Pressure from Customers for Sustainable Business Drives Channel Effort

The IT channel must make room to make sustainable business a strategic priority — or risk losing customers.

That’s according to new research from IDC. The study indicates that having a sustainable business has evolved from a “nice to have” to a priority for customers. Indeed, organisations increasingly say the environmental impact of their IT is now as important as factors such as pricing.

IDC recently surveyed 700 IT buyers and executives across Europe as part of its new practice, European Technology for Sustainability and Social Impact. Six out of 10 European businesses cited sustainability as a very or extremely important business priority for 2020.

Important for the channel, sustainability is becoming a competitive differentiator. Close to 60% of organisations in Europe now include sustainability objectives into requests for proposal (RFP).

Two in five (41%) companies want help from their IT service partners to incorporate sustainability targets into products, services and solutions they deliver. Three in five (60%) see them as playing a crucial role in helping them achieve their sustainability goals.

Moreover, almost all (99%) recognize sustainability plays a role in selection of channel partners by both customers and by their business partners. Almost half (45%) believe this plays a critical role in that decision-making process. Fifty-four percent believe it plays a slightly important role. Only 1% believe it not to be important.

IDC Europe’s Margaret Adam

“Technology is and will be the means to achieve sustainability KPIs,” said Margaret Adam, associate VP, IDC Europe. “Over 50% of European companies state explicitly that they are currently investing into technologies to improve sustainability performance. Our research also showed us that there is a causal relationship between sustainability-targeted governance/investments and strong financial performance.”

Sustainable Business

The good news is that the partner ecosystem’s responses are encouraging, says Adam.

“In research conducted with 150 channel partners across Europe, we found 75% have recognized the importance of sustainability to their business strategy. Encouragingly, close to 40% are making significant investments to improve their profile as a sustainable business, with 35% implementing some measures to contribute to sustainable business practices.”

However, she notes that only 7% believe that sustainability is fully integrated into how they operate as a business.

“Given how much of a role sustainability is playing decision making, partners who are committed to being more sustainable need to ensure this is front and centre in how they position themselves. Of course, this needs to be backed with facts and credible propositions.

“They should think about how they can help customers embrace the circular economy, particularly those partners who are supplying IT equipment. Providing options for recycling of equipment should form part of their portfolio of services.”

Meanings Vary

Justin Harling, CEO at UK channel firm CAE Technology Services, believes what sustainability means in practice varies.

CAE Technology Services’ Justin Harling

“There is a level where sustainability appears to be included within decision making as a tick-box exercise,” he said. “This is either a tick for having ISO 14001 (the international standard for environmental management systems) and demonstrating the existence of the relevant supply chain policies, or for providing data on specific products and their inevitable improved performance. Neither are bad things to review, but greater action is required to ensure that a sustainability goal is achieved opposed to ‘green washing’ an RFP process.”

Harling believes you can measure the greater sustainability impact with …

… a joint understanding between customer and supplier.

“It should encompass impact from production, supply chain, product operation, service delivery and working practices. Ongoing measurement is required if sustainability is truly a critical success factor and this requires greater involvement from the wider business, not just IT.”

Circular IT

Adam says partners need to “walk the talk” and be transparent about how they operate as a sustainable business

“Explore financing and leasing and other consumption models,” she added. “Many vendors and partners provide flexible financing solutions. Recycling of existing equipment is often part-and-parcel of these offerings. In the current economic climate, many customers are looking to limit capital investments, so financing and leasing can provide a viable alternative whilst also giving the additional benefit of helping them achieve sustainability goals.”

In addition, she said partners must ask tough questions of their vendor partners.

“Increasingly, customers [will] want to get better visibility on the full supply chain and key sustainability KPIs of their providers.”

Leon Timmermans, CEO, Flex IT Distribution, agrees there is a growing awareness of sustainability within IT. Describing the company as a “circular IT hardware distributor.” the firm has launched circular reseller programmes to support the change to a sustainable business.

Flex IT’s Leon Timmermans

“We facilitate trade-ins and supply up to a three-year warranty for our circular hardware, which we also rent, to prevent capex investments for the end user. We will even proactively buy hardware and rent it back to free up cash when needed,” he said. “I strongly preach the circular message to our business. The team here knows that we will always choose to purchase circular over new equipment or products. The past few months have underlined to the world that there is really no excuse anymore to not buy circular.”

Sustainability Programs

Among vendors, HP has been one of the most vocal proponents of sustainability.

HP’s George Brasher

“Ensuring we have a sustainable impact on the planet, its people and our communities has become ingrained in our business strategy and operations,” said George Brasher, HP’s managing director for the UK and Ireland.

The firm recently announced the HP Amplify Impact program, which includes working toward a circular, low-carbon economy. For partners who choose to join this opt-in pledge, HP will provide training and support. The company also will help partners set goals and provide guidance on how to achieve them.

Brasher says HP’s various sustainable impact efforts helped drive more than $1.6 billion in sales wins in 2019, up an estimated 69%.

Legislation, such as that designed to cut carbon emissions, drives many organisations’ sustainability practices. For others, it is a question of reputational or pressure from customers, investors and employees. In either case, sustainability is something the channel can no longer ignore.