SAP may have chosen to buy a carbon accounting software startup rather than build its own. But now that it has it, SAP sees its customer base as giving it a big advantage.

Since the enterprise software giant bought Clear Standards this summer and rebranded it as SAP Carbon Impact, it's lined up a handful of publicly announced customers – SunPower, Casella Waste Systems, Intuit, Autodesk and the University of Buffalo – and it is bringing more on board, Peter Graf, SAP's chief sustainability officer, said in a Tuesday interview (see Carbon Consolidation Begins With SAP's Latest Buy).

That's a tiny sliver of SAP's 90,000 customers, which, by the way, are responsible for about one-sixth of the world's greenhouse gas emissions, Graf said. (SAP has also used the software on itself, click here for an example).

But Graf sees SAP's incumbency with its customers as a big advantage against others in the carbon accounting software space.

Those include both established companies such as CA (Computer Associates), Johnson Controls and Enviance – representing the enterprise software, energy management and environmental reporting industries, respectively – as well as startups such as CarbonFlow, Planet Metrics, Carbonetworks, CSRWare and notable new entrant Hara (see Carbon Accounting: It's All About Appearances and Hara Grabs $14M, Seeks International Markets).

Most of these software offerings offer similar functionality in collecting, analyzing and reporting emission data, Graf said. But it's his contention that companies don't want a stand-alone carbon counting system. Rather, they want something that folds neatly into all the rest of their enterprise software.

After all, every business decision will have a carbon footprint impact, he said. Those making such decisions will want to compare costs to the potential penalties or rewards, based either on the price of carbon per ton or more intangible measures, such as the public relations value of being able to claim and document a carbon footprint reduction, he said.

"That is something the startups will never be able to do," he said.

Startups may disagree. Hara, for its part, has customers including Coca-Cola, Brocade, Aerojet and the cities of Palo Alto and San Jose – a client list as impressive as SAP's so far.

The carbon accounting software industry is worth only about $10 million or so in the United States today, but is expected to grow rapidly in the coming years, according to a June report from Groom Energy Solutions and Greentech Media.

Startups are likely to be more nimble at attacking that market, Paul Baier, vice president of consulting for Groom Energy. On the other hand, it's a tough time for startups to raise funds, and companies choosing carbon accounting software may be worried about their chosen vendor staying afloat for the coming years, he said.

"I think the reality is that most enterprise carbon accounting software will not be stand alone products," Baier said.

The example of Clear Standards' purchase by SAP, or that of eQuilibrium Solutions, a startup bought by demand response provider EnerNoc in June, would seem to bear that out, he noted (see Green Light post).

Hara, which has raised $20 million from investors including Nth Power and Kleiner, Perkins Caufield & Byers, may buck that trend. CEO Amit Chatterjee has said that the company plans a "long and healthy independent" existence as a standalone company, rather than an acquisition.

In the meantime, competitors such as enterprise software giant CA, which launched its EcoSoftware product in September with British supermarket chain Tesco as a showcase client, will be giving startups and SAP alike a run for their money, Baier said (see CA's EcoSoftware Lands Tesco as First Client).

SAS also has a strong carbon accounting and sustainability offering, he said. Other enterprise software giants, such as Oracle and Microsoft, have been less aggressive, he said.

Microsoft has created an online tool it calls Project 2 Degrees that it's offering for free to city governments in partnership with Autodesk and the Clinton Global Initiative (see CNN). It is also working with the Carbon Disclosure Project to make the next version of its online carbon reporting platform – a task also being helped along by SAP, as well as consulting firm Accenture.

Baier said that IBM and Hewlett Packard are two companies to watch for future carbon accounting offerings. Another is Cisco, which also has been working with the Clinton Global Initiative and government partners on a host of carbon-tracking projects, he said (see Green Light post).

Software that can easily generate reports to submit to such groups as the Carbon Disclosure Project, the Global Reporting Initiative, or the World Resources Institute's Greenhouse Gas Protocol, will likely be highly prized, Graf said. That's something SAP's Carbon Impact can do, he noted.

Just as important, Baier said, will be software that can meet the sustainability reporting requirements of giants such as Walmart, which has set a five-year goal to have all of its suppliers report data including carbon emissions (see Green Light post).

In comparison, tracking carbon emissions to meet government mandates such as the European Union's cap-and-trade system, or the regulations that the U.S. Environmental Protection Agency is set to start imposing next year on the country's biggest power plants, refineries, factories and other facilities, may be a simpler task, Baier said.

"I do not believe the EPA ruling will drive a lot more software sales for vendors, he said. "What will drive a lot more sales is Walmart telling its suppliers they need to calculate their company-wide footprint."

Graf agreed that complying with regulations is not the driving force behind investing in these kinds of systems.

Instead, first and foremost, "It's a great way to save money," he said.

"Companies use carbon as an indicator of process waste," he explained. That's not just limited to using carbon footprint as a measure of energy efficiency, though that's one big way companies are looking to save, he said.

For example, one SAP client, a beverage company, found that one of its largest carbon contributors was the fertilizer that its orange growers were using in their orchards, and worked with them to cut down on that use, he said.

Beyond money savings, companies that are promoting green products and services want to have a verifiable way to prove how green they are, he said.

Without software, doing corporate carbon footprint calculations via spreadsheets, as most is done today, is expensive and complicated, Graf says. He knows – he was in charge of SAPs €500,000 effort to do so in 2007.

"My task" with sustainability software "is to make myself obsolete in five years," he said.