IFS exec: Moving to cloud creates sustainability benefits

Many companies have set ambitious goals to become more environmentally responsible, such as setting net-zero carbon emissions targets. But the follow-through can be difficult, as companies run up against the cost and complexity of establishing and managing sustainability initiatives.

IFS, an ERP vendor based in Linköping, Sweden, has been at the forefront of enterprise sustainability and believes its embedded tools in IFS Cloud and its suite of products help customers measure, manage and report on sustainability data. IFS Cloud includes ERP, enterprise asset management, supply chain management, field service management and other applications for aerospace and defense, construction and engineering, energy and utilities, manufacturing, services and telecommunications.

In this Q&A, Sophie Graham, chief sustainability officer at IFS, discusses how running manufacturing and other operations more efficiently has both sustainability and business benefits. To do that, she encouraged IFS customers to move systems from on-premises to IFS Cloud, which can provide some of that efficiency and where customers can access IFS' sustainability management tools, according to Graham.

Editor's note: This Q&A has been edited for clarity and brevity.

Companies are struggling with the idea that becoming more environmentally sustainable is too expensive and will infringe on profitability. How can IFS help its customers deal with this issue?

Sophie Graham

Sophie Graham: I strongly believe that sustainability is not a cost center, and there's a stronger business case for it every year. Sustainability at IFS makes us a better business. It makes us more attractive to work for, it makes us a better business to work with and a better business to invest in.

How can IFS sustainability tools help its customers achieve sustainability goals?

Graham: In one example, the IFS Business Value Assurance tool enables companies to model out a win-win-win scenario [for sustainability]. With one customer, for example, we modeled planning and scheduling optimization for their fleet of engineers. We found that by optimizing the fleet schedules of the engineers, they could achieve 30 million euros of savings -- so tick on the financial side as they got 10% more productivity, tick on the productivity operational side and tick on the sustainable side as they reduced carbon emissions by 30%. With industrial AI, we have a huge ability to [get industrial-scale sustainability benefits, even if they're] not very glamorous.

Are there trade-offs that companies need to make to become more sustainable?

Graham: In sustainability, of course, there is an element of a trade-off. You see it particularly with ESG [environmental, social and corporate governance] as a term, between the "E" and the "S," you can have something that's great for the environment but not so good for the society or the communities that it might serve. Copperleaf [an enterprise asset management company that IFS acquired in June] allows getting those difficult decisions around understanding and incorporating sustainability alongside financial and operational KPIs when they're deciding capital allocation for the next five to 10 years.

Two or three years ago, companies were setting targets in a flurry, and everyone seemed to have a net-zero target. But now we're in the difficult stage of delivering on that, and companies are struggling to deliver on their sustainability targets. Companies in the aviation sector are missing 80% of their interim targets, for example. So we're into the hard stuff, and a lot of that now is becoming a resource allocation decision. How do you go from commitments you've made on a page to action on the ground. That's often putting your money and people where your mouth is and doing that in a way that still allows you to drive operational performance and meet your financial KPIs.

Two or three years ago, companies were setting targets in a flurry, and everyone seemed to have a net-zero target. But now we're in the difficult stage of delivering on that, and companies are struggling to deliver on their sustainability targets.

Does having the sustainability tools embedded into IFS Cloud make it easier for adoption?

Graham: That's what I'm hearing [from customers]. [A recent PwC survey indicated that] 74% [of respondents] still manage ESG data purely on spreadsheets, which is very manual and resource-intensive. IFS can help to streamline that, and a lot of that ESG data exists within IFS Cloud.

What are the challenges for customers that are still running on-premises systems?

Graham: In some of the sectors we work with, there are particular concerns around data. In the defense sector, for example, they want to be on-premises. That's definitely a conversation that we're having with customers. But there's a strong sustainability story for moving to IFS Cloud, and we can model emissions savings and efficiency gains that you can get by moving to IFS Cloud. Plus, you can then access things like the new Sustainability Management module and all of these other industrial AI benefits that are built into IFS Cloud. So the pull is getting stronger to move on to IFS Cloud, and there's a strong sustainability angle to that.

We know that AI has huge energy requirements that are problematic for sustainability efforts. What is IFS doing specifically, and what are you doing for customers to manage that question about what AI means for sustainability?

Graham: It's early days with sustainability benefits and AI, but when we talk about industrial AI, we can show that there are sustainability benefits associated with industrial AI. For example, look at scheduling optimization. If you optimize the schedule of your fleet of engineers, you typically save them carbon, reduce their travel time and we can measure that out. We can present that immediately to customers and prospects. In terms of what we're doing internally with our products, we're looking at how we build software and code in an efficient way. We're looking at standards such as [those from] the Green Software Foundation and how we manage and measure that. One of my most common touch points with R&D is looking at how our products are sustainable, part of which is how energy efficient they are. There's typically an overlap there, because we want [an application] to run efficiently from a cost perspective, which means it runs efficiently from an energy perspective as well. Our solutions are scaled to near-zero when not in use, which helps to keep that energy cost low.

That's even more important when we get into the topic of AI, where we've seen these really big increases in energy and water use associated with AI and typically generative AI use. That's where I work closely with our partner Microsoft. Azure is where we host those cloud services, and they're doing a lot around reducing energy use, moving to renewable energy and also minimizing water use.

What's the biggest challenge that companies face as they try to become more sustainable?

Graham: Data, because about 50,000 companies are being caught by the new EU Corporate Sustainability Reporting Directive regulation, which includes some outside of the EU, many in the U.S. [The regulation] contains over 1,000 data points and exposures, which breaks down into 4,000 KPIs, not all of them are quantitative, as some are qualitative. But that shows you the exponential growth of sustainability data that's going to be out there in a few years. The first reports will come out in a few months, as we get into the new financial year. It's increasing the quantity of that data, but there's also an expectation of the quality, which is, it should be auditable, it must be in your public domain, it has to pass the scrutiny of the board committees. That's where companies are really struggling, how do they get that data and how do they make sure they're comfortable with it going out and that it can be trusted so they won't be called out for greenwashing.

Jim O'Donnell is a senior news writer for TechTarget Editorial who covers ERP and other enterprise applications.