How Software Development Can Help Organizations Achieve Strategic Goals

Introduction

The software development is becoming a critical tool to achieve better efficiencies and to improve businesses productivity. This assignment aims to explain the main trends in which technology is being used and developed to help many organizations to achieve their strategic goals. The industrial environment is shifting to better technologies as is needed to “produce more with less” because of the limitations of the resources availability and the rising demand for products and services. With this shifts in the industrial landscape arise the need for new products as well as new ways to produce them with a sustainable approach.

The software development is influencing a lot of industries, take as an example the artificial intelligence advances in the automotive industry, there are a lot of development aimed to automate the driving experience. The AI is causing a new industrial revolution; the “Industries 4.0” in which the pull models is initiated by the customer.

This assignment take in consideration 3 examples of how many organizations are making use of the IT technological advances to reduce their impact on the environment. First, the SAP enterprise which is the larger Enterprise Resource Planning (ERP) software corporation, secondly the PUMA company, which is known worldwide because of the shoes and apparel they produced and The Heineken Company a worldwide brewery which has operations in all the continents

Main Body

The software development is a critical factor in the innovation disruption of many industries, for example in the automotive value chain the advances in artificial intelligence (AI) is creating new opportunities to create business value via electric-autonomous-connected vehicles (Corporate Innovation 2015). Besides this, the innovation in software has managed to reduce carbon emissions of many transportation modes via tests automation (Shaw 1990).

On the other hand, with the tech environment in lasts years have emerged a new kind of industry, the “Industries 4.0”. The term “Industries 4.0” was coined in Germany and refers to the fourth industrial revolution. The first revolution was in the XVIII century with the invention of the vapour machine, the second one was in the middle of the XIX century with the creation of the assembly line and the third one was in late XX century via the operation control through a programmed computer. (Drath 2014)

One key technology that is being used in many organizations to automate, and increase operations efficiencies is the Enterprise Resource Planning (ERP) software. The ERP system helps companies to integrate its operations throughout the entire supply chain and the product lifecycle, from the design phase to the end-of-life process, from the resource management to the final delivery. The ERP solutions, (Finance, HR, production assets, inventories, manufactured goods) automates business processes, customer relationship management (Brand, customers, campaigns), product lifecycle management (Products, bill of material), supplier relationship management (Contracts, suppliers) and the supply chain management (Logistics, transportation assets) (Monk 2012).

One benefit of this software is that it allows to measure and control the pollution generated which can be used to establish strategic objectives. By stating a relative target, the enterprise could reduce carbon emissions per revenue, per production, per employee or even per year, on the other hand, by stating absolute targets the enterprise could cut emissions by a defined criteria bearing in mind a time framed scenario (Monk 2012). With this in mind, organizations are using the software development to monitor the impact of their operations in their environment.

These initiatives are framed within term “Green IT”. By definition “Green IT” implies to run data centers, client infrastructure, networks, storage, and communications with minimal impact on the environment and they ensure a socially responsible supply chain. In other words, it aims to boost energy efficiency during the product's lifetime and renewably powered IT, embrace recyclability, waste reduction and reducing the use of hazardous materials. One of the benefits of this approach is reducing IT costs significally (Murugesan 2008)

Another “Green IT” initiative has to do with the “Green software development model”. A study from 2012 discusses the changes in the existing Software development lifecycle (SDLC) and suggests a few processes to lower carbon emissions, power and paper use, thus “helping organizations to move towards greener and sustainable software development”. (Shenoy 2011)

In regards of the energy efficiency, the advances in IT, which include cloud transition, site selection and electricity reduction, are aiming to use low-energy hardware, server virtualization and adaptive computing to reduce the environmental impact, for example, better use of hardware and applications and less CO2 emissions (Murugesan 2008)

Another way to reduce the environmental impact in Green IT is dematerialization, which consists of virtual collaboration. The trends in this area are about changing the travel culture, organizational complexity and customer relationship, collaboration tools, apps and utilization reports. The immediate impact of these initiatives are fewer flights, gas emissions, and costs, shorter reaction times and better work-life balance for hired workforce (Murugesan 2008)

One important way that IT has helped organizations to reduce their emissions is via telework and teleconferencing as both approaches can substitute travel. The results of study made in 2011 indicate that an organization can “significantly reduce its environmental impact and costs, by actively using the applications as tools to reduce travel”. (Arnfalk 1999)

Another great trend in IT development has to do with Sustainable Enterprise Resource Planning (S-ERP) as this initiative addresses the issue that sustainability data is not “sufficiently integrated and used for decision making”. In a study from 2014, the Sustainable Enterprise Resource Planning (S-ERP) system was proposed as a holistic solution to support sustainability goals in organizations. The S-ERP systems' life cycle and identified six key areas include: concept, system design, pre-implementation, implementation, post-implementation, and system extension similar to the business processes mentioned before and propose S-ERP system appears as a “promising solution to solve integration problems in sustainability” (Chofreh 2014)

The sustainability approach to reduce pollution from operations by applying new technologies is not new, as a study from 1999 suggests from the Academy of Management Journal the “management of the natural environment is becoming an increasingly important issue to manufacturing firms”, they proposed “The environmental Technology Portfolio” as construct based in the resource-based view of the firm and manufacturing strategy. The authors found that the technology significantly affect both manufacturing and environmental performance for the sample of manufacturing plants (Klassen 1999). These initiatives are framed in the shifts of the industrial environment; since resources and energy are finite, there is the need to improve business productivity with new technologies that able organizations to produce “more with less”. (Chryssolouris 2008)

One example of this can be observed in one of the ERP Software Company, SAP, which is the market leader in enterprise application software, they help organizations to streamline their processes, by giving them the ability to use live data to predict customer trends. According to the 2015 integrated report, they “made significant progress toward our goals for the reduction of greenhouse gas emissions”, by using digitalization and green technology trends. They are reducing their energy consumption and greenhouse gas emissions. Their goal is to reduce the net greenhouse gas (GHG) emissions from operations to levels of the year 2000 by 2020. They are working to reduce emissions through three primary approaches: increasing operational efficiency combined with innovative approaches; purchasing high-quality renewable electricity certificates; and investing in high-quality carbon credits. Their total net emissions decreased to 455 kilotons CO2 (2014: 500 kilotons). This decrease stems primarily from a reduction of business flights and compensation with carbon emission offsets. (SAP 2015). Since 2007 they have managed to reduce these emissions per € revenue in 50% and 20% in global terms.

Another example of the implementation of technology to reduce pollution is PUMA. According to the environmental profit and loss account they say;

“Our operations and supply chain depend on nature for services such as fresh water, clean air, healthy biodiversity and productive land. The PUMA E P&L is the first attempt to measure the immense value of these services to our business, and the true costs of our business’s impacts on nature by placing a monetary value on them along our entire value chain.” (Puma 2011)

By accounting the environmental impact of their operations, they can make use of the developed technologies to reduce water use, for example. In the figure 2, a representation of resources use is estimated in monetary value. (Puma 2011)

A third great example is the Heineken Company, which by making use of Green IT managed to reduce 45% of the emissions of their fridges by purchasing “green fridges”. One other goal they achieved was to reduce 36% of their emissions compared with 2008 and they have planned to reduce CO2 emissions from distribution (transportations through a truck fleet to end customers) by 20% in Europe and the Americas. (The Heineken Company 2015)

According to Forbes, BMW, the car manufacturer is the most sustainable business of 2015, as they are developing new software technologies that allow them to achieve “efficient use of water, energy, and lack of waste”. This approach is supported from the high-level management as its “responsible approach to paying taxes, large innovation investments, low employee turnover, and low CEO-to-average-worker pay ratio” helps them to be aligned with sustainable goals throughout the entire organization (Forbes 2016). The BMW Group will reduce its resource consumption (energy, water, waste, solvents) per vehicle produced by 45% by 2020. The main initiatives to achieve these goals are based on improvement in their software to better operations efficiencies. (The BMW Group 2015)

As a result, with the rise of new technologies from the 4 industrial revolutions said before it also emerged new flows of pollution, so more technology has translated into more pollution, however, as stated before, there are new trends that aim to reduce the pollution generated by improving the businesses’ productivity, which means producing more outputs with less inputs, therefore reducing the environmental impact and the pollution generated

Conclusion

The advances in technologies have caused 4 industrial revolutions, the first one with the invention of the vapour machine, the second one by the invention of the assembly line, the third with the process’ automation via computer use and the recent one based on the development of the internet of things. With the implementation of each of these technologies arise pollution, so more technology means more pollution, beside this there is a double need to increase business productivity. First, resources are finite and second there is a global increase in the demand of products and services. Consequently, many organizations are investing in software technologies like enterprise resource planning (ERP) and sustainable enterprise resource planning (S-ERP) to help them capitalize new opportunities as well as to improve their productivity and their processes’ efficiencies.

Among these initiatives is the “Green IT” approach, which aims to the use of the technology to increase energy efficiency by implementing practices like telepresence, telework or teleconferencing to reduce the carbon emissions due to transport needs. This particular effort is known as dematerialization

This assignment also explained how 4 companies are making use of technology to achieve their strategic sustainable goals. The ERP leader, SAP, reduced their carbon emissions by implementing telepresence and telework applications, using digitalization and green technology trends. Their goal is to reduce the net greenhouse gas (GHG) emissions from operations to levels of the year 2000 by 2020. The shoe and apparel manufacturer PUMA is using IT to estimate a monetary value of their operations in regards of the resources used, as their “operations and supply chain depend on nature for services such as fresh water, clean air, healthy biodiversity and productive land”. The Heineken Company, used IT to apply a fridge purchase program to achieve a new 100%-green fridge network and also managed to achieve the reduction of 36% of their emissions compared with 2008. Lastly, it was explained that the most sustainable enterprise of 2015 was The BMW group as the approach on new software technologies allowed them to achieve “efficient use of water, energy, and lack of waste”