4 Ways to Be Sure You're Buying the Right Energy Management Software

4 Ways to Be Sure You're Buying the Right Energy Management Software

Energy management isn't a peripheral concern any more. No longer just the concern of energy and facilities managers, it has jumped to the top of the page, and has settled itself as a regular feature on executives' lists of priorities.

Faced with rising energy prices, the stringent demands of regulators and shareholders' growing curiosity over sustainability, execs know that business-wide, transformational and strategic programs are the holy grail of energy management.

The solution is enterprise-class energy management software that gives businesses the ability to monitor, analyse and reduce energy consumption across a firm's entire operations. Pre-2009, managers contracted small-scale software solutions to deal with energy management challenges on a tactical basis, such as on a single site or for a particular building, but the market has come a long way since then.

As energy and sustainability risks have increased, software has kept up with the pace of change with the arrival of enterprise scale solutions that can scale up to global deployment. We identified over 60 suppliers offering energy management software solutions in the market today. Given the wealth of choice, how can firms be sure of selecting the best match for their functionality requirements?

In our recent report, Green Quadrant Energy Management Software, Verdantix researched both the buy-side and the sell-side of the enterprise energy management software market.

Interviewing 15 budget holders from global firms with combined revenues of $306 billion, we heard that buyers are investing in energy management software in order to cut costs and deliver on energy reduction targets as their businesses shift from basic energy monitoring to advanced energy management.

On the sell-side, we spoke to 15 energy management software suppliers and conducted 15 live product demonstrations to find out exactly what energy management software options are on the market, to piece together buyers' requirements and suppliers' offerings.

So what are buyers demanding? Our entire customer panel considered monitoring and targeting functionality essential in energy management software, with two-thirds calling for reporting and certification functionality as well as utility bill management functionality.

Buyers also require proof of value from suppliers -- 13 stated they would request evidence from suppliers to show how the software delivers savings, with the same number also keen for new software to integrate with existing data sources.

Yet faced with so many software suppliers, buyers need to select energy management software with extreme caution. Our research unearthed a number of implementation train wrecks which heads of energy, sustainability and facilities can avoid if they keep the following recommendations in mind:

1. Energy domain expertise is crucial. Even the largest energy management software providers tend to specialize within a few distinct "energy domains," for example data centers, grocery retail, or commercial buildings. It's essential to choose an energy management software supplier with expertise in the domains directly related to your business operations.

Our research indicates that buyers with large IT portfolios would do well to work with suppliers such as CA Technologies or JouleX; those with a considerable real estate portfolio would be wise to turn to CarbonSystems, IBM or Johnson Controls; and retailers should find a good fit with Verisae. These are just a handful of examples; there are several sector-specific solutions out there.

2. Confront the software integration challenge. The diversity of energy-consuming equipment -- from lights and security systems to HVAC and boilers to servers and routers -- means that no single application can automatically collect all the data.

Buyers must plan for a big integration project and push suppliers to demonstrate previous integration success with the relevant hardware and equipment -- whether it's meters and controls for data centres or building management systems.

3. Keep an eye on market dynamics. 2008 and 2009 witnessed the launch of 40 new software applications from 33 suppliers, but the bubble is starting to burst. M&A activity in 2011 has seen many a big supplier swallow up its smaller competitors (witness IBM's acquisition of TRIRIGA or Schneider Electric's purchase of Summit Energy), and we forecast that by 2016 the market will be fully consolidated. Buyers should consider the capacity of potential suppliers to ride out this storm.

4. Get evidence for cost savings. Few of the applications in the market today can directly reduce energy consumption. But if you are planning an energy reduction program -- perhaps in partnership with an energy services firm -- they you should look for a solution that can identify opportunities for cost reduction. Get proof from the supplier that their application can do this.

Our research identified four global leaders in the energy management software market: CA Technologies, CarbonSystems, IBM and Verisae.

Specialist firms include recent entrants to the market C3, Hara, Infor, JouleX and SAP who have strong product road maps, and equipment and services firms including Johnson Controls, Pace Global and Schneider Electric who are well aligned for market demand for energy data management.

Buyers should ensure that they follow these four recommendations when selecting an energy management software supplier to find the right match for their business.

The full report, "Green Quadrant Energy Management Software," is available to Verdantix clients at Verdantix.com.

Spreadsheet photo via Shutterstock.