Industry Cloud Business Applications: The Rise Of Industry

Verticalization is back! Why? Even though horizontal business applications are mature, they don't fully support industry-specific workflows. Manufacturers need to track schedules, time sheets and labor efficiencies, which aren't core to inventory management or customer relationship management (CRM). The patient's journey from diagnosis to long-term care must be managed by healthcare providers.

For decades, business software vendors have been creating industry applications. Lightweight cloud templates replaced traditional on-premises solutions, such as Oracle Siebel or SAP CRM. These templates provided scripted best practices and industry data models as well as user-interface-specific labels, extensions, and labels for the horizontal product, but they never reached depth enough to provide maximum results. During this time, vertically-oriented cloud solutions like Blackbaud, Procore, and Veeva emerged for pharmaceuticals and other life sciences.

There is now a fundamentally different approach to industry solutions. This is partly due to the need to modernize core system and adopt cloud solutions to increase agility and resilience. It also reflects cost pressures to concentrate resources on differentiation. Forrester has seen large CRM and digital operations platform vendor increase their focus on industry solutions. One example: According to public reports, Salesforce's industry editions are on track for accounting for 10% of its total revenue. Infor's industry cloud accounts for a third.

Although these new industry clouds will be the most popular way to buy five years from now in five years, today's choices aren't as clear. Many of these solutions remain relatively new. They can also be more costly and require special resources to install and manage them.

Forr the Planet: Sustainability Interview Series -- Cisco

The sector of telecommunications is at an important juncture in their sustainability story. Many companies are finding their feet in setting the right goals, addressing customers' questions about sustainability, and getting into the supply chain.

R. was our interviewee. We spoke with R. Herren, Cisco's executive Vice President and Chief Financial Officer, and Francine Katsoudas (executive vice president, chief people, policy and purpose officer) about Cisco's $100m fund to address climate change. They also discussed how mandatory reporting can help mitigate climate change, how innovation-driven cultures bring out the best in people and how sustainability questions arise from within an organization. We discuss the fact that the climate crisis is our generation’s problem and responsibility to solve it.

Abhijit, What role does the telecommunications sector play in sustainability and what role can an organization like Cisco play in sustainability?

Fran:Cisco, as a company, identified 2020's new purpose. It is to "For all, power an inclusive futureIt was the perfect timing. This helped us get through a difficult 14-month period. And it continues to help us today. It was our way to take responsibility for the greater impact we want on the world.

It is remarkable that companies such as Cisco recognize the importance of climate change mitigation. Employees also want to work in a company that is proud of the work being done. If we don't think about how we use our influence and power, the digital divide will only get worse. We believe that all of our partners must be gathered together because there is no single company that can solve these problems alone. As a global company with significant energy consumption, we recognize that we are responsible for reducing and minimizing our greenhouse gas (GHG), emissions through our operations and products. Scope 1 and Scope 2, GHG emissions, will be reduced by 60% by fiscal year 2022 (compared to FY07's base year). We are pleased that we are almost there. We are also making great strides towards our goal of sourcing 85% global electricity from renewable sources by 2022. We currently have 83% global renewables and are close to 100% in Europe and the US. We will keep pushing for our goal by buying low-carbon electricity, and using local renewable energy.

Scott:There is an inexorable connection between the pandemic we are currently living with and sustainability, climate change and social justice. This is because the most affected people in the world have the lowest economic advantage. They have been the most affected by all three issues. These problems are interconnected, so the solutions must be interlinked. The telecommunications industry has a key role to play in providing bandwidth and internet access. It's almost impossible to imagine living without internet access. There is a common role that all industries can play within this space, I believe.

Abhijit: Very interesting. We also touched upon the digital divide as well as access to the internet, which are both very important topics. What other important roles can telecommunications companies and networking organizations play in environmental sustainability?

Scott:My fundamental belief is that sustainability and climate change are the problems of our generation. It starts with looking at the supply chain and making sure that everything is in order. This applies to Cisco as well as the entire telecom industry. We design products with the circular economy mindset in mind, not just the idea of dumping it out and hoping it gets repurposed at the end. We want products to have as many reused components as possible so that they can be upgraded, repaired, or reused in the next generation. We have put a lot into the supply chain to design for a truly circular economy. For example, we have committed to reduce our use of virgin materials. Some of our products are covered in plastic. We are now moving towards using more post-consumer recycled (PCR) plastics to offset the amount of virgin plastics.

Once the product leaves the supply chain, and is ready to go into use, we invest a lot of time in designing energy-efficient products. Our chipset is super-efficient and we are currently developing it. The Cisco Silicon One chipet has a 35% increase in bandwidth. It is also smaller than 10 pallets of gear that weighed around 2,000 pounds. This reduces the amount of gear to about 30 pounds. It also lowers the annual energy consumption by 96% compared to its predecessor. It all begins with how we make products and continues to our design of sustainability after they leave our doors.

Abhijit : This is a great perspective of how you view your entire value chain. Do you have any particular products or solutions that you are more invested in? Are you willing to share your sustainability commitments in some of these products and solutions?

Scott:We first discussed the Cisco Silicon One chipet. It has significantly higher bandwidth and is also denser. This means it consumes substantially less energy in terms of both throughput and cooling. Our target market includes the largest data centers and public cloud providers. The new chip will consume less than 4% power than its predecessor and offer 35% more bandwidth. We have created specific products such as the Silicon One chip and the 8000 Series router.

We are also working to reduce virgin plastic usage by 20% by 2025, as we have mentioned previously (compared with FY18 base year). By fiscal year 2020, we will have avoided 1 million metric tonnes of supply chain greenhouse gases (compared to FY12 base year).

The third announcement by the Cisco Foundation was a $100million commitment for the next 10 years. This will fund technologies that reduce carbon output and capture carbon already released into the atmosphere. It also funds community education processes that allow everyone to become part of the solution.

Fran:Talking to engineers from Silicon One, I am struck by how proud they are of their customers' sustainability goals and the need to use less energy. It is about innovating that they are most proud of, and this is a challenge that they want to take on. Our engineers are motivated by the fact that they have a greater purpose and mission than we did before.

Abhijit: In relation to customers, do you see more customers becoming aware of specific products and solutions? Is there a greater traction than ever before?

Scott:It is rare that an RFP does not include questions about our sustainability commitments, disclosures on ESG, and other pertinent information. This is an area Cisco has been a leader in, and Cisco has a long track record of doing so. OurCorporate social responsibility reportIt is over 100 pages long and contains a lot of information. As the CFO, I strongly support mandatory sustainability and broader ESG disclosures through a regulatory agency like the SEC (the US Securities and Exchange Commission). This is the problem of our generation. One way to solve it is to expose -- not only on a voluntary but also on a mandatory basis -- how each company performs on these metrics. It is clear that companies doing the most on ESG issues will attract investment. Although it is difficult and requires a lot more work, I am a strong advocate for ESG topics.

Glenn O'Donnell says: It's a great topic and companies are taking an altruistic approach. As a public company, however, you have fiduciary responsibilities and this comes with a price. As a company, have you been able look at this from a ROI perspective and say, "This is costing me some money but we can have an X% rise in revenue because this is what we do"?

Scott:I know that sales are driven by the activities we do around a circular economic model. This includes the management of our operations, our supply chain to reduce Scope 1, 2, 3 GHG emissions and efficiency improvements in our products once they reach the field. It's difficult for us to see which of these we would have got if we looked back. It's not easy to think in the exact way that a CFO should. It pays off in higher sales and greater interest from sustainable-focused investors. Customers who choose us over our competitors are proof of this. This competitive advantage does not come from the products we have produced or the services that our customers receive, but also due to the company's overall philosophy and its focus on sustainability and doing the right things. Although there is an obvious cost to this, it's not easy to quantify. However, there are many benefits.

Abhijit says: This question has been repeatedly asked by Forrester clients. They specifically want to know how to create a tangible model of the ROI of sustainability. To assess the returns of sustainability investments, we recently published a model that used Forrester's Total Economic Impact (TEI) model.

Abhijit, With more than 75,000 employees at Cisco, how do they help you achieve your sustainability goals? And, correspondingly, how can you ensure that each employee is able to reach the corporate-level goals?

Fran:You rightly emphasize the need for both a top-down approach and a bottom-up approach when problem solving in this area. Cisco views us as fortunate because we have been using both approaches together. This topic is very much a part of our employees' lives. We bring structure in certain cases to aid that process and help us reach maximum scale as an organisation. Sometimes, I joke that sustainability questions are not answered from the outside. They come from within. As we enter a more intense battle for talent, we discover that each candidate has their own list of ESG issues and they want to know our position on these issues. There is tremendous interest from a talent perspective.

A few of the initiatives that we have undertaken have brought about big results for our company. Earth Day is a tiered event. We usually have a two-month program called Earth Aware where employees can share their best ideas and create a global collection. Our employees were the ones who asked "Why are we still using paper cups?" and we began to push for all cafeterias to eliminate paper cups. Although we are still on this journey, I love that it came from our employees.

The Cisco Global Problem Solver Challenge is a program that funds the most innovative ideas from outside Cisco. We see amazing people using technology to solve many of the world's most pressing problems. Our employees help to vote for the best innovations we believe will be significant.

Abhijit, Thank you so much for sharing your perspectives. Your perspective is invaluable to our clients. You are a key advocate for sustainability at Cisco. We thank you for making sustainability a priority.