Highlights from the 2015 EHS and Sustainability Software Buyers Guide

Today s Presentation Overview of NAEM and our Research Program About the 2015 EHS and Sustainability Software Buyers Guide Key Questions we ll answer today: How do most companies manage their EHS and Sustainability data? Why are companies looking for a new data management system? What are buyers looking for in a new system? How much time do buyers expect the process to take? How much are companies prepared to spend on their systems? Lessons Learned Q&A All rights reserved 2015 2

Who we Are

What we Offer Largest community for corporate EHS and sustainability decision-makers Peer-led education conferences Monthly Webinar program (Free for members) Online Resources Newsletters Member Case Studies Conference Reports Detailed benchmarking research Copyright NAEM 2015 4

NAEM s Benchmarking Research Developed with input from corporate leaders of EHS and sustainability Four main focal areas: Organizational Design and Staffing EHS & Sustainability Staffing and Structure (Dec. 2014) Key Competencies for the EHS & Sustainability Profession (Jan. 2015) Career Profiles and Attributes for Career Success (Sept. 2015) Performance Metrics and Corporate Reporting Green Metrics that Matter (April 2011) Leading Metrics (March 2014) Information Management Approaches to Managing EHS & Sustainability Data (February 2013) 2015 EHS & Sustainability Buyers Guide (February 2015) Emerging issues Planning for a Sustainable Future (January 2014) The Energy-Water Nexus (May 2014) All rights reserved 2015 5

About this Report 2015 EHS and Software Buyers Guide Objective This research study was designed to meet the needs of EHS and sustainability leaders who are shopping for a new software system. As such, the survey was developed to benchmark how buyers in the market for a new system are approaching the purchase and how past purchasers came to their decision. In addition, it provides insight into the budgets, requirements and management of EHS and sustainability software systems. Methodology Online survey distributed through NAEM, E2 ManageTech and CH2MHill Timing Developed Fall of 2014 Survey fielded December 2014 January 2015 Published: March 2015 available now at NAEM.org

Respondent Profile 165 Survey Respondents Survey respondents were screened to be exclusively in house EHS, sustainability decision-makers and IT professionals. Consultants and service providers were excluded from the survey. Primary Industries Manufacturing Energy/Utility Pharmaceutical/Medical Products Chemical Self-Described Level of EHS Risk 16% 21% Operations 96% North America 63% Europe 61% Asia 50% South America 63% N=158 High Medium Low

Past Purchasers vs. Buyers The 165 respondents to this survey hailed primarily from U.S.-based companies. The audience represented a mix of those who are currently in the market for software (36%) and past purchasers of software systems (64%). Past Purchasers vs. Buyers 36% 64% Past Purchaser Buyer N=165 All rights reserved 2015 9

Half Are Starting the Process; the Other Half are on the Path Among those who are shopping for a new system, almost half are just beginning the process, having not yet set a budget or defined a list of requirements. Still others, as reflected in the comments, are exploring options to replace their existing system, but have not yet committed to purchasing something new. Buyers Position in Selection Process Have not set a budget or requirements 46% Put money in a budget, haven t started to look 2% Have a budget and requirements 18% Narrowed the list of finalists 22% Ready to make a purchase 13% N=55 All rights reserved 2015 10

#1: How do most companies manage their EHS and Sustainability data?

Most Companies Still Use a Mix of Data Management Approaches For both buyers as well as past purchasers, the most common data management approach is a mix of internally developed systems, commonly available tools and off-the-shelf software. Current Data Management Approach Commonly Available Tools ONLY 1% Commonly Available & Internally Developed 7% Internally Developed Systems ONLY 2% Off-the-Shelf & Commonly Available 16% Off-the-Shelf Software ONLY 2% Internally Developed & Off-the-Shelf 15% Combination of all Three 56% N=164 All rights reserved 2015 12

Buyers are More Likely to Rely on Internal Systems, Common Tools While buyers seem to rely on commonly available tools and internal systems, these first generation solutions seem to have some staying power, even among past purchasers, who are using them alongside their off-the-shelf software (19%). Comparison of Data Management Approach: Past Purchasers vs. Buyers Combination of all Three Off-the-Shelf & Commonly Available Internally Developed & Off-the-Shelf Internally Developed & Commonly Available Commonly Available Tools ONLY Internally Developed Systems ONLY Off-the-Shelf Software ONLY 10% 5% 3% 7% 2% 3% 19% 21% 19% 58% 53% Past Purchaser N=105 Buyer N=59 All rights reserved 2015 13

EHS Leads System Management The EHS function leads the selection, implementation and maintenance of the EHS Management information system (MIS), with support from IT and operations. Functions Involved with System Management EHS 3% 28% 75% IT 19% 22% 50% Operations 31% 56% Other 9% Lead the team On the Team Consulted All rights reserved 2015 N=32 14

#2: Why are companies looking for a new data management system?

Top Reasons Buyers are Seeking New Software Systems Top Reasons Buyers are Seeking New Software Systems Outdated software 42% Working to provide greater external transparency Poor integration with IT systems Do not have a software system 32% 36% 36% Costs too much to maintain 24% Not a good fit with internal culture Not satisfied with the service from current vendor 19% 17% Seeking ISO/OHSAS certification 10% Other 15% N=59 All rights reserved 2015 16

Accountability & Centralizing Data are Key Objectives for New System Buyers Business Objectives for New Software System Improve accountability for performance Centralize data collection efforts Build a management system 17% 17% 17% Collect data for internal and external reporting 14% Improve compliance assurance 10% Improve communication across sites 7% Facilitate reporting to senior management Improve incident reporting 5% 5% Improve data analytics 2% Other 7% All rights reserved 2015 17 N=59

Reporting Matters More to Those Upgrading their Systems Comparison of Business Objectives: First-time vs. Returning Buyers First-time Buyers % Returning Buyers % Build a management system 24% Centralize data collection efforts 21% Improve accountability for performance 18% Improve accountability for performance 17% Improve compliance assurance 18% Collect data for internal and external reporting 17% Facilitate reporting to senior management 12% Centralize data collection efforts 6% Improve data analytics 6% Improve communication across sites 6% Build a management system 14% Improve incident reporting 7% Improve compliance assurance 7% Improve communication across sites 7% Collect data for internal and external reporting 6% Other 6% Facilitate reporting to senior management 2% Other 7% All rights reserved 2015 N=17 N=42 18

#3: What are buyers looking for in a new system?

Software Buyers Mainly Seek Support for Compliance Activities Summary of Top Desired Software Capabilities: Buyers Percentage Incident tracking 88% Corrective action tracking 85% Audit finding documentation 82% Incident reporting 82% Incident investigation 82% Internal reporting 82% Performance metrics/dashboards/scorecards 82% Environmental auditing/inspections 76% Compliance calendar 76% Energy and carbon management/metrics 73% Safety auditing/inspections 73% NOV tracking 73% Non-Conformance statistics 67% Risk management 67% Regulatory change tracking and monitoring 64% Hazard identification and assessment 61% Annual sustainability reporting 61% GHG reporting 61% Job hazard/risk assessment 58% EMS/ISO 14001 management system 58% Document management 58% N=33 20

Half of Buyers Seek Comprehensive, Enterprise-Wide Systems Among those shopping for a system, about half are seeking an enterprise-wide off-the-shelf solution, while 41 percent are looking for a module to address a specific EHS or sustainability need. Buyer s Scope of the Desired System 6% 41% 53% N=34 Enterprise-wide off-the-shelf software An issue-specific software module Other All rights reserved 2015 21

Buyers Want Solutions that are Easy-to-Update and Flexible Most Important Requirements for Buyers First-time Buyers % Easy to update 100% Cost of implementation 100% Flexibility of configuration 100% Requires minimal on-going support 89% Cost of maintenance 89% User friendliness 89% Real time metrics tracking & performance measurement 89% Fit with business model 78% Flexibility of the customization 78% Cost to purchase the software 67% Compatibility with existing IT systems 67% Out-of-the-box functionality 67% Reflects our organizational work flows 67% Provides on-going customer support 67% Overall knowledge of the software vendor 67% Multi-language capabilities 67% Training and customer support 67% Options for formatting the data output 67% All rights reserved 2015 N=9 Returning Buyers % User friendliness 96% Flexibility of configuration 92% Provides on-going customer support 92% Easy to update 88% Fit with business model 88% Cost to purchase the software 84% Cost of implementation 84% Cost of maintenance 84% Overall knowledge of the software vendor 84% Training and customer support 84% Options for formatting the data output 84% Requires minimal on-going support 80% Reflects our organizational work flows 80% Compatibility with existing IT systems 76% Out-of-the-box functionality 76% Real time metrics tracking & performance measurement 76% Graphical user interface 72% Speed of implementation 72% Multi-language capabilities 72% N=25 22

#4: How much time do buyers expect the process to take?

The Selection Process Takes About a Year According to past purchasers, the selection process tended to take between seven and twelve months to complete. Current buyers were more optimistic, with 38 percent expecting to complete the process within six months. Expected Selection Timeline: Buyers 38% 35% 18% 3% 6% 0-6 months 7-12 months 13-18 months 19-24 months Actual Selection Timeline: Purchasers 24 months + N=34 31% 41% 16% 3% 10% 0-6 months 7-12 months 13-18 months 19-24 months 24 months + N=95 All rights reserved 2015 24

EHS Expected to Take the Lead in Both Selection and Implementation EHS takes the lead in the selection process, but IT and Operations get more involved for implementation Functions Involved with Selection and Implementation EHS 94% 100% IT 66% 78% Operations 47% 72% Other 13% 19% Selection Implementation All rights reserved 2015 N=32 26

EHS Function Decides which System to Buy EHS will predominately (69%) have the final say in which system to purchase. Other functions respondents noted include finance, accounting and supply chain Function that Decides which System to Purchase Other 21% IT 10% EHS 69% N=29 All rights reserved 2015 27

#5: How much are companies prepared to spend on their systems?

Software Purchase Budget: Buyers Buyers expect to spend an average of $340,000 on an enterprise-wide system. The average spend for past purchasers was $360,000 Software Purchase Budget: Buyers N= 25 th Percentile 50 th Percentile 75 th Percentile 100 th Percentile Average Enterprise-Wide 13 $100,000 $150,000 $300,000 $2,000,000 $339,615 Issue-Specific 11 $87,500 $200,000 $200,000 $400,000 $171,818 All rights reserved 2015 29

Budget for Implementation: Buyers Among respondents who are in the market for an enterprise-wide system, 39 percent plan to spend $100,000 or less on implementation. About a third (31%) of those looking for issue-specific software plan to spend less than $50,000 USD on implementation. Expected Implementation Budget: Buyers Less than $50,000 USD 8% 23% $50,001 - $100,000 USD 8% 31% $100,001 - $500,000 USD 15% $500,001 - $1,00,000 USD More than $1,000,000 USD 4% 4% 8% Enterprise-Wide Issue-Specific All rights reserved 2015 N=26 30

Cost of Implementation: Past Purchasers Past purchasers reported that their implementation costs ranged from less than $50,000 (23%) to more than $1,000,000 (16%). Respondents who implemented issue-specific systems spent less for implementation costs. Actual Implementation Cost: Past Purchasers Less than $50,000 USD 10% 13% $50,001 - $100,000 USD 7% 13% $100,001 - $500,000 USD 13% 16% $500,001 - $1,00,000 USD 5% 7% More than $1,000,000 USD 5% 11% Enterprise-Wide Issue-Specific All rights reserved 2015 N=61 31

EHS Tends to Provide the Budgets The budgets for EHS and sustainability Information management systems primarily comes from EHS, with the function providing the budget over 50 percent of the time for the initial purchase, implementation and maintenance. IT also provides funds for EMIS systems, with respondents noting functions including Operations, HR and Supply Chain. The Functions that Provide the Software Budget Initial Purchase Implementation Maintenance Operations 9% Other 6% Other Operations 5% 7% Other Operations 8% 8% IT 20% EHS 65% IT 24% EHS 64% IT 26% EHS 58% N=91 N=91 N=91 All rights reserved 2015 32

Lessons Learned

Lessons Learned #1: Have a Solid Game Plan Be prepared to spend much more time than you ever thought it would need - identify a compact dedicated internal team with strong EHS background to manage the process. #2: Be Specific About Your Requirements Need to be very specific in writing the scope of work. #3: Engage the End User Upfront It is important to consider how your workflows will change with the system As much as possible involve the right people early on to ensure that they are engaged in the selection and design process. #4: Be Prepared for Customization The out-of-the-box solution required a number of changes and updates provided by the vendor to make the software functional. We started with Beta software that was supposedly fully functional, but the reality was that it wasn't ready to be used right away. #5: Be Realistic about the Outcome There is no off-the-shelf system that provides everything we want. All rights reserved 2015 34

Acknowledgements

Survey Advisory Committee Martin Healy, Enterprise EHS Business Leader W. L. Gore and Associates Inc. Brijesh Krishnan, Environmental Data Manager Cummins Inc. Girish Menon, Director - Environment, Health & Safety FUJIFILM Holdings America Corp. Melanie Powers-Schanbacher, Principal Specialty Technical Consultants Joanne Schroeder, Principal E2 ManageTech Rob Somers, Director Global EHS Perrigo Company All rights reserved 2015 36

2015 Calendar of Events Date Topic Location February 24-25 EHS & Sustainability Software Conference Tampa, FL April 14-16 Women s Leadership Roundtable San Antonio, TX May 20-21 EHS Compliance Excellence Conference Atlanta, GA August 4-5 2015 Sustainability Conference Minneapolis, MN October 14-16 2015 EHS Management Forum Charlotte, NC NAEM @copyright 2015 38

2015 Webinar Calendar Date Topic Feb. 17 GHS Deadlines March 12 Review of the EPA s 2014 National Enforcement Initiatives March 24 April 23 May 5 June 4 June 16 July 8 Aug. 27 E-Enterprise for the Environment Portal with US EPA Climate Adaptation and Resiliency Environmental Management Systems: You can Get There from here Transforming EHS MIS Zero Waste to Landfill Conflict Minerals: Finding Smelter Sources Supply Chain Risks Sept. 22 The New ISO 14001 Nov. 17 Tackling Sustainability Holistically Dec. 3 & 17 Best of the Forum NAEM @copyright 2015 39