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Digitalization and Sustainability – A Congenial Duo

Reading Time: 4 Minutes 23.02.2021 Currents & Trends

With solutions like AI, process mining, and modern ERP systems, the digital transformation can be a great help in reaching ambitious climate targets

Over the last years, many German companies have already paved the way for digitalization, and now the coronavirus pandemic has significantly accelerated its development. 86% of the managing directors interviewed for the "Bitkom Digital Office Index 2020" intend to replace mail by digital communication, for example for processing incoming invoices. This number is almost twice as high as back in 2018. 61% of the interviewed companies regularly use video conference systems now compared to the 48% from two years ago.

According to the Bitkom survey, the last few months have proven that the more digitalized a company's processes are the more likely they are to withstand trying times.

How does digitalization affect the environment?

Along with the advantages already inherent in the digital transformation, for example working from home or remotely, the crisis has had a positive effect on the environment. According to the Potsdam Institute for Climate Impact Research, 8.8% less carbon dioxide (about 1.6 billion tons) was emitted into the atmosphere in the first half of 2020 compared to the same period of the previous year.

While the effects of the reduced carbon emissions during the months of crisis are only temporary, digital technologies are predestined to protect the environment in the long term. The systematic and accelerated digitalization of the industrial production and the design of buildings and workstations could mean 120 million tons less of carbon emissions by 2030 compared to 2019. According to the "Digital economy's impact on the climate" survey by Bitkom, this is almost half of the specified 262 million tons of reductions in carbon emissions Germany wants to achieve by 2030.

Critics of this development point out that digitalization only relocates the problem from the companies to the bigger providers which play a central role in the digital transformation. Customers are increasingly using services and the necessary infrastructure from the cloud and current figures indeed show that the global energy demand of the data centers has quadrupled in the last decade.

At the same time, energy efficiency has improved significantly and its potential is still far from being exhausted. With their study on opportunities and risks of digital technologies ("Rechenzentren in Europa – Chancen für eine nachhaltige Digitalisierung"), the Berlin Borderstep Institute for Innovation and Sustainability has identified around 70 technologies which will offer economic benefits along with better sustainability.

One of the examples provided by Borderstep are adaptive data centers. Since alternative electricity generation by means of wind energy and photovoltaics is only useful with enough solar exposure or wind strength, infrastructures for relocating cloud workloads to locations with fossil-free energy generation will emerge.

In the second example, the integrated cross-system efficiency optimization, everything revolves around the ERP system. Thanks to the real-time analysis and control of the resources used, it is possible to fully exploit the internal IT infrastructure and hence gain financial benefits.

What options do companies already have today?

In their position paper "Digitalisierung & Nachhaltigkeit" (digitalization & sustainability), Bitkom has identified the two goals "digital solutions for sustainability" and "increased efficiency and optimization", among others.

Along with increased energy efficiency, digital tools offer a pool of innovative solutions which help companies to act more sustainably. A typical example is predictive maintenance, which helps to avoid unplanned downtimes to a great extent and to significantly reduce the amount of field work.

Artificial intelligence (AI) is expected to play a major part in sustainability. The survey "Climate AI: How artificial intelligence can power your climate action strategy" by Capgemini shows that already 48% of the interviewed companies use AI to reduce their carbon emission and increase their energy efficiency. The benefits of AI are not limited to certain areas. Industries like automotive, manufacturing, energy and utilities, consumer goods, and retail expect to benefit from it.

Bitkom's second identified goal, increased efficiency and optimization, comprises several technical capabilities which help harmonize the available resources and workflows within your company.
This improves efficiency and makes the use of additional resources redundant in most cases.

Process mining, a strategy pursued by many leading ERP providers, for example, gains more importance in this context. The survey "Mehrwerte schaffen für den Mittelstand durch ERP-Software" (available only in German, roughly: How to create added value for SMEs using ERP software) by teknowlogy | PAC and proALPHA revealed that 41% of the interviewed companies within the DACH region see great potential in analyzing existing processes. Process mining also reveals optimization potential where flaws and inefficiencies occur.

The implementation of the technical sustainability measures specified by Bitkom require comprehensive digitalization with end-to-end modeling and business processes without any media disruptions.

Take automatic processing of accounts payable, for example. Standardized and consistently digitalized processes from the receipt of an invoice to its verification, release and posting ensure more productivity with less expenses. Experience has shown that smart tools can save up to 90% of the paper-based expenses.

One thing is clear: Digitalization can make a great contribution to reaching the climate targets. However, it is important to understand that sustainability can only work if every single company takes active part in it.

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