In this article, jointly written with Neil Harris, Sustainability Strategy and Innovation lead at Amazon Web Services, we explore the importance of cloud transformation in reaching an organisation’s net zero goals.
Of the business world’s many challenges, two are connected in ways that might not seem obvious. One is the need to transform to a digital, cloud-enabled business model that transforms ways of working while enabling new sources of cost reduction and revenue growth. The other is the need to reduce greenhouse gas emissions and achieve net zero to avoid climate change risks, including the risks associated with making this transition.
The two are increasingly intertwined, and critical to an organisation’s future success. Both are built on a foundation of better efficiency - of cost and emissions - innovation, ecosystem collaboration, and more transparent and richer data insights. And success relies on the use of the right technology in the right places, usually the responsibility of the chief information officer (CIO) or an equivalent, such as the chief technology officer (CTO).
Not only do these individuals understand the capabilities and opportunities that digital transformation provides, but they also provide clarity on decisions and options. And with a remit across most organisations’ functions, priorities and performance, they are perfectly placed to understand the business value of the cloud, as well as deliver greater efficiency and sustainability through cloud or tech-powered transformation.
Enterprise-wide cloud adoption makes it easier to manage data, streamline operations and gain visibility across organisations and ecosystems, which helps make better decisions and can reduce carbon emissions in its own right. But it can also deliver powerful knock-on benefits in meeting net-zero goals, thanks to the insights these technologies can provide across every aspect of business operations.
Organisations are unlikely to achieve their sustainability ambitions without good data, insights and collaboration. That’s where the CIO becomes critical in a company’s climate strategy: joining up actions across departments, functions and teams. It’s also where they can amplify value by enabling and championing transformation through data-driven decisions around ESG strategy.
This is a big - but vital - change in perspective for many businesses. Cloud and net zero transformation, if combined in the right way, significantly increase the impact. And that means climate efforts must involve the CIO as much as the chief sustainability officer and the rest of the C-suite.
There are several reasons why organisations might accelerate a move to cloud - innovation, time to market, operational efficiency, among others. For many, it is to reduce IT costs. Perhaps less well known is the fact that cloud is more energy-efficient than traditional on-premise data centres: a report by 451 Research found Amazon Web Services (AWS) infrastructure can help businesses reduce energy use by nearly 80% when they run applications on the AWS Cloud instead of operating their data centres. Organisations could even potentially reduce carbon emissions of an average workload by up to 96% when AWS reaches its goal of purchasing 100% of its energy from renewable sources.
In a world of constrained budgets and competition for strategic investment, cloud migration can be a cost-effective way to tangibly reduce emissions while achieving a wider business objective of transforming legacy technology.
Though it may appear a straightforward solution to dual benefits, organisations should be careful to ensure that the promised savings from the cloud are realised. Typically up to a third of cloud spending is wasted on inefficiencies. In a consumption-based model, inefficient consumption of cloud resources is also likely to translate into inefficient energy consumption and unrealised net zero savings. But leading cloud providers are already offering solutions, implementing best practices and well-architectured frameworks to minimise the environmental impacts of cloud workloads.
And it isn’t just pure cost reduction where cloud transformation adds value. Moving to the cloud allows businesses to access digital data whenever and from wherever they need it. It enables them to integrate, view and analyse data from vendors, supply chain partners and other third parties, helping keep a keen eye on financials.
With rising expectations around sustainability from regulators, investors and customers, organisations should take a cloud-first approach to capturing, collating and analysing their climate data. Without sustainability-related data insights from across their supply chain, they can’t understand where change is needed most or track the impact of their improvement efforts. They also need good data to be able to transparently report what they are doing to reduce environmental impacts – currently, only 42% of consumers believe businesses are investing enough in climate and carbon efforts.
The cloud provides a level of efficiency that organisations can’t get from the patchwork of solutions often used to track emissions and other sustainability metrics. For example, procurement departments or manufacturing divisions might monitor their progress towards net zero using spreadsheets shared by email. That approach works to a point but it’s not effective for organisation-wide transformation. Achieving broader change requires a system that everyone in the company can access when needed – and the cloud makes that possible.
Organisations will not meet increasingly stringent climate reporting requirements without better data insights - and those will depend on cloud transformation and other data solutions. For a large global business, in particular, the complex challenge of achieving net zero can’t be tackled without the cloud.
Business as usual will not get us to net zero: The scale of our decarbonisation challenge will require more innovation and new business models. But innovation and change are much cheaper and faster to achieve through the cloud: it’s only with the flexibility, agility and scalability of the cloud that advanced technologies such as big data analytics, machine learning and artificial intelligence (AI) are possible. And this is where true cost savings and growth can be realised.
Take green AI: It has the potential to increase GDP and increase employment while reducing emissions. Other cloud-based AI and machine learning can also enable innovation for sustainability in many ways – for example, by helping logistics companies to optimise routes, leading to reduced fuel consumption and carbon emissions.
Using the cloud, organisations can unearth operational efficiency and identify innovation opportunities. These can include novel strategies, better ways to use resources and the development of products and services that offer growth opportunities - such as digital products that are greener and or have greater transparency around emissions, which can be a differentiator in the market.
Every part of a business can benefit from innovation for sustainability. The decision to pursue green strategies depends on leadership from the chief sustainability officer, but the CIO needs to take the lead in making sure the right digital technologies are in place to drive green innovation.
Cloud computing offers additional benefits beyond improved energy efficiency, better data insights and easier innovation. It enables entire business ecosystems to quickly and easily share information through a single platform - this creates the potential for cross-industry collaboration that could help society in many ways.
Look, for example, at how FinTechs have used cloud orchestration and open application programming interfaces (APIs) to transform financial services, creating a wide variety of new digital products and services to meet the ‘anywhere, anytime’ expectations of modern consumers. Imagine the same happening with GreenTech.
And businesses can use cloud insights to improve their performance across many environmental, social and corporate governance (ESG) areas. In one survey, 92% of business executives said they believe that companies committed to ESG goals will outlast competitors that aren’t.
The chief sustainability officer (CSO) has long been the main driver of an organisation’s progress to net zero, but the rapid adoption - and realised benefits - of cloud technology has seen changes to that dynamic. There’s now a pressing need for the CIO and CSO to come together, collaborate, and use their combined influence to push their organisation towards net zero through digital transformation.
The success or failure of a CSO’s net zero plan is now likely to be heavily dependent on the ability of the CIO and their technology organisation to deliver digital-enabled and data-driven solutions to the net zero transition. A key part of that solution is cloud technology: only by moving to the cloud can organisations introduce faster innovation, richer data insights, and stronger, more collaborative business ecosystems that improve efficiency and reduce emissions.
It’s time to start looking at cloud and net zero transformation as one. And that responsibility rests as much with the CIO as with the chief sustainability officer or anyone else in the C-suite. By making the CIO a key figure in the organisation’s net zero agenda, it’s possible to introduce a digital transformation that realises significant cost savings, provides visibility around reporting and tangibly demonstrates the value of any changes.