Ventana Research Analyst Perspectives

Perillon Takes Sustainability to the Next Level

Posted by Robert Kugel on Nov 28, 2010 11:13:45 AM

Ecology and economy are two words with the same root. Similarly, the focus on sustainability in business has two sorts of "green" impacts: on the environment and (if you do it right) on the bottom line. Perillon has an on-demand and cloud computing-based solution for companies that want to manage their double-green sustainability efforts more effectively. Perillon Workspace Suite offers "sustainability performance management" for organizations in energy and environmental management. It delivers the kind of benefits that all enterprise performance management systems are designed to provide: the ability to assemble all relevant performance-related data, put that data into the proper context, present it relative to objectives, provide individual managers with alerts when results require their specific attention and incorporate a mechanism for ensuring that out-of-tolerance situations are addressed adequately. Moreover, because of its engineering history, Perillon captures data, in effect, all the way from the smokestack and not just in the technology stack. This differentiates the product from reporting tools that, while intelligent enough to have already built data and reporting structures designed to support sustainability efforts, must obtain the data from separate systems.

Any generic performance management application or analytics technology can be configured to manage sustainability. The main reasons companies will buy one already set up for a specific purpose are that it offers faster time to value, it can be less expensive to create and maintain, and it offers a wide set of features and functions that someone other than your IT department is responsible for enhancing. This is especially true if a company's IT department does not have adequate skills in working with line-of-business users in technical areas to develop and maintain applications. Perillon brings many years of domain expertise in energy management and environmental health and safety compliance. Built-in formulas enable the user to distinguish, for example, between average rates (for instance, the average sulfur dioxide emissions year-to-date) and the total amount. Selecting a vendor that offers performance management in a software-as-a-service (SaaS) or "cloud computing" mode can add to this ease of use because it simplifies the acquisition and maintenance process. Business users can sidestep any technology compatibility issues that might come up if they wish to implement on-premises software, and SaaS implementations usually are not subjected to a capital project review.

One of the important elements of constructing a performance management application is bringing together all of the data needed for accurate performance measurement, such as (in this case) materials consumption (electricity, natural gas, diesel fuel, water and so on), operations (for example, machine uptime or miles driven) or effluents (for instance, specific types of gas emissions or discharge water temperatures expressed either as an absolute amount or as the amount per unit of output). Over the past decade companies have replaced most of their paper reports with performance management portals that group together the business elements that each individual needs to monitor and present the data graphically in an easy-to-understand fashion. Perillon facilitates the integration of all such relevant information for the specific needs of sustainability.

Performance management systems also can be used to monitor out-of-tolerance conditions or keep track of tasks that have not been started or completed, and Perillon offers these sorts of monitoring and tracking capabilities. One reason why information technology has been able to improve productivity is that can automate oversight and allow managers and executives to manage by exception. There are two parts to this. The first is continuously monitoring data for out-of-tolerance situations and, when they occur, communicating them to the appropriate individuals. From a management standpoint, though, alerts are a necessary but insufficient capability. The second part is having the ability to monitor and track the resolution of the issue. The Perillon application has workflows that guide individuals through a defined resolution process, which not only ensures that individuals follow best or mandated practices but also enables those supervising to receive alerts if action items have been left unresolved for too long. In situations where there are legal or regulatory compliance issues related to these incidents, workflow systems can document that necessary steps were taken in a timely fashion. In addition, although it's highly configurable to users' needs, the application incorporates the company’s years of experience with the requirements of people in range of functions, from environmental health and safety to engineering and operations.

Today, many companies track their resource consumption, effluents and by-products and environmental, health and safety regulatory compliance separately, often using spreadsheets for some or all of these functions. However, spreadsheets cannot provide a complete view of these interrelated corporate functions, and therefore users may not be measuring or monitoring them as effectively as possible. Consequently they may be missing opportunities to operate much more efficiently or sustainably. They also may be missing the opportunity to better manage enterprise risks since it is possible to create alerts to senior executives if a sufficient number of events (such as safety issues) or threshold amounts (for example, average or absolute emissions, or resource consumption per unit of output) rise to a level high enough to warrant their attention.

In an era when corporations must manage costs carefully and where there are many benefits to operating in a sustainable fashion, I think there are compelling benefits in doing a better job of managing the double-green bottom line. Companies should have a sustainability performance management initiative in place, complemented by software that will make it easy to support these efforts. Perillon provides specific capabilities for managing activities and tasks related to sustainability that go beyond just measuring and monitoring them in a dashboard – the capabilities that many other software providers stop with today. I recommend companies look into how Perillon can help them gain efficiency and save money but also become operationally more effective in their energy and environmental management efforts.

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Robert Kugel CFA - SVP Research

Topics: Supply Chain Performance, Sustainability, Perillon, Business Performance, Financial Performance, Financial Performance Management

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Robert Kugel

Written by Robert Kugel

Rob heads up the CFO and business research focusing on the intersection of information technology with the finance organization and business. The financial performance management (FPM) research agenda includes the application of IT to financial process optimization and collaborative systems; control systems and analytics; and advanced budgeting and planning. Prior to joining Ventana Research he was an equity research analyst at several firms including First Albany Corporation, Morgan Stanley, and Drexel Burnham, and a consultant with McKinsey and Company. Rob was an Institutional Investor All-American Team member and on the Wall Street Journal All-Star list. Rob has experience in aerospace and defense, banking, manufacturing and retail and consumer services. Rob earned his BA in Economics/Finance at Hampshire College, an MBA in Finance/Accounting at Columbia University, and is a CFA charter holder.