32nd International Conference on Organizational Science Development SMART ORGANIZATION High Potentials. Lean Organization. Internet of Things.
March 20th – 22nd 2013, Portorož, Slovenia
Opportunities of sustainable business practices in SME’s Alenka Baggia1, Robert Leskovar2, Boris Delibašić 3, Nataša Petrović 1,2 Faculty of Organizational Sciences, University of Maribor, Slovenia 1
[email protected],
[email protected] 3,4 Faculty of Organizational Sciences, University of Belgrade, Serbia 3
[email protected],
[email protected]
Abstract Information technology and information systems, as well as business processes have a direct and enabling effect on the increase of Greenhouse Gases (GHG) emissions. Green information communication technology has been an interesting topic few years ago. In recent literature research, green information systems and sustainable business practices are becoming an issue which helps enterprises to embed sustainable practices into their activities or products and reduce their environmental impact. This paper presents enablers, barriers and opportunities for the introduction of green and sustainable business processes in small and medium enterprises.
Keywords: sustainable, business process, green, information system
1
Introduction
Environmental initiatives were seen by management as additional cost and non-profitable prestige for the company two decades ago. At the beginning of the 21st century, environmental awareness of the company was recognized as an indicator of success and companies began to benefit from their sustainable attitude. Due to the economic crisis in the last couple of years, market pressure and higher costs, Small and Medium Enterprises (SMEs) are not devoting enough attention to their environmental and sustainable attitude. Green Information Technology (IT) gained more attention, since the effect of the energy efficiency is obvious and contributes to lower costs of business. Purchasing Green IT has become self-evident for companies and individuals. Essentially less attention was focused on sustainable business processes, environment and Information Systems (IS). SMEs are in turn to renovate their business, processes and acts to raise their environmental awareness and reputation. In recent years, a new breed of IS has emerged, Green IS. The focus of the research Enterprises are under increasing pressure to adopt environmentally sustainable strategies for
their product and services. As presented by (Butler, 2011), the organizational change to sustainable business practices is influenced by regulative, normative and cultural-cognitive pressures for Green IT/IS. As presented in (Melville, 2010) IS plays a critical role in shaping beliefs about the environment, in enabling and transforming sustainable processes and practices in organizations, and in improving environmental and economic performance. The field of sustainable business processes gained some additional attention in the last years from the academic research (Melville, 2010; Watson, Boudreau, & Chen, 2010), while some research papers were also presented in green supply chain (Sundarakani et al., 2010; Sarkis, 2012), business process management (Ghose et al., 2009) and diverse case studies addressing environmental business approaches. There are many ways for a company to practice their sustainable awareness in business processes. For example controlling carbon emissions and measuring the carbon footprint across a supply chain is a challenge for organizations today (Sundarakani et al., 2010). Ghose et al. (2009) argue that Business Process Management (BPM) technology, with its focus on understanding, modelling and improving/optimizing business processes, is a key starting point. A system, presented by the case study by Curry et al. (2011) allows employees and groups within the SME to understand their overall environmental impact, allowing them to incorporate sustainable business concerns within their microlevel day-to-day activities and decisions. The remainder of this paper is structured as follows: a) reasons and perspectives of sustainable business practices are presented. b) Green information systems, supporting sustainable business processes are discussed. c) Opportunities that SMEs have in the area of sustainability are introduced. d) Concluding thoughts and guidelines for SMEs are presented.
2
Sustainable business practices
In the research Kranz & Picot (2011) investigates the factors influencing private consumers’ attention to adopt Green IS. The results implicate that apart from the major determinant attitude, intention is driven by environmental concerns and social influence. Apart from factors influencing private consumers, when discussing enterprises, we could also add the factor of profit. The term "Green BPM" is used by technologies that leverage and extend execution and monitoring in a manner and instances. Their research provided process designs.
Ghose et al. (2009) to describe a novel class of existing BPM technology to enable process design, informed by the carbon footprint of process designs a roadmap for assessment of the carbon footprint of
According to Quariguasi Frota Neto et al. (2008) consumers and legislation have pushed companies to re-design their logistic networks in order to mitigate negative environmental impacts. The carbon emissions in the supply chain arise from various processes, ranging from the processing of raw materials to the dispatching of finished goods (Sundarakani et al., 2010).
Measuring the effect of sustainable business practice on the company’s business is not clear because of the diversity and mixture of approaches. The difficulty of obtaining real industry data for an end-to-end automotive supply chain has limited this study to preliminary results (Sundarakani et al., 2010). An important contribution to adoption of sustainable business processes is the design and implementation of information system that supports environmentally friendly business.
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Green Information Systems
Green IS refers to the design and implementation of information systems that contribute to sustainable business processes. According to Boudreau, Chen, & Huber (2007) they help organizations to: Reduce transportation costs with fleet management system and dynamic routing of vehicles Support team work and meetings when employees are distributed throughout the world Track environmental information (energy, water, etc.) Monitor operational emissions and waste products to manage more effectively Provides information to consumers so they can make green choices. Using Green IS a company is able to monitor and report Greenhouse Gases (GHG) emissions, has an efficient waste management, appropriate use and disposal of toxic and hazardous materials. The control on energy consumption throughout the business process is assured. Green IS should support the company to design environmentally friendly products and services to their customers. Existing platforms can be transformed to support environmentally sustainable business processes. The effects of Green-IS can be differentiated into three levels (Kranz & Picot, 2011): Direct effects: Reducing negative environmental impacts of IS itself. Enabling effect: Reducing negative environmental impacts of other economic sectors like industry, households, or agriculture by means of IS. Systemic effect: Developing innovative IS-enhanced products and processes which profoundly change ways of living and result in reorganization of production and consumption towards more sustainability. Butler (2011) introduces a conceptual framework, presented in Figure 1, for assessing progress to sustainability, which posits that a green business and IS Strategy is underpinned by unique configurations of people, processes and Green IT.
Figure 1: A Practical Framework for Green IS: From Strategy to Lower GHG Emissions (Butler, Towards a Practice-Oriented Green IS Framework, 2011). Watson, Boudreau, & Chen (2010) even propose the creation of a new subfield of IS named energy informatics. This subfield concerns with the analysis, design, and implementation of IS for increasing the efficiency of energy demand and supply. In the following section opportunities and enablers for adopting sustainable business practices in SMEs are presented.
4
Opportunities for SME’s
Based on the data gathered from the research of environmental awareness of small and medium retailers (Baggia, Leskovar, Vukovič, & Senegačnik, 2012) and information gathered from literature review, we can conclude that environmental actions of SMEs issues are mainly focused on energy efficiency issues, connected with lower costs of business. Many SMEs are not aware of the possibilities which sustainable business processes and green IS could offer to their business. The company has to be motivated to adopt new organizational climate and
business. In the near future increasing demand about environmental and sustainable policies in the company from the customer can be expected. Considering existing research, presented in previous sections, certain factors, so called enablers, are important for the success of sustainable practices in a company. Simply focusing on cost reduction may limit the understanding of Green IS initiatives and prevent the company to harvest other benefits such as better business process or a more positive company image (Brooks, Wang, & Sarker, 2012). General attitude of management and employees must promote environmental awareness inside the enterprise and should also be seen from and outside perspective. Even if SME staff is environmentally aware, without sustainable business processes, their efforts do not produce satisfying results in environmental footprint of the company. Sustainable business processes are possible to maintain with appropriate technology and software support. Therefore so called green IT and Green IS are indispensable enablers of the sustainable business practices in an SME. For a SME, which decides to go green, different aspects of enterprise sustainability are important:
Strategy and environmental culture: as mentioned, management plays and important role when trying to make a cultural change in a company.
Products and services: in practice only a few companies actually measure the environmental impact of their products and services. Estimation of carbon footprint of products and services is a challenging task, which has to include the entire life cycle, bill of materials, environmental impact of materials and services included etc. The information system and database used should be upgraded, to enable storage of data important for the calculations of environmental impact.
Sustainable processes: Organizations need to embed sustainabilty-related targets at all level of business, process measurements needs to accommodate sustainabilityrelated factors (carbon emissions, energy consumption, paper consumption etc.) as presented in Siedel, vom Brocke, & Recker (2011).
A SME can decide to adopt any of the proposed aspects, they can be addressed independently and (until now) none of the presented aspects is obligatory to the company. Some kind of structured approach should be adopted by the company to incorporate all the addressed aspects. For example introducing sustainable processes without proper sustainable strategy of the company is not appropriate. Companies that already have a certificate based on a standard, for example ISO 14000 or even ISO 9001 are in a better starting position, since their processes are already standardized and therefore reorganization of the processes should run smoothly. We propose the following measures to be taken in SME that wants to introduce sustainable practices in their business:
Change the perspective and raise environmental awareness among management and other employees with the promotion of sustainable transport and other best practices identified.
Define a sustainable strategy and begin to act as a sustainable enterprise taking into account simple steps connected to energy consumption, water consumption, green technology and waste management.
Revise business processes, taking into account all the perspectives and possibilities to improve their environmental performance, and improve business processes to act sustainable.
Incorporate sustainable business processes into practice.
Appeal to all stakeholders and business partners to become environmentally more efficient and sustainable.
As presented in (Seidel, Recker, Pimmer, & vom Brocke, 2010) personal motivator factors as well as organizational factors, such as business inclusion, strategy definition and a dialectic top-management and bottom-up support play a role in enabling the company to manage their sustainability. To understand and optimize the environmental impact of an SME, a company should extend their business process management to measure the environmental performance. The approach demands cultural change of organization and a significant effort in upgrade business process management system with indicators or equivalents for carbon dioxide emissions.
5
Conclusions
Based on the (OECD, 2009) information technology and information systems have a direct and enabling effect on the increase of GHG emissions. After a one year research Butler, (2011a) concluded that while the direct effects of Green IT are being realised by a growing number of organizations, the enabling effect of Green IS are proving more elusive. As presented by Dick & Burns (2011) most organizations are aware of the potential of green IT and are doing something – however the actions taken tend to be at the lower end of the green IT continuum. The findings indicate that one of the prime ways to getting Green IT into corporate policy is to inculcate an appropriate mind-set amongst high-level managers in general, thus bringing about attitudinal changes (Sarkar & Young, 2009). In their research Ko, Clark, & Ko (2011) concluded that green IT innovators have a competitive advantage over other companies in the industry and also over other green non-IT innovators. Similar conclusions could be expected in the area of green IS. With the on-going shift in the IT industry from product-oriented to service-oriented business models such as cloud-based IT services, the underlying technology for development of
Sustainable Information Technology Services (SITS) is also at hand (Curry & Donnellan, 2012). SMEs should be careful when publicizing their environmental friendly actions on the market. When exposed as an environmentally friendly company in public, the company could lose their reputation, if their claims are false or incomplete. Even though as presented by (Lyon & Maxwell, 2011) corporate adoption of high quality Environmental Management System (EMS) reduces incentives for greenwash. Webster’s NewMillenium Dictionary of English defines greenwash as “The practice of promoting environmentally friendly programs to deflect attention from an organization’s environmentally unfriendly or less savoury activities.” The future research in the area of sustainable business practices in SMEs should include an overview about success factors influencing the adoption of sustainable practices. A research should also consider the impact of the economic situation on the willingness of the enterprise to adopt sustainable business processes. Literature Baggia, A., Leskovar, R., Vukovič, G., & Senegačnik, M. (2012). Zero Carbon Action Plan. Kranj: Faculty of Organizational Sciences, University of Maribor. Boudreau, M.-C., Chen, A., & Huber, M. (2007). Green IS: Building Sustainable Business Practices. Information Systems, Global Text Project, pp. 1-15. Brooks, S., Wang, X., & Sarker, S. (2012). Unpacking Green IS: A Review of the Existing Literature and Directions for the Future. In J. vom Brocke, S. Siedel & J. Recker (Eds.), Green Business Process Management (pp. 15-37). Berlin: Springer-Verlag. Butler, T. (2011a). Compliance with institutional imperatives on environmental sustainability: Building theory on the role of Green IS. Journal of Strategic Information Systems, Vol. 20, No. 1, pp. 6-26. Butler, T. (2011b). Towards a Practice-Oriented Green IS Framework. Proceedings of European Conference on Information Systems. Helsinki: ECIS. Curry, E., & Donnellan, B. (2012). Sustainable Information Systems and Green Metrics. In S. Murugesan, & G. R. Gangadharan (Eds.), Harnessing Green IT: Principles and Practices (pp. 167-198). John Wiley & Sons. Curry, E., Hasan, S., Hassan, U., Herstand, M., & O'Riain, S. (2011). An Entity-Centric Approach to Green Information Systems. Proceedings of European Conference on Information Systems. Helsinki: ECIS. Dick, G. N., & Burns, M. (2011). Green IT in Small Business: An Exploratory Study. Proceedings of the Southern Association for Information Systems Conference. Atlanta: SAIS.
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