Business Climate Change

Nigel King, Oracle vice president, functional architecture talks to Profit Online about solutions that integrate sustainability with corporate strategy

Nigel King is a renowned Oracle applications expert with an amazingly broad background that includes work with sales and marketing, finance, supply chain, mechanical engineering, and procurement software. He has authored books and articles about supply chain and holds patents in areas as diverse as audit and portfolio analysis. Profit Online spoke with Nigel about how Oracle products are addressing the increasing need for businesses to manage resources and waste in the name of sustainable business. And as the United States government prepared legislation to create a “cap and trade” market to limit greenhouse gas emissions, about the problems Oracle’s products can address as the sustainability debate becomes a business reality.

Profit Online: When did you first become interested in the sustainability debate?

NK: It has been in the background for along as I can remember, but I think the epiphany for me was threefold. First, I came to understand that we are facing an urgent global problem. We are rapidly approaching the carbon capcity of the atmosphere. The isotherem is moving nothward at the rate of 35 miles per decade. NASA’s climatology unit is telling us we have to cap emmissions in 2015 and get them moving the other direction.

Then, I began to see how an externality for businesses began to creep back into the enterprise. The externality is the cost of responding to the climatic change While the costs of extraction, refining, and transportation are built into the costs of fuel the costs of consuming the carbon capacity of the atmosphere are not. But this externality is beginning to be reflected in cap and trade systems.

But at last, I saw this was a problem that, at a personal and professional level, I can personally do something about.

Profit Online: Why is Oracle as a company getting interested in this field?

NK: Our customers are beginning to weave environmental policy into their overall corporate strategy. Oracle's products and services are there to assist customers in the monitoring and execution of that strategy. Our products will evolve, but there are many capabilities that can already support customers in these efforts. For example, now that cap and trade [[note: “cap and trade” places a limit on the total tonnage of green house gasses a business can create, but allows businesses with lower emissions to trade credits with businesses with emissions higher than the allowed limit.]] is becoming a reality in the United States, customers are thinking about how carbon should be reflected in their resource planning systems—and an application such as Oracle Advanced Planning and Scheduling can assist with that. If a resource is included on a bill of resources, the capacity constraints and differential costs between being inside or over your carbon cap can help you optimize your production. Customers may wish to start include carbon in their budgeting and reporting process as statistical amounts.

Profit Online: But this reaches beyond carbon emissions, right? Are there other areas customers should address as part of corporate sustainability strategy?

NK: Even the carbon emissions problem is multi-faceted. Energy security shook the world in 2007 and should have brought home the real risk and business continuity issue for the enterprise. But now there are also market access issues in customers in your supply chain needing to know the carbon footprint of your products. But yes the debate is much wider than carbon emissions and Oracle can bring more diverse capabilities to the table.

Customers can extend the use of our governance risks and compliance offerings beyond ISO 14000 [Note: ISO 14000 is a standard for reducing the environmental footprint of a business and decreasing the pollution and waste a business produces] to fuller environmental audits encompassing things like ethical purchasing verification.

Or use our product lifecycle management offerings not only to ensure design for manufacturability, but also design for disassembly and recovery of components in the post-consumer phases of the product. Customers may also need to re-examine distribution and logistics systems that have to account for a much larger reverse logistics flow as landfill is rapidly becoming a thing of the past. All these abilities are there today and can help customers better meet the demands of this business climate change.

Profit Online: What are the biggest changes that you expect in business systems as a result of the need for more sustainable business practices?

NK: We’ll need to present business problems in a different way. We’ll need to measure ourselves in different ways. The economic model should put a value on scarce resources, but the resources that are becoming scarce do not seem to be accounted for in the way the economy currently works. We will need to measure companies and products not just in price, but in some measure of environmental scorecard.

This may seem outlandish, but I picked up a humble bag of potato chips that proudly told me its carbon content right on the packet. Consumers are already making purchasing decisions on information other than price. This is really happening at a ground level today.

I believe business systems will have to gather and aggregate the appropriate measures to make this possible in the future:--energy, green house Gases, heavy metals, landfill space, water consumption, net new material—and present this information to consumers and investors. It may take a while for the measures to stabilize such that comparisons can be made, but it is a movement that can be sensed now and is growing every day.

Profit Online: How are public policy and private enterprise each driving these changes?

NK: Public policy is bringing the costs of sustainability into the enterprise. The enterprise is really good at making rational economic decisions, but the tools of public policy have to be there to make the costs evident. And of course there are decisions that need to be made at the level of the state that are the constraints within which the enterprise will function. This frames the problem for us as engineers—finding solutions to difficult problems is what we are good at.

Of course at Oracle, solving business problems is what we have always been about, and this is where we think we can really help our customers, and through that help contribute to a wider solution.