use of Hazardous Substances in electrical and electronic equipment (RoHS) and the Directive on waste from electrical and electronic equipment (WEEE). The importance of maintaining accurate data records is such that many firms now manage the reporting through an IT system such as SAP s EHS Management package. This is reflected in the customer panel responses, which show that 14 out of the 15 customers have implemented an environmental management IT system project in the past two years. Improvements in our sustainability performance are often driven by regulatory changes both in the EU and US, with a focus on the operational level. We're targeting energy efficiency in our production systems, reducing waste to landfill, and being proactive in reducing the chemical usage in our product manufacturing processes. (Industrial engineering firm) Improve their sustainability reporting and performance management. Stakeholders and customers expect, and increasingly require, their suppliers to report and manage the sustainability aspects of their performance, such as energy consumption and carbon emissions, use of water and disposal of waste. Some of this reporting is now mandatory. There has been a significant increase in the number and scope of carbon compliance regulations: in Europe, Phase 3 of the EU Emissions Trading System (ETS) began in January 2013 and will impose much higher costs on firms that are unable to manage their energy consumption and report data accurately (see Verdantix Best Practices: EU Emissions Trading Systems Phase 3). Illustrating the increasing importance of Verdantix Ltd Reproduction Prohibited. 7

8 sustainability reporting, the number of firms producing sustainability reports against the Global Reporting Initiative (GRI) framework has risen from 281 in 2004 to 2,654 in 2011, at a compound annual growth rate (CAGR) of 38% (see Verdantix Corporate Sustainability Reporting Budgets And Priorities). Fourteen out of the 15 panel members have implemented a sustainability performance management IT system project in the past two years. We are continuing to expand and improve our energy and sustainability performance reporting systems. We already track a range of metrics, including water use, energy, carbon emissions, waste, and safety. (Pharmaceuticals Firm) Increase energy efficiency of buildings, factories, and data centres. Reducing energy consumption has the dual benefits of lowering cost and reducing carbon emissions, and investments in these systems are easy to justify financially. Firms are also taking increasing interest in generating their own electricity from renewable sources; 14 of our customers had invested in renewable energy projects in the past two years. Verdantix has found that many large firms have launched a strategic energy management programme to better manage growing energy costs, mitigate security of supply risks and benefit from the potential of decentralized electricity generation as well as renewable energy technologies. (see Verdantix Green Quadrant Energy Management Software (Global) 2013). We have two areas where we'd like to see development in over the next two years: renewable power and improved efficiency. We've been looking to small scale on-site renewable generation such as biomass and small hydro to increase the sustainability of our operations. (Construction firm) Over The Past Two Years Most Firms Have Used Tech Services Providers Over the past two years, all but one of the customer panel have engaged technology services providers to advise or implement one or more of a range of sustainability initiatives (see Figure 3). Verdantix heard that customers: Engaged tech service providers more for advisory than implementation support. When evaluating the 12 initiatives, more customers engaged with providers on advisory projects than for implementation. For four of the initiatives, at least eight of the customers said they worked with a tech services firm on an advisory project and at least six had worked with a tech services firm on an implementation project. The greatest demand for support came from IT portfolio energy systems defined as data centres and telecoms networks and sustainability performance management software. For both of these, 73% of buyers (11) from the 15-strong panel told Verdantix that they had engaged with a tech services provider during the past two years. We have engaged a tech services provider to advise us on our sustainability reporting - a mixture of metrics, carbon, energy etc. We want to disclose our carbon footprint in a way that is transparent. (Travel and transport firm) Verdantix Ltd Reproduction Prohibited. 8

9 Figure 3. Advisory And Implementation Investments With Tech Service Providers Has your firm used a tech services provider for advisory or implementation services on the following projects over the past two years? (multiple responses accepted) IT Portfolio Energy Systems Sustainability Performance Management 4 60% 6 6 Manufacturing Plant Energy 53% 4 Environmental Management 53% Renewable Energy Systems Real Estate Energy Systems Water Management Systems Smart Grid Energy Systems Municipal Energy Systems Residential Smart Meter Systems Low Carbon Transport Climate Change Modelling Advisory Implementation Source: Verdantix N=15 Sought advisory and implementation support for a wide range of energy and environment projects. Eight members of the customer panel engaged a tech services firm for advisory work on an environmental management project, and six on implementation. At least seven customers had worked with tech services providers on advisory projects for renewable energy, manufacturing plant energy systems and real estate energy systems and six of these had also bought assistance with implementation. Issues such as water management are gaining more prominence and are also triggering requests for advice, but only four customers had followed this through with help on implementation. We partnered with a tech services provider to install a smart micro-grid at the factory level, giving us fine resolution on energy use at the factory floor. The factories use much more energy than our office buildings, so any changes we can make to improve factory energy efficiency will be Verdantix Ltd Reproduction Prohibited. 9

10 Figure 4. Assistance With Projects Over The Next Two Years Will your firm seek advice or implementation support from a tech services provider for any of your sustainability projects over the next two years? (multiple responses accepted) Manufacturing Plant Energy Systems Sustainability Performance Management Environmental Management 33% 33% 53% 4 53% 4 IT Portfolio Energy Systems Real Estate Energy Systems Smart Grid Energy Systems Renewable Energy Systems Municipal Energy Systems Climate Change Modelling 2 Residential Smart Meter Systems Low Carbon Transport Water Management Systems Advisory Implementation Source: Verdantix N=15 significant, however you can't change what you can't measure - that is why this detailed metering and reporting is so useful to us. (Pharmaceutical firm) Followed up advisory engagements: evolved into implementation projects. For ten of the 12 sustainable technology initiatives evaluated, members of the customer panel had followed up advisory projects with implementation work. (The exceptions were low carbon transport and climate change modelling.) For example, 60% (nine) of the customers had taken both advisory and implementation services for IT portfolio energy systems; one other customer had taken just advisory assistance, and another had only paid for help with implementation. We engaged a tech services provider to help us with the management of our data for health and safety (e.g. accident reporting), environmental performance, energy usage, water consumption Verdantix Ltd Reproduction Prohibited. 10

11 Figure 5. How Buyers Assess Tech Services Providers On Sustainability Strategy When you assess a tech services provider on their sustainability performance, how important are the following strategic factors? Commercial partnerships Corporate sustainability strategy 2 4 Quality of CSR report 2 Assurance of sustainability data 33% 2 NGO partnerships 33% 2 Seniority of sustainability leadership 2 2 Ranking in sustainability indices 2 33% 2 Very Important Important Neutral Unimportant Source: Verdantix N=15 and for recycling. This will give us the information we need for internal audits. (Manufacturing firm) In The Next Two Years Firms Will Continue To Buy From Tech Services Providers All but one of the panel plan to engage a tech services provider over the next two years. Verdantix heard that in future the dominance of advisory work will reduce (see Figure 4). Specifically, there will be: A shift towards implementation support for more mature technologies. Slightly more panel members will seek implementation support than advisory help for IT portfolio and real estate energy efficiency projects reflecting the level of maturity of these solutions. Firms top priority is to reduce costs, and these projects are easy to justify. Nine of the panel members will engage tech services firms for both advice and implementation support for these two categories. Continued demand for help with complex problem areas. A common theme of many of the customer interviews was that firms plan to put increased efforts into IT systems for enterprise-wide automated reporting across sustainability performance management domains like energy, carbon, water and waste. Nearly two thirds (60%) of the panel said that they planned to engage a tech services firm for either advisory or implementation Verdantix Ltd Reproduction Prohibited. 11

12 Figure 6. How Buyers Shortlist Tech Services Providers On Sustainability Performance When you assess a tech services provider on their sustainability performance, how important are the following operational factors? Ethical supply chain policy 60% Waste and recycling policy 4 33% Carbon reduction target 2 53% Data centre energy efficiency 60% Social inclusivity policy 4 2 Water management policy Building energy efficiency 2 Travel emission reduction target 53% Very Important Important Neutral Unimportant Source: Verdantix N=15 support with these initiatives. They will also look for help in other complex areas such as manufacturing energy systems: seven members (4) of the panel will look for both consultancy advice and implementation support for this domain, and one other intends to take consultancy advice only. Increased interest in innovative solutions. Six of the panel plan to invest in advice on renewable energy systems, four on municipal energy systems such as combined heat and power (CHP) solutions, and four on climate change modelling. Climate change IT systems can be used to assess business risk or to predict future demand. Climate change modelling and the innovative use of satellite data is valuable in sectors such as agriculture, transport, and government bodies, which feel the impacts of climate change directly. For example, Hitachi markets GeoMation Farm, an agricultural information management system. The system determines the optimum harvest time based on growth forecasting, helping to reduce energy use. In the case of wheat, users can reduce annual CO2 emissions by approximately 33% over the life cycle of the crop. Buyers Expect Transparency, Disclosure And Leadership From Their Tech Services Providers In the next two years, corporate buyers in line of business units and in corporate functions such as facilities management and IT want to implement technology solutions that will save them money, meet compliance goals and enhance their overall sustainability performance. Verdantix Ltd Reproduction Prohibited. 12

13 Figure 7. Buyers Awareness Of Tech Services Providers Sustainability Services What is your awareness of the sustainable technology services offered by the following providers? IBM 80% HP 33% Deloitte 53% Accenture 2 33% 2 Infosys 33% CGI 2 53% Fujitsu 2 33% Hitachi Consulting 2 Atos 2 33% Capgemini 2 33% CSC BearingPoint 6 Dimension Data 6 Wipro 73% Steria 73% TCS 73% High Moderate Low None Source: Verdantix N=15 Customers focus on a number of factors when shortlisting providers for these solutions (see Figure 5). Verdantix heard that customers: Look for customer-centric sustainability thinking. Buyers of technology services for energy and environment projects are often the people who set the bar highest when scrutinizing their suppliers sustainability credentials. The panel s desire to assess tech providers, such as Accenture and Wipro, on their relevant commercial partnerships is key here. It means buyers focus on the impact a supplier s sustainability strategy has internally, and what this means for the customer in terms of the supplier s ability to carry out a project for them. Our panel placed greater value on suppliers having a proven partnership, for example with IHS on large-scale EH&S deployments, than on topping the list of the Dow Jones Sustainability Index. Verdantix Ltd Reproduction Prohibited. 13

14 Figure 8. Buyers Preferred Sustainable Tech Service Providers How likely are you to hire one of the following providers for a sustainable technology project in the next 12 months? IBM 4 Deloitte 4 Accenture 73% BearingPoint 6 Capgemini 80% CSC 73% Dimension Data 73% Fujitsu 6 HP 60% Infosys 6 CGI 73% TCS 80% Wipro 80% Atos 8 Hitachi Consulting 8 Steria 8 High Moderate Low None Source: Verdantix N=15 Expect suppliers to apply sustainability initiatives internally. In terms of operational factors, customers are keen to see evidence of firms deploying solutions internally (see Figure 6). The customer panel puts more emphasis on brand and reputation issues such as an ethical supply chain policy, waste and recycling and publishing a carbon reduction target than on cost reduction strategies such as energy management. All fifteen members of the customer panel considered it important or very important for providers to have an ethical supply chain policy in place. Eighty per cent (12) of the panel considered it important or very important for suppliers to have implemented a waste and recycling policy and to have published a carbon reduction target. This reflects the growing focus on product life cycle assessment, scope 3 emissions and closed loop models. Articulate distinct levels of awareness of different providers sustainable technology services. Thirteen of the customer panel had a high or moderate awareness of the Verdantix Ltd Reproduction Prohibited. 14

15 sustainable technology services offered by IBM (see Figure 7). Eleven members of the panel advised us they had a high or moderate awareness of Deloitte and HP s sustainable technology offerings, whereas only two members of the panel had a high or moderate awareness of TCS and Steria s sustainable tech services. Two Verdantix global surveys, one of 250 energy leaders and the other of 250 sustainability leaders, backs up the brand awareness data of this smaller panel (see Verdantix Global Surveys). Show strong preferences for potential suppliers. We also asked customers which firms they were most likely to hire over the next 12 months. IBM and Deloitte were mentioned most frequently, with eight and seven members of the customer panel advising us they would definitely or possibly hire one of the two firms for a sustainable technology project over the next 12 months respectively (see Figure 8). Atos, Hitachi Consulting and Steria were mentioned the least, with only one panel member responding that they were certain or likely to contract these suppliers. Given the small size of the panel, we view these responses as indicative of global market demand, with strong regional variations at play. GREEN QUADRANT : SUSTAINABLE TECHNOLOGY SERVICES Based on the insights from the customer panel and our in-depth interviews we define sustainable technology services as: Technology advisory and implementation services that enable an organization to achieve business goals such as cost reduction, revenue generation and risk management related to energy, environment and sustainability initiatives. This definition of sustainable technology services includes 12 capabilities covered in this study: real estate energy systems, IT portfolio energy systems, manufacturing plant energy systems, municipal energy systems, renewable energy systems, residential smart meter systems, smart grid energy systems, sustainability performance management, environmental management, climate change modelling, water management systems and low carbon transport. Verdantix has aligned the energy-related capabilities with prior work on energy domains and energy systems (see Verdantix The Future Of Energy Management). Green Quadrant Methodology The Verdantix Green Quadrant methodology provides buyers of a specific product or service with a structured assessment of comparable offerings at a certain point in time. The methodology is designed to support purchase decisions by identifying potential suppliers, structuring relevant purchase criteria through discussion with buyers and providing evidence -based assessments. To ensure the objectivity and accuracy of the results the research process is based on the following principles and activities: Transparent inclusion. We aim to analyse all providers that qualify for inclusion in the research. For those firms that decline our invitation or fail to respond, we aim to include them in the report based on public information where this would provide an accurate Verdantix Ltd Reproduction Prohibited. 15

16 analysis of their market positioning. All suppliers actively participated in this report with the exception of IBM and HP. Analysis from the buyer s perspective. We recruit a panel of individuals who bought or plan to buy the products or services analysed in the Green Quadrant. Their role is to define relevant buying criteria and to weight the evaluation criteria in the model that drives the Green Quadrant graphic. Reliance on professional integrity. Since it is not feasible to check all of the data and claims made by providers, we emphasize the need for professional integrity. Assertions made by providers are put in the public domain in the Verdantix report and can be checked by competitors and existing customers. Scores based on evidence. To assess the expertise, resources, business results and strategy of providers we gather evidence from public sources and conduct interviews with multiple spokespeople and with industry experts. When providers claim to be best in class we challenge them to present the evidence. Comparison based on relative capabilities. We construct measurement scales based on worst in class and best in class performance at a certain point in time. A provider s position in the market can change over time depending on how its offering and success evolves compared to competitors. Green Quadrants are typically repeated once a year. Evaluated Suppliers: Selection Criteria To ensure the Green Quadrant analysis only compares suppliers providing similar products or services, we define explicit inclusion criteria. The 16 technology service providers included in this study were chosen because they have: Annual revenues of more than $500 million An established capability in technology services targeted at energy, environment and sustainability business processes and projects Operations in at least 15 countries This report compares 16 suppliers. Technology services firms that actively participated in the study are Accenture, Atos, BearingPoint, Capgemini, CGI, CSC, Deloitte, Dimension Data, Fujitsu Ltd, Hitachi Consulting, Infosys, Steria, TCS and Wipro. HP and IBM were also included but their assessment was based on publicly available information, including information from the prior Green Quadrant study published in The following providers were not included in the study, but may be considered in the future: Cognizant, HCL, LG CNS, Lockheed Martin, Mahindra Satyam, Tieto and Unisys. Verdantix Ltd Reproduction Prohibited. 16

17 Evaluation Criteria For Technology Services Providers Verdantix defined the evaluation criteria using a combination of existing domain expertise, structured interviews and open discussions with a number of technology services firms and interviews with customers. This study builds on the previous sector benchmark published in February 2012 (see Verdantix Green Quadrant Sustainable Technology Services (Global) 2012). The Green Quadrant analysis compares offerings of 16 technology services firms using 53 weighted criteria grouped under the following categories: Capabilities. This dimension, captured in the vertical axis of the Green Quadrant graphic, measures each technology provider on the breadth and depth of its service offerings. To assess performance in this dimension Verdantix collected data on 36 criteria grouped into 12 areas: real estate energy systems, IT portfolio energy systems, manufacturing plant energy systems, municipal energy systems, renewable energy systems, residential smart meter systems, smart grid energy systems, sustainability performance management, environmental management, climate change modelling, water management systems and low carbon transport. Market momentum. This dimension, captured in the horizontal axis of the Green Quadrant graphic, measures each technology services provider on a range of strategic success factors including sustainability strategy and corporate sustainability performance. The 17 criteria included in this axis are grouped into three areas. The first is strategy and execution, which looks at seven different measures including sustainability strategy and partnerships. The second is energy and carbon, which has six individual criteria including building energy efficiency and carbon reduction programmes. Environmental and social is the third grouping with four separate elements including waste management, recycling and social inclusivity. The evidence provided by each supplier is captured in a quantitative model. Each top-level criterion is broken down into sub-criteria. Taking the capability section as an example, the sub -criteria are: 1) Technology strategy and business process design advice; 2) Systems implementation and integration; and 3) Customer evidence (the number of recent customers named if possible broken down by geography, together with customer case studies). Each of these criterion is then awarded a score based on a zero to three scale. Each top-level criterion and sub-criterion is allocated a weighting that is used to calculate the overall score. Details on the criteria are provided in Figure 9 and Figure 10. These figures also provide (in brackets) the weighting attributed to each top-level criterion in the model. Among Eight Market Leaders, Accenture, CGI, Deloitte And IBM Offer Outstanding Capabilities The Green Quadrant analysis segments the market into four quadrants (see Figure 11). Within the Leaders Quadrant, four suppliers stand out: Accenture, CGI, Deloitte and IBM. Several factors distinguish these suppliers from the other 12 suppliers analysed, including: A core team that drives innovation and growth. The four clear Leaders have established dedicated sustainability practice groups under different banners that Verdantix Ltd Reproduction Prohibited. 17

18 Figure 9. Capabilities Criteria For Sustainable Technology Service Providers CAPABILITIES Real estate energy systems (10%) What are the advisory or implementation capabilities related to facility-level (offices, stores, distribution centres) energy management technology strategies, business process design, systems implementation and integration? IT portfolio energy systems (10%) What are the advisory or implementation capabilities related to sustainable data centre technology strategies, business process design, systems implementation and integration? What is the customer evidence? Manufacturing plant energy systems (10%) What are the advisory or implementation capabilities related to manufacturing plant energy management technology strategies, business process design, systems implementation and integration? Municipal energy systems (5%) What are the advisory or implementation capabilities related to municipal energy management technology strategies (e.g. Smart City systems), business process design, systems implementation and integration? Renewable energy systems (10%) What are the advisory or implementation capabilities related to renewable energy IT strategies, business process design, systems implementation and integration? What is the customer evidence? Residential smart meter systems (10%) What are the advisory or implementation capabilities related to utility and network operator smart meter technology strategies, business process design, systems implementation and integration? What is the customer evidence? Smart grid energy systems (10%) What are the advisory or implementation capabilities related to utility and network operator smart grid technology strategies, business process design, systems implementation and integration? What is the customer evidence? Sustainability management systems (10%) What are the advisory or implementation capabilities related to sustainability performance management technology strategies, business process design, systems implementation and integration? What is the customer evidence? Environmental management (10%) What are the advisory or implementation capabilities related to environmental compliance technology strategies, business process design, systems implementation and integration? What is the customer evidence? Climate change modelling (5%) What are the advisory or implementation capabilities related to climate change technology strategies, business process design, systems implementation and integration? What is the customer evidence? Water management systems (5%) What are the advisory or implementation capabilities related to water stewardship technology strategies, business process design, systems implementation and integration? What is the customer evidence? Low carbon transport (5%) What are the advisory or implementation capabilities related to low carbon transport technology strategies, business process design, systems implementation and integration? What is the customer evidence? Figures in brackets represent the weighting given to each criterion in the flexible multi-criteria model that generates the Green Quadrant graphical analysis. Source: Verdantix Verdantix Ltd Reproduction Prohibited. 18

19 Figure 10. Momentum Criteria For Sustainable Technology Service Providers MOMENTUM Strategy and execution () Energy and carbon (30%) Environmental and social (30%) How do the firms sustainability strategies compare? How do the firms see the market developing? What approach is taken to achieve sustainability leadership and governance? What partnerships do the firms have? What is the quality of their sustainability reporting? What energy efficiency improvement plans are in place for the firms buildings and data centres? What carbon management process is in place? What is the scope of the carbon reduction programmes? What fuel efficiency and travel emission reductions are in place? What initiatives are in place to support responsible procurement, waste management and recycling? What programmes are in place to support social inclusivity and employee engagement? Figures in brackets represent the weighting given to each criterion in the flexible multi-criteria model that generates the Green Quadrant graphical analysis. Source: Verdantix own the strategy and deploy the expertise required to succeed in this complex market. By managing relationships with external groups such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) and the US EPA, the core team can launch innovative offerings ahead of the competition. Accenture claims over 150 consultants worldwide in its core sustainability team. Deloitte established its branded sustainability practice as an Integrated Market Offering, bringing together its strong multidisciplinary capability. CGI now has a global sustainability consulting practice, following the approach taken by Logica before its acquisition by CGI in In October 2010, IBM announced that it had regrouped its activities focused on energy efficiency, smart grid, electric vehicles and renewable energy in a new market strategy focused on sustainable infrastructure (see Verdantix IBM Blends Smart IT With Sustainable Infrastructure). Linkage at the top to monetize internal sustainability investments. Given the scale of many IT services firms, which may have more than 200,000 employees, there is ample opportunity to sip your own champagne. Whilst the idea of externalizing successful internal projects such as data centre energy efficiency is far from new, the execution of this strategy requires the right organizational model. A critical success factor is to link leadership of the internal programme with leadership of the market-facing group. For example, Deloitte s Dave Pearson and CGI s Melba Foggo both have these dual roles. By contrast, HP attempted to leverage its corporate sustainability programme with its Energy & Sustainability Management (ESM) offering back in 2011, but this has not Verdantix Ltd Reproduction Prohibited. 19

20 CAPABILITIES VERDANTIX GREEN QUADRANT SUSTAINABLE TECHNOLOGY SERVICES (GLOBAL) 2013 Figure 11. Green Quadrant Sustainable Technology Service Providers CHALLENGERS LEADERS Deloitte Accenture CGI IBM Wipro Atos TCS Dimension Data Infosys Capgemini CSC Hitachi Consulting Steria Fujitsu HP BearingPoint ENTREPRENEURS SPECIALISTS MOMENTUM Capabilities This dimension assesses sustainable technology capabilities for: real estate energy systems, IT portfolio energy systems, manufacturing plant energy systems, municipal energy systems, renewable energy systems, residential smart meter systems, smart grid energy systems, sustainability management systems, environmental management, climate change modelling, water management systems, and low carbon transport. Momentum This dimension assesses strategic success metrics including: market vision, sustainability strategy, sustainability leadership and governance, marketing, partnerships, sustainability reporting, data centre energy efficiency, building energy efficiency, carbon management and reduction programmes, travel emissions reductions, responsible supply chain, waste and recycling, social inclusivity and employee engagement. The Green Quadrant graphic is generated from a multi-criteria model in a spreadsheet. The flexible design of this model enables Verdantix clients to add providers and re-weight or re-score criteria for additional insights. Source: Verdantix Verdantix Ltd Reproduction Prohibited. 20

21 delivered as expected and the initiative is now on the back burner (see Verdantix HP Launches Energy & Sustainability Management Initiative). Strategic acquisitions to achieve a critical mass of expertise and relationships. Where gaps in expertise exist, Leaders fill them through acquisition. For example, in August 2012 CGI, the Canadian based IT services firm, acquired Logica for 1.7 billion ($2.6 billion), and has stated publicly that it is ready to do more deals as the sector continues to consolidate. In December 2010, Deloitte acquired ClearCarbon Consulting and DOMANI, two US sustainability consultants, complementing its core team with domain expertise focused on sustainability initiatives and cross-industry best practice (see Verdantix Deloitte Acquires Rare Sustainability Expertise). In March 2011 IBM acquired TRIRIGA, a US-based software supplier of Integrated Workplace Management Systems (IWMS) with a strong energy software play. With few specialist consulting firms left to be bought, these moves may prove to be decisive. Broad portfolio of offerings across energy, EH&S and sustainability. Target customers such as VPs of EH&S and COOs know that they need to try and manage energy and environment initiatives in a more integrated way. It is no surprise, then, that these clear Leaders have the broadest capabilities. For each top-level criterion, this analysis recorded just 22 maximum scores of 3.0 (representing a world-class capability) across all suppliers. These four suppliers account for 12 of the top scores (see Figure 12). Across the full range of 12 capabilities, each of the four suppliers has eight rated as either strong or best in class. CGI sets itself apart from its competitors through its pre-built renewable energy management system that facilitates integration of wind energy to the grid. Deloitte combines a strong advisory background with an implementation capability on a par with the major systems integrators; it also stresses its strong capability in data analytics that it believes will act as a market differentiator. Consulting expertise to free up cash for new client projects. Selling energy and EH&S technology projects is different from traditional IT consulting and systems integration sales. The buying process is typically led by the line of business owner, the head of sustainability may help structure the RFP, and the CIO is likely to be contacted halfway through the discussion. As a result the sustainable technology market requires consulting skills to help customers figure out what projects they need to implement; this requires domain expertise that most user firms do not have in-house. All four leading suppliers are consulting-led, compared with the more generalist IT outsourcing providers that focus on the cost reduction of existing functions such as IT operations or Human Resources. We awarded 35 maximum scores (3) for advisory services; 23 of these went to the four leading suppliers, compared with a total of 12 to the other 12 providers. Credible internal sustainability programme. Customers seeking advice and support to tackle their own sustainability challenges favour suppliers who demonstrate success in implementing sustainability programmes internally although this is not a primary motivator of purchase decisions. IBM is one of only four firms to achieve a maximum score on its own data centre energy efficiency programme, based on its transparent reporting of the PUE of its data centre estate and its PUE reduction target. Prior to its Verdantix Ltd Reproduction Prohibited. 21

22 Accenture Atos BearingPoint Capgemini CGI CSC Deloitte Dimension Data Fujitsu Hitachi Consulting HP IBM Infosys Steria TCS Wipro VERDANTIX GREEN QUADRANT SUSTAINABLE TECHNOLOGY SERVICES (GLOBAL) 2013 Figure 12. Capability Scores For 16 Sustainable Technology Service Providers Real estate energy systems IT portfolio energy systems Manufacturing plant energy systems Municipal energy systems Renewable energy systems Residential smart meter systems Smart grid energy systems Sustainability management systems Environmental management Climate change modelling Water management systems Low carbon transport Measurement scale is 0 to 3 This figure represents the quantified assessment of supplier commercial capabilities based on the Green Quadrant benchmark data. A full bar indicates best in class capabilities (3/3), an empty bar indicates no capabilities (0/3). Source: Verdantix Verdantix Ltd Reproduction Prohibited. 22

23 Accenture Atos BearingPoint Capgemini CGI CSC Deloitte Dimension Data Fujitsu Hitachi Consulting HP IBM Infosys Steria TCS Wipro VERDANTIX GREEN QUADRANT SUSTAINABLE TECHNOLOGY SERVICES (GLOBAL) 2013 Figure 13. Momentum Scores For 16 Sustainable Technology Service Providers Strategy and execution Energy and carbon Environmental and social Measurement scale is 0 to 3 This figure represents the quantified assessment of supplier commercial capabilities based on the Green Quadrant benchmark data. A full bar indicates best in class capabilities (3/3), an empty bar indicates no capabilities (0/3). Source: Verdantix acquisition by CGI, Logica s strong internal sustainability programme was one of the factors that enabled it to win major contracts such as the UK Ministry of Defence s sustainability management and reporting system (SIRA) and automated metering to collect energy, water and waste data and identify energy savings across 4,000 sites. Accenture has a long standing carbon reduction programme and in 2011 was included in the CDP's Carbon Disclosure Leadership Index, representing the top 10 per cent of firms. But Accenture needs to rectify its failure to publish an annual sustainability report a practice pursued by all of its competitors and expected by customers. Marketing of sustainability ideas and capabilities. IBM s Smarter Planet campaign is the most successful sustainability-related marketing campaign reflected clearly in the results of Verdantix global surveys with 500 energy and sustainability decision-makers. Deloitte also maintains an active sustainability thought leadership programme. For example, the firm published a report entitled Sustainability 2011: A Difficult Coming Of Age and has also covered the role of the CFO in sustainability strategy and implementation. By marketing to individuals who own energy and environment initiatives, tech services suppliers extend their brand license into these new market segments. Without such marketing, IT services firms who are dependent on relationships with CIOs and Heads of Application Development often hear too late about new business opportunities kicked off in the EH&S function or by the Head of Real Estate. Verdantix Ltd Reproduction Prohibited. 23

24 Investment By Atos, Dimension Data, TCS And Wipro Pays Off As They Enter The Leaders Quadrant Another four suppliers Atos, Dimension Data, TCS and Wipro score above 1.50 on the capabilities axis, placing them in the Leaders Quadrant. None of these suppliers featured in the Leaders Quadrant in our 2012 Verdantix analysis (we did not include Dimension Data in 2012). All of these suppliers have a dedicated sustainability practice, a wide range of capabilities and a strong track record in corporate sustainability. During the last 12 months, through investments in specialist areas, they have significantly enhanced their value propositions. Specifically: Atos has become a Leader by acquisition. In July 2011 Atos acquired Siemens IT Solutions and Services (SIS) for $1.1bn, making Atos the second biggest European IT services firm by revenue. To cement the deal, Siemens signed a separate seven year, 5.5 billion ($7.1 billion) contract for Atos to provide it with its IT services. SIS had a major practice in data centre energy management, and Atos has used this experience to launch a new real estate energy management business. Atos shares many of the attributes of the top four Leaders it has aligned its internal and external sustainability organizations, and only offers solutions that it has used itself. It has a best-in-class score of 3 for its smart meter and environmental management capabilities, with a strong customer base including Daimler, Michelin, Philips and Siemens. It has an ambitious carbon reduction programme with a target to reduce its carbon emissions by 50% by 2015 (from a 2008 baseline). Atos s strategy is to partner with leading suppliers it is the recipient of a 2012 SAP Pinnacle award as SAP s Sustainability Partner of the Year, and it is partnering on energy management with Siemens Building Technology and Infrastructure one of the four major players in the building energy technology market. Dimension Data has deep expertise in the built environment and data centres. Dimension Data already has a broad and deep sustainability portfolio. It has deep expertise in the built environment for example it was responsible for the integrated instrumentation systems design and implementation for the Cape Town Stadium built for FIFA 2010, which was awarded the Green Goal Silver Sustainability Award by the Impumelelo Social Innovations Centre. It has extensive experience in data centre and renewable energy projects, and has a subsidiary (Britehouse SSD) focusing on SAP implementations involving software modules such as EH&S. Dimension Data was acquired by the NTT group in July 2010 for $3.2 billion. NTT, headquartered in Japan, is the world s second largest telecoms group by revenue. In the future, Dimension Data plans to draw on the expertise of its NTT sister companies (for example NTT Data) in such areas as low carbon transport and climate change modelling, which will extend its already broad portfolio of sustainability solutions. Following the model adopted by the global leading providers, Colin Curtis, Dimension Data s sustainability practice leader, leads its internal programme as well as the externally facing consultancy and systems integration practice. TCS demonstrates strength in multiple energy management capabilities. TCS achieved a best in class score for its advisory expertise in two of the criteria in the capabilities section, for manufacturing plant energy systems and residential smart Verdantix Ltd Reproduction Prohibited. 24

25 meters. The TCS data centre power management tool PowerInsight was developed for monitoring and managing the power consumption of a data centre and provides real -time information about the power consumption of both the IT (servers, storage devices, and network devices) and the non-it (cooling and lighting) components in a data centre. TCS positions its data centre energy management offering under its IT infrastructure transformational framework 'itransform' and has been gaining momentum in marketing these across the US, Europe and India. It also has considerable expertise in renewable energy systems for example, TCS designed the SCADA system to monitor and control wind farms for a large manufacturer of wind turbines with over 7,500 wind turbine installations worldwide. Compared with the four standout suppliers, TCS has not undertaken sufficient marketing to the non-it buyers to build the brand presence that would enable it to fully exploit its strong technical expertise and project wins. Wipro is notable for its work with utilities, retailers and in EH&S. Wipro has a broad portfolio in its EcoEnergy business with a best-in-class offering in real estate and manufacturing energy systems, and offers a comprehensive suite of renewable energy services focusing on implementation of Solar PV systems. It has built a large customer following, especially amongst retail & consumer packaged goods (CPG) clients. It offers attractive commercial terms, for example it will offer to invoice them only after the customers achieve energy bill savings, as part of its customer reward commercial models. Wipro has built a strong practice in smart meters in Australia, Europe and the US, helping some of the largest utilities to coordinate the management of their smart meters and other areas of asset management and outage management. It also works on smart grid projects for large utilities in the US and the UK. It has considerable experience in advising clients on sustainability performance management and EH&S management in the oil and gas, and mining industries. It has been involved in large and strategic EH&S programs for oil & gas firms across US and Europe and companies in the Middle-East and Australia. Such work includes global HSSE application support in managed services mode for firms such as Shell. Four Specialists Have Solid Corporate Sustainability Credentials And Proven Capabilities Three providers Fujitsu, Hitachi Consulting, and Steria offer a wide range of capabilities, but have achieved market success only in limited geographic markets. By contrast, HP has a narrow set of well developed capabilities. All four providers have successful internal sustainability programmes. The Green Quadrant analysis finds that: Specialization is a successful strategy to deliver profitable projects. Fujitsu has a strong practice in environmental compliance and has a potentially leading capability in advisory work on energy systems, but limited ability to deliver outside Australia and Japan. Hitachi Consulting already has strong scores for its facility and IT portfolio energy systems, and for its capabilities in sustainability performance management and environmental management. It continues to invest for future growth: in April 2012 it acquired PRIZIM (a US-based environmental consultancy) and in January 2013 it bought Celerant Consulting, a leading business operations consultancy with a global client base in 57 countries. HP achieves best-in-class scores for its facility and IT Verdantix Ltd Reproduction Prohibited. 25

26 portfolio energy systems. Its big ambitions from 2011 to expand its energy and sustainability propositions look to have fallen victim to the intense cost cutting and disruptive reorganizations being undertaken to turn the firm around. Steria has a wide set of sustainable technology services; it received strong scores for its facility and IT portfolio energy systems, and for its capabilities in sustainability performance management and environmental management. It has considerable expertise in France on smart meters and municipal energy systems; for example EDF has selected Steria to support implementation of 35 million new-generation smart meters, and Steria is responsible for the functional and technical architecture in the IssyGrid Smart City project in a Paris suburb. Embedding sustainability in the corporate culture delivers superior results. Executives at Fujitsu, Hitachi Consulting, HP and Steria believe sustainability should represent a key component of their organization and they have each taken action to achieve this. In the area of energy and carbon reduction, Fujitsu, HP and Steria were the three leading firms in our assessment with scores of 2.3, 2.4 and 2.3 respectively (see Figure 13). HP has communicated detailed annual CO2 emissions data since 2005 and has achieved absolute reductions in energy consumption and related CO2 emissions reflecting the strength of its environmental management systems (see Verdantix HP Achieves Leadership On Carbon Reductions). Steria beat its three year carbon intensity reduction target for its Scope 1, 2 and 3 emissions starting from January 2009 and received 98% for disclosure in the Carbon Disclosure Project 2012 and A- for performance, the best result for an international IT services company in the world. Fujitsu had a target to reduce its absolute GHG emissions for its manufacturing facilities by 6% by the end of FY 2012 compared with FY 1990; it achieved an 18.2% reduction in FY2011. A strong product set is necessary, but not sufficient, to guarantee future success. HP s recent organizational and financial turmoil is well documented. It has announced 29,000 job losses as part of a "productivity initiative designed to simplify business processes". But it has a strong reputation for the quality of its products and services, and continues to invest heavily in R&D. When we asked the panel which provider they were most likely to hire for a sustainable technology project, it tied in fourth place. This suggests that our panel has not lost faith in HP s capability to deliver market leading sustainable technology solutions. Hitachi Consulting and Steria were in joint bottom place on this question. Steria was also joint bottom for customer awareness of its solutions; it needs to do more to promote its image and its services. Hitachi Consulting, on other hand scored, well on awareness. Fujitsu scored well on both awareness and probability of hiring. It had the best momentum score in our assessment, ahead of all the Leaders, and a wide range of capabilities. Its IT portfolio energy systems are successful globally, but most of its other services have focused on a limited number of countries. Four Providers Offer Focused Commercial Capabilities, But Have Weaknesses In Corporate Sustainability Performance A formal sustainability practice area, a wide range of sustainable technology services, and a commitment to internal sustainability programmes characterize the Leaders in sustainable Verdantix Ltd Reproduction Prohibited. 26

27 technology services. Four other firms BearingPoint, Capgemini, CSC, and Infosys split across the Entrepreneurs and Specialists Quadrants also exhibit some of these characteristics. These suppliers typically have more limited portfolios with some deep capabilities in specific areas, but their internal sustainability programmes are still a work in progress: BearingPoint s sustainability practice is growing from small beginnings. BearingPoint is organized as a partnership with 3,500 consultants across 26 offices in 15 European countries and posted 2011 revenues of 515 million ($669 million). Originally the global IT and business consulting arm of KPMG, it is now established in Europe since its MBO in 2009, and operates globally via its partners ABeam Consulting and West Monroe Partners. BearingPoint is both a management and technology consulting firm with broad capabilities, some outside this evaluation. It has established a sustainability strategy and transformation team, which has helped to develop several European blue chip firms overall green strategy. It has a strong capability in smart meters and low carbon transport, and has published thought leading white papers such as Will your company pass the Sustainability Stress Tests?". But it is weak in many of the capability and momentum criteria; for example it does not publish a sustainability report, although it is a United Nations Global Compact member and produces a CDP report. Capgemini has strong IT portfolio and smart meter expertise. Capgemini scores best in class for its IT portfolio and residential smart meter capabilities. It offers a variety of governance and strategic IT consulting services such as 'GreenScan for Strategy' and Green ITIL (for a comprehensive sustainable IT Service management) to enable a continuous improvement process and easier alignment with the business. In addition it offers consultancy services for green data centre retrofits and green data centre new builds based on its extensive experience in its own data centres. These include its Merlin data centre in the UK, which is one of the world s most sustainable and energy efficient data centres. It has over 15.7 million meters deployed and 1.7 million meters under management in both Europe and North America, and in 2011 won a contract for the deployment of four million meters in Canada. As a more focused supplier Capgemini achieves only moderate scores on six of the other capabilities. In the UK it has a strong internal sustainability record, but its overall momentum score reflects the fact that beyond the UK its sustainability programme is at an early stage. CSC has a focused portfolio of unique offerings. CSC offers a number of welldeveloped sustainable technology services: it is marked as strong for three of the capability areas (smart meters, environmental management and climate change modelling), but scores one or less for seven of them. CSC is one of the leading technology services firm in the climate change modelling market: it has developed an innovative offering called the Climate Resilient Economic Analysis Tool to assist water utilities in evaluating climate change adaptation options. CSC is also responsible for energy management at Johnson Space Center for NASA, and provides engineering services for alternative energy sources including solar, wind, and geothermal and implemented water savings programmes. CSC has a strong customer base of US federal clients, utilities and US-headquartered multi-nationals, but it has a smaller number of customers for sustainability solutions outside the US. CSC s corporate sustainability Verdantix Ltd Reproduction Prohibited. 27

28 efforts deliver some positive results, but it is evident that sustainability is not a priority for the executive team focused on cutting $1 billion in costs as CSC lacks a global data management platform for sustainability and set of performance targets comparable to those of direct competitors such as HP and IBM. Without investing in a larger core sustainability team CSC risks losing bids for work with federal agencies, which are poised to tighten their green procurement requirements. Infosys aims to be a global leader in three years. Infosys set up a global sustainability practice group in 2011, with the goal of meeting the global needs of multinationals for advice on sustainability transformation. It based the strategy on leveraging best practices from its own internal sustainability experience like Infosys Energy Information Management solution (IEIMS) and the Infosys Sustainability Compliance & Reporting solution (ISCRS). The practice has a core team of 180 dedicated sustainability professionals globally, that includes 30 senior consultants. Infosys recorded strong scores for its capabilities in the areas of smart meters and smart grid, and shows promise in renewable energy and sustainability performance management. It scored top marks for its smart meter and grid customer base, mainly of major US utilities. Uniquely in this group of suppliers, it has credible offerings in all 12 of the areas assessed, although some of its specialist groups are currently small. It starts from a position as an IT systems integrator, but for our panel it was the fifth best known supplier of sustainability services, and third equal firm which they were most likely to hire for a sustainability project. Its internal sustainability reporting is strong in India, but needs to be expanded globally. Overall Verdantix concludes that Infosys has the capability to meet its target to become a global leader within three years, assuming the sustainability practice receives additional investment in people, partnership and thought leadership. HOW TO SELECT A TECH SERVICE PROVIDER FOR SUSTAINABILITY PROJECTS The Verdantix assessment of the capabilities and momentum of 16 global tech services providers finds wide variations in their expertise and maturity in addressing the sustainable technology services market. Customer panel members told Verdantix that they were confused about how to select providers to deliver their broad mix of energy, environment and sustainability projects. In many cases this confusion is a result of the constant barrage of new practice group announcements. Verdantix recommends that decision-makers should select service providers with: An established sustainability practice group led by a manager with the seniority to access internal resources. Virtually all large services providers operate in a matrix structure organized by country, industry and/or service line. Suppliers need a central/ global sustainability practice leader to rally colleagues from key industry groups such as energy and utilities, as well as service lines such as technology innovation, and get everyone signed up to a shared sustainable business vision. In practice this is hard to achieve given competing priorities. An underfunded, insufficiently powerful sustainability practice group leader risks failing to deliver on projects. Depending on organizational size, a sustainability practice leader may also be needed in each country Verdantix Ltd Reproduction Prohibited. 28

29 of operation. Providers such as Accenture, Deloitte and IBM have had organizational delivery structures in place for more than five years. We recommend that buyers find the true number of core sustainability practice group experts by asking for names and CVs. A practice group that is responsible for internal sustainability programme. An organizational approach increasingly adopted by the most successful sustainable technology service providers is for their sustainability practice leader to lead the internal programme as well as the externally facing consultancy practice. For example Deloitte s Dave Pearson, CGI s Melba Foggo and Dimension Data s Colin Curtis all have these dual roles. Verdantix finds this approach compelling: it ensures that the practical experience of implementing an in-depth sustainability programme across the supplier can be brought to bear on a customer s situation and it ensures that the strategy consultants only propose solutions that they know can be implemented successfully, because they have already been implemented in their own organization. Mature internal sustainability programmes with transparent performance metrics. In the technology services sector, strong corporate performance on sustainability provides not just a platform for marketing and faster bid response, it can also feed directly into deploying tools used internally for customer use. Technology services providers have significant sustainability impacts to manage and increasingly sophisticated buyers should demand that their technology suppliers demonstrate superior performance on energy, environmental, social metrics and sustainability reporting. Buyers should also check that suppliers make sector-leading internal use of the same tools and solutions that they offer to the market. This makes sound business sense too. Verdantix heard that from one supplier that they had won a public sector contract because of their superior sustainability performance; we predict that in future suppliers with lacklustre sustainability programmes will be excluded from bidding for major contracts in both the public and private sectors. An integrated perspective on energy, environment and sustainability performance. IT advisory work and project implementation for electric vehicles, wind farms, carbon registries, low carbon electricity networks and sustainability reporting are all connected to the same business theme: a sustainable business is a more competitive business. Verdantix strategy research on firms such as BT, Marks & Spencer, PepsiCo, Turner Construction and Unilever indicates that line of business buyers are shifting from isolated pilot projects to integrated programmes. Given the interconnections between energy, environment and sustainable business processes, Verdantix believes that decision-makers should shortlist technology services firms that offer a broad portfolio of service lines, since expertise in one area will enhance capabilities in a contiguous area. And due to the dispersed nature of sustainability challenges and responsibilities, buyers will increasingly expect service providers to integrate solutions issues across the firm. Expertise that is equally strong in both consulting and delivery. A strong trend among our customer panel was the use of the same provider to implement the solution that had been recommended in the consultancy phase of the project. Deloitte told Verdantix that its technology expertise is vital to the success of their business consulting. Deloitte s Verdantix Ltd Reproduction Prohibited. 29

30 view is that clients want a strategy that can be delivered by the same team that designed it. Customers are increasingly looking for broad-based advice on how to incorporate sustainability into all their business activities, and in response another emerging trend is to merge sustainability and business consulting practices, as Accenture did in November As firms increasingly incorporate sustainability in everything they do, Verdantix concludes that in future it will be difficult to offer sustainability transformation consultancy without an equal level of expertise in business consulting. This could prove to be a problem for tech service providers such as Infosys, Steria, TCS and Wipro, that come from an IT services background. Customer references with hard data on business benefits. To assess a provider s true capability and experience, decision-makers should demand a list of reference customers and case studies in their industry and country or region. Providers often claim that they are prevented by customer confidentiality from giving client names and project details, and it is true that many customers do not want the details of their projects put in the public domain, but most satisfied customers are willing to speak in confidence to potential new clients. This will allow details of their project to be made available to potential clients on an anonymous basis. Our research has found significant disparities in the ability of service providers to share success stories and given the acknowledged value of such marketing collateral, we believe the inability to disclose project examples reflects a smaller volume of deals and less experience. Verdantix Ltd Reproduction Prohibited. 30

31 The Authority On Sustainable Business Verdantix is an independent analyst firm. We provide authoritative data, analysis and advice to help our clients succeed in the world of sustainable business. Through our global primary research and deep domain expertise we provide our clients with strategic advice, revenue generating services, best practice frameworks, industry connections and competitive advantage. A Strategic Research Relationship We work with our clients, located in more than 50 countries around the world, to build long-term, strategic research relationships. We listen to our clients requirements for data, analysis and advice on sustainable business to help them succeed with their strategies, programmes and initiatives. Our Knowledge Service helps clients: Plan effectively for regulations Keep pace with competitive actions Make connections with new customers Launch new propositions Educate colleagues with evidence Quickly shortlist suppliers Save time in strategy development Reduce risk with new initiatives Speed up business case assessments Benchmark performance Deliver financial results Achieve competitive advantage Sustainability Expertise And Industry Connections Our analysts combine rich business experience with specialist sustainability expertise. They leverage privileged access to thousands of sustainability decision makers around the world and robust methodologies to deliver analysis that is independent, fact based, and commercially relevant. Find out more: visit Contact us: research@verdantix.com Verdantix Ltd Reproduction Prohibited. 31