Transformation and IT sustainability are no longer just buzzwords.

Digital transformations deliver on two fronts: long-term business success and environmental sustainability

Digital transformation and sustainability are no longer just buzzwords. Businesses that are unable to adapt to the forced change of the last 12 months are going to get left behind.

The word ‘sustainability’ has been inextricably linked with the movement to make positive changes and take actions that will help to slow down the depletion of our natural resources. It’s a ‘green’ concept that businesses are starting to introduce, either through executive choice and ethics, market pressure, or regulation.

But, with this focus, it’s easy to disregard the primary definition of sustainability; the ability to maintain at a certain rate or level. This means if your business is not adopting sustainable practices, your entire business is at risk from becoming an unsustainable enterprise. There will be a line in sand drawn between businesses that adopt sustainable practices before they are forced to, and businesses that get left behind.

Over 72% of S&P500 companies are now reporting on their sustainability goals, reflecting a growing recognition of the strong interest expressed by investors.
Our current global crisis has also revealed the depth of other global risks – which demonstrate the need to prepare for unexpected disruption with resilient business operations, digital technology and IT infrastructures. Disruption that can be mitigated through well-planned and executed digital transformations.

Jane Sun Jie, the Chief Executive Officer of Trip.com Group explained the rising urgency for digital transformations, ‘The world is becoming rapidly digitally driven. It has never been more critical to embrace these technologies to empower customers, transform business and create opportunity.’.

A business case for sustainability

Sustainability is not a new concept but ‘sustainability-as-standard’ in corporate models is. In the report, Digital Transformation: Powering the Great Reset, the UN reports that more and more voices are calling for ‘a new form of capitalism – one that produces macro-outcomes that are aligned with human and environmental needs.’

The report also revealed some illuminating metrics when it comes to the real-world value of sustainability practices.

  • 90% of the studies on the cost of capital show that sound sustainability standards lower the cost of capital of companies
  • 88% of the research shows that solid ESG practices result in better operational performance of firms
  • 80% of the studies show that stock price performance of companies is positively influenced by good sustainability practices

The value of setting and meeting sustainability targets helps companies match consumer feeling, pre-empt regulation, reduce their environmental impact, and improve their operational and financial performance.

Digital transformation can be a pathway to a sustainable future

Julie Sweet, Chief Executive Officer at Accenture described 2020 as the starts of ‘’the decade of delivery for the promise of technology. Digital transformation is a powerful enabler of the great reset, to generate sustainable value and shared success.’’

And as the events of 2020 proved, business leaders now have the opportunity – and pressing need – to shape a new “business normal” that switches businesses practices from ‘Sustainability as a luxury’ to ‘Sustainability as a need’.

It’s widely acknowledged that undergoing a digital transformation can help companies meet these twin goals: long-term business success and environmental sustainability.

Digital transformations help improve the speed and reliability of the entire supply chain, the rate of product development and the speed and efficiency of logistics and delivery. This results in reducing waste, preventing unnecessary consumption of resources.

The Korean Advanced Institute of Science and Technology (KAIST) articulated this link clearly in their research report on Digital Transformation and Environmental Sustainability.
‘Digital technologies enable companies to eliminate waste across entire value chains to the fullest extent, enhance sustainable consumption, and eliminate harmful waste residue to the environment.’

Accenture estimated digital transformation could lower pollutant emissions of the logistics industry by as much as 3.6 billion metric tons by 2025 — a 10% reduction over ten years.

Sustainability goals and digital transformations seem to go hand in hand for corporate development, both contributing to the prevailing global shifts, regulatory patterns, and empowering economic growth.

In fact, the World Economic forum has outlined the opportunities and new value that stem from a digital transformation. According to the report, there are 7 near-universal dimensions that undergoing a digital transformation will add to any corporate structure.

  • New value – Value based on linear value chain that maximizes shareholder value will evolve to a dynamic value map, that is able to focus on stakeholder value.
  • Business models – Single, digital channels for products evolve into data-led services or outcomes and entire digital ecosystems.
  • Operating models – Models transform from hierarchical, isolated, and on-premise, to agile, AI-enhanced, and platform-based systems.
  • Supply chain – Globalized, low-cost, systems that deliver just in time become localized, resilient, efficient, and ethical.
  • Decision-making – Manual decisions based on historical data are replaced by predictive, real-time, intelligent, at the edge decision making
  • Finance/investments – Finding new tech capabilities and growth objectives moves to de-risking cost/revenue and finding new revenue that is in line with ESG targets.
  • Talent – A digital transformation helps companies close known skill gaps, building an elastic, rapidly upskilled digital workforce, with talent-on-demand models.

An environmentally sustainable digital transformation strategy forces business leaders to isolate issues that are crucial to the business operation and stakeholders along the chain. Efforts then naturally flow to areas with the greatest potential for business growth and environmental sustainability impact.

Digital transformations help business leaders set and articulate a long-term value creation as part of an environmental sustainability strategy, supported by targets and resources.

This link between value and sustainability contribute greatly to the fact that digital ecosystems will represent more than $60 trillion in revenue by 2025, or more than 30% of global corporate revenue.

A more sustainable digital transformation

Yet being digital-at-the-core by itself is not enough. Digital transformations are an ongoing process. In addition to the natural environmental benefits of a digital transformation there are ways to incorporate increasingly sustainable practices into digital transformations.

Companies can undergo a sustainable-by-design digital transformation through practices that consume IT infrastructure as a service, often through independent providers. In doing so, they eliminate the overprovisioning of IT, reducing both capital expenditures and environmental footprint.

Independent IT services can help businesses implement a more sustainable digital transformation through:

  • Extending the true life of IT equipment through platform extension with end of sale refurbished equipment, asset management and maintenance
  • Defining value of the equipment by assessing its usability rather than using planned obsolescence or end of service life terms as a reference
  • Offering second-life applications to equipment via buybacks of obsolete infrastructure platform services
  • Reducing consumption through repair and refurbishment or through reselling refurbished equipment
  • Reducing environmental impact through WEEE-approved recycling techniques

Digital transformation is not a new endeavor for business, though prior attempts have often failed to realize its full potential. Successful leaders will utilize the opportunity of a rapidly changing business environment to advance digital transformations that chime with the sustainable responsibility of businesses.

Digital technology offers the potential for businesses to enable long-term value creation for all stakeholders alongside long-term visions for environment and business sustainability inclusivity, and trust.