ERP Vendors, Are You Green Enough?

Disclaimer: The idea behind this post is strictly based on an assumption that has no scientific proof—and an approach that is very simplified. Thus, the results and conclusions should not be used for any serious purpose.

Recently, as a member of the TEC Green Team, I went through over 20 enterprise resource planning (ERP) vendors to examine elements within their offerings that help companies tackle environmental issues. During the research process, I got the impression that there seems to be a relationship between vendor size and the greenness of their offerings.

To confirm my impression, I took a super simplified approach. For vendor size, I used the annual application revenue data (year 2006) from a report produced by AMR, and for the greenness, I simplified it to the number of search results that include “green” on the various ERP vendors’ sites. Google was used as the search engine. (If you are not familiar with how to search only within one specific website, take a look at the “domain search” here.)

I picked the top 7 vendors because 7 is my favorite number. Also, I believe that the rest of the vendors won’t really change the trend line that I’m going to show, due to their insignificant numbers (in terms of both revenue and green count).

A few adjustments were made while collecting the green counts. For Microsoft, I narrowed down my search to microsoft.com/dynamics/ instead of the company’s homepage, and for Sage Group, I included both sagecrmsolutions.com and sageaccpac.com. Here are the results.

FIG. 1

For the next step I combined the green counts with the application revenue of each vendor and produced a chart (see FIG. 2). Each dot represents each vendor’s position on the revenue/green count quadrant. A linear trend line (instead of other more complicated trend lines) was then generated to see the linear relationship; the formula of the trend line is y=1.7564x – 1131.1.

FIG. 2

To verify whether the determined pattern between these two groups of data (revenue and green count) made sense, I calculated the correlation between the two variables. The result was 0.91. Not bad, because it is close to 1, the perfectly positive correlation.

Having completed all of the above steps, my conclusions is that, in general, the bigger an ERP vendor is, the more green capability it can (or shall) offer. What else we can do with the chart?

ERP vendors may use the trend line to determine whether they have enough green exposure on the Internet. For example, if your revenue is $1 billion, your green count benchmark should be 625 (convert your revenue into $M and plug it into the formula mentioned above, 1.7564*1000 – 1131.1 = 625) If you have high green count then you are doing better on the environmental issue than the average, and vice versa. Adopting organizations may use it to determine above-average vendors to build their competitive edge in tackling environmental issues.

One big flaw of this research model is that the word “green” didn’t always relate to environmental issues. “Green” could be the family name of a person who works for a vendor, a part of the company name of a vendor’s client, or the original meaning – the color. So once again, please don’t trust the trend line results above. This is just for fun.