The fact that the 26th United Nations Climate Change Conference (COP26) has set “keep 1.5 degrees within reach” as its goal reveals how challenging it has become to deliver on the promises of the Paris Climate Change Agreement.
One of the biggest challenges is that the world is ploughing through its natural resources at a stunning pace. According to the Global Resources Outlook 2019 report, half of total greenhouse gas emissions come from natural resource extraction and processing. Also, while the world’s population has doubled in the past 50 years, we have more than tripled our use of natural resources.
That’s the reason why building a circular economy becomes essential to achieve climate neutrality by 2050. Unfortunately, however, instead of growing the circular economy, it is declining. According to the Circularity Gap Report 2021, the global economy was only 8.6% circular in 2020, down from 9.1% two years previous.
This is because the transformation towards a circular economy is very hard to achieve for individual companies as it requires a complex transformation of the entire design and development process to ensure that the components used in production are more durable and suitable for repairing, reconditioning, and – ultimately – refurbishing.
More importantly, a circular economy also requires a shift in the way we do business, from purchasing and installing huge amounts of equipment that are underutilized to an as-needed model. Adopting an “as-a-service” business model is one of the most impactful changes we can make today.
It not only makes our economy more circular by breaking established patterns of mismatched supply and demand; it also has the potential to generate significant growth opportunities for any industry.
As-a-service is a radical departure from a commoditized business model whereby companies sell a product and consider their job done. Instead, the producer retains ownership of – and responsibility for – the product throughout its entire life cycle.
The customer has full use of the product for as long as is needed, paying only for when it is used, instead of for the product itself or its upkeep. The producer, in turn, is responsible for building a quality product that lasts and is energy and material efficient. It is also their role to take the product back and prepare it (or its components) for reuse.
Consider this representative example of as a service in action in the technology space: DAA owns and manages the two largest airports in Ireland. It needed to upgrade its servers and storage systems and decided to leverage an as-a-service offering. As a result, rather than scrap its old technology, and purchase new equipment, DAA was able to upcycle obsolete legacy systems.
This allowed DAA to take the residual market value of the old IT and apply it to the cost of the new as-a-service model. It also helped the company meet its sustainability objectives by extending the life of old technology rather than it becoming e-waste.
For CIOs and CTOs, this example shows why the ‘IT-as-a-service’ model is a viable option for companies seeking to contribute to a more circular economy and achieve sustainability goals. There are three typical ‘IT-as-a-service’ outcomes that are making a real difference:
1. Eliminate overprovisioning
Take data centre. 25% of computer resources are not doing useful work and the remaining resources are operating at a small fraction of their capacity. This means higher costs and unnecessary consumption of power, space, and cooling. Consequently, by switching to as-a-service, costs and energy use will significantly decline.
2. Avoid vendor lock-in
By adopting an as-a-service model, the company’s IT equipment can be rapidly upgraded to the latest, more energy-efficient technologies without worrying about any capital costs. That’s a critical option for companies as inefficiencies of ageing equipment means that 65% of the power used by IT in data centres is used to process just 7% of the work.
3. Take back IT assets at the end of the usage cycle
When looking for as-a-service providers, it is important to consider vendors with refurbishment services in the house who can help keep e-waste out of landfills.
For example, Hewlett Packard Enterprise (HPE) has technical renewal centres that processed more than 3.1 million units of technology in its Technology Renewal Centres in 2020. Close to 90% of this equipment was remarketed and returned to active use; the rest was responsibly recycled. This is the result of 20 years of experience in the refurbishing business and a consequent shift towards an as-a-service business model.
Scale up the as-a-service model for a sustainable future
The seeds of as-a-service are being planted across industry sectors. Signify, formerly known as Philips Lighting, sells “light as a service” to customers. The company cites figures of up to 80% savings in energy consumption.
Desso, a global supplier of carpets for commercial use, designs carpets according to the cradle-to-cradle principle meaning that the company can lease its carpet tiles – taking care of the installation, maintenance, return and recycling.
However, it’s important not to underestimate the paradigm shift that moving to as-a-service entails for a company, esp. CIOs, ideally as part of the digital transformation strategy that embeds sustainability within it.
Offering as-a-service requires the overhaul of a company's business and digital transformation strategy but yields significant benefits for all – most importantly to keep 1.5 degrees within reach.