Last week, I posted some initial commentary on Ecovadis, a European provider focused on the sustainable/green procurement sector. Even though Ecovadis is a relatively small and young company, they have already signed up a handful of significant partners, including Ariba and PWC, to help extend their solution capabilities and reach into the market. In today's post, I'd like to expand on this commentary from earlier in the week, focusing specifically on Ecovadis' solution offering as well as introducing some of the findings from a benchmarking examination they conducted to examine and validate the market opportunity in the sustainable procurement area within Europe.
First, let's examine Ecovadis' solution approach. EcoVadis focuses specifically on three core areas of sustainable procurement: supplier assessments, supplier audits, and corrective action procedures. Unlike Aravo -- which has a broad supplier information management platform which they have customized and developed for green and sustainable procurement as one of a range of initiatives users might want to deploy it for -- EcoVadis has built their solution from the ground up to support sustainable procurement initiatives in the European market, taking into account regional and EU-wide regulatory policies. EcoVadis claims that their solution is complaint with GRI G3 standards and the pending ISO 26000 certifications within each of the 150 procurement categories that their solution enables.
In total, the Ecovadis platform is built to support over 150 spend categories and provides support across 23 green/sustainable criteria (as they term it) which encompasses some 1200 pre-defined supplier questions/queries. This approach enables three levels of control for companies to evaluate their supply base including: self/assessments, documentation/audits and managing stakeholder information. Their solution includes a web-based platform for sustainable supplier scorecarding and ratings (including self assessments and related models) and a dashboard to present information. Tied into this centralized repository for tracking and managing supplier sustainable/green performance and credentials are a range of content sources as well as available third-party supplier audit services provided by EcoVadis partners.
In my view, EcoVadis did a lot of research in deciding which areas of sustainable procurement to focus on before developing their applications. A recent survey they conducted with Ariba more than confirms the market opportunity for sustainable procurement solutions in the European market. The above-linked report (registration is not required) that was conducted with Ariba provides a number of useful insights into what European leaders are thinking when it comes to sustainable supplier initiatives. The sample size is large enough -- 300 companies representing the largest organizations in Europe -- and senior enough (over 50% of respondents were CPOs, VPs, or Directors) that I suspect that it is more than just directionally accurate in its findings.
While the overall report is succinct and readable -- and I'd suggest anyone interested in green/sustainable programs check it out -- a few summary findings stood out at me. First, sustainability has become a top three priority for companies in Europe, but at the same time, 91% of CPO respondents reported that they had not fully "achieved their sustainable procurement objectives for 2007." Clearly, there is a large gap between planning and execution when it comes to green/sustainable initiatives. Perhaps the largest roadblock to implementation plays almost unfairly into EcoVadis' hands. This, of course, is a "lack of tools and a lack of clear performance indicators" to drive initiatives. And given that no other vendors that I'm familiar with are making the same type of aggressive sustainable procurement automation play in Europe, my guess is that EcoVadis should have no problem at least getting at bats to position and sell its approach on the Continent -- and perhaps beyond.
- Jason Busch