Challenges in Meeting Sustainability Requirements – Maggie Laird, Hitachi Vantara

This is Textron tv. Hey guys, thanks for the throw. We're here with Maggie Lard, who is head of the Lumata software business, and also in charge of corporate sustainability for Hitachi Van Terra, which is Lata being a unit of Hitachi Ventura.

For those of you who are following along, Maggie, welcome to the show. Thanks for having me. Michael.

We hear a lot about sustainability these days, and everybody kind of gets the general idea, and this is a good thing, but it's not clear to me we know exactly what to do in terms of decarbonization of software and it, and I know you guys have your own internal initiative, and it sounds like you're now launching a service to help other customers wrap their heads around this. What is the fundamental challenge, do you think? I mean, it seems like on the one end, if I was gonna make it simple, software and hardware generates energy and that creates carbons and we should be more efficient with it.

But maybe there's more to it than that. Walk me through it. Yeah, absolutely.

Um, so it companies are on their journeys to sustainability and what that might mean for different companies depends, right? It depends on their own carbon footprint, but for those companies that have a large it, um, data center footprint, um, that can represent a pretty significant portion of their emissions. So you got it right.

Um, it's exactly about how to de decarbonize that data center and to, to really peek inside the covers there. You've got, you know, the infrastructure that goes in the data center, right? You've got the software, you've got your applications, right?

You've got the power and the cooling that also contributes to that energy use of all of those things. So, you know, for those companies that see a significant, um, you know, kind of contribution here, they're gonna have to look across that landscape to really understand where they are today, get the data and facts for where they are, and then ultimately, um, figure out how they're gonna reduce that emissions profile. And I think that's where the trick is, right?

Because that's where, again, there's some successful strategies that many companies today are, are using, but a lot of times it's difficult to get all that data, um, in a consumable way so companies can start to make those, those decisions. Yeah, As part of that whole motion today, we measure everything you can possibly imagine within it with maybe not so much focus on carbon, but we definitely measure energy efficiency. So what is it gonna take for organizations to wrap their heads around this?

Do I just need another column in my dashboard, or are there different tools? And then what are the instrumentation processes that I need to think through? Yeah, yeah.

So it's a bit of, a bit of all of the above, right? So a lot of the data that is relevant to the conversation might be considered dark data, right? So companies aren't necessarily tracking that data.

Um, it sits in places that are not visible, um, in, in today's decision making. So, you know, the first step is really getting a handle on where all that data is and what's relevant for your particular situation, right? So I think that's step one is, is getting kind of handle on, on all that information.

And then you're right, then it's about how do you, um, monitor that and, and keep, um, a pulse on that growing emissions data. Um, just some fun, fun facts here. I mean, companies are seeing that, they're projecting their data used to be increasing, right?

So the, the amount of data that's gonna be required by companies to drive their digital transformation, all the AI that's gonna take that like this data is gonna grow, right? So, so you've gotta be able to have your pulse on, you know, how you are monitoring and, and using that information. So it's, it's that instrumentation, it's that that dashboarding and it's also finding that relevant information, right?

Because it's not just transactional data, this is power consumption, right? This is, you know, data that's maybe not being accessed today. Um, when companies start to make serious decisions about, you know, maybe turning off their use of, of some of their, um, their infrastructure, whether that when to turn that off, right?

What is the usage patterns of the, of the data center that that's, that would recommend when to, when to turn that down, when to, um, to really drive some of those, those decisions. So it's, it's a bit of a holistic strategy, I think, in terms of, of locating that information and making ongoing decisions about how you're gonna proactively manage, um, manage that equation. So you guys have made some commitments to, um, how you're gonna achieve a lot of these goals, and they have timelines in the 2030 and 2050 range, and I'll let you explain that, but fundamentally, what takes it's lot of time between now and then, so what's the challenge?

Why does it seem like we can't go faster? Yeah. Yeah.

So just to start with the Hitachi's commitment to, um, to carbon and to reducing that carbon. So we've got, um, two sectors of our goals. Our first is to be, um, carbon neutral here by 2030, and that's, um, everything within our control.

So scope one and scope two internal operations. Um, we wanna be carbon neutral in that time. Um, the second and more challenging piece, which we'll talk about in a second, is, is the full supply chain, right?

So that's the scope three, and that's 2050. So if you think about 2030 is, is right around the corner, um, and to be carbon neutral, there's, there's a series of of steps that, that one you've gotta understand again, where do you fit, um, on that, on that carbon, um, kind of baseline if you will. So this is, you know, every single facility that you own, this is understanding where that emissions is.

This is understanding potentially water usage, right? This is all of those environmental, you know, um, data factors you've gotta get a handle on. You've gotta understand now to make yourself carbon neutral, right?

You've gotta, you know, contribute to a significant reduction in, in many of your baseline, um, facilities, manufacturing sites. Um, you think about the, the shipment of goods from point A to point B to your customer, all of that, right? So that is a pretty difficult challenge for, for companies.

Um, you know, I think as we look at scope three, um, you know, one of the, the statistics we see out there is that companies about 75% of their total emissions will be in their scope three. So this could be upstream with your, um, suppliers that you buy components from this, could it be downstream with your customers? So you think, okay, how are we gonna get all that done?

And that is really the, the journey where every single player in the ecosystem have to be making strides and pretty aggressively contribute to be able to make that full supply chain achievable. So it's, it's the data and it's the, the real, the influencing of the entire, um, ecosystem to, to drive towards those goals, goals as well. I don't think I'm gonna be telling any secrets out there, but there's a lot of sloppy code running around the systems that are not especially efficient.

Uh, you could argue we've been consuming IT infrastructure in the cloud, like, uh, perhaps maybe drunken sailors. So aren't we gonna have to kind of, you know, revisit all this stuff that we've got, We're gonna have to take Yeah, absolutely. Gonna have to take ownership, right?

So there's a quick fix, right? Throw it in the cloud, right? But not, you're not gonna be able to do that with everything.

So it's, you know, it's, it's gonna be required that, that those modern gonna modernize that infrastructure, monetize, modernize that code. Um, and the good news is there's, you know, there's industry associations out there that, you know, have standards around around this, but it's gonna require, you know, everybody really digging in and probably making investments to make those changes. And, and I think that's where also you think about time, you know, the business case around making these changes, it's important.

Um, there's a, there's a big financial impact. So again, things like, you know, changing your code base to be more efficient, right? To make sure that it's, you know, putting off the, the right usage of energy.

There's gonna be, you know, significant investments required. Um, you know, both in people and, and probably more modern, um, software that underpins that as well. Do you think people are gonna drive on this because of mandates and it's a requirement?

Or is it more around corporate goodwill? And I'm asking the question because, and you cannot have a conversation about climate that doesn't involve some political element and people don't know exactly maybe where they should land on this. Is it a moral thing or is it a legal thing?

Yep, yep. So we recently put out a, a survey on this exact topic, and what we found out is there's three primary, you know, areas of contribution. Um, first it's really the regulation that's being driven, right?

So whether that's, and there is an alphabet of soup here around sustainability, um, regulations and requirements, but, um, but again, there will be, you know, compliance and, and reporting required for most public companies as they move forward. So that is absolutely a shift, um, and a requirement. Um, the second is the ethical, um, reason.

That's number two in terms of what we found in the survey and being a good corporate citizen, right? Doing the right things for the planet, for the people, for the, for the wider, uh, mission. Um, and then third reason is actually talent.

So it comes down to retaining talent and acquiring talent. And, you know, today's workforce wants to be associated with companies that are making strides and also, you know, walking the talk here as well. So I think tho those are what we've, we've found in our survey and, and just kind of ringing rings true for me internally here at Hitachi as well.

Mm-hmm. You can't walk down the street these days without somebody leaping out to tell you about their great new AI thing. So can we apply AI to sustainability?

Will AI maybe save the planet? I think there's a lot of promise here in ai. I think, um, you know, one particular area that we've looked at is the, you know, contribution in the data center.

Could AI again, and, and help us understand usage patterns, right? And, and how things are being used. And I do think that, again, once these models can get trained up and learned, it might be able to give us some insights that we can't see, um, you know, natively from just all the disparate information that's coming at us.

So I, I do think it's got an opportunity to, um, you know, make things more seen, um, and then ultimately give us some, you know, recommendations based upon when to power things down, when to, um, to, to pl amplify usage and things like that. So I, I think it absolutely has a role, um, again, when the data, data is, is getting in the right spot, and we can fill in some of that data gaps too. Conversely, some of these AI platforms are churning through a heck of a lot of data.

So they're not exactly, uh, poster children for climate concerns just yet. So They're driving, they're driving the demand, to be honest, right? And all the horsepower that comes with it.

So will we need to be more efficient in how we think about AI as well? And is that part of our modernization efforts? Yes, I think a absolutely.

Um, you know, and I think we're gonna get smarter here as more of these applications actually get deployed. Um, and, and companies start to, again, I think it's gonna come down to data, um, here and, and understanding your baseline of where you are. And then as you start to put these, these models into practice, right?

You're gonna have to observe the incrementality of, of, of their usage. And I think it's, it's then when companies are gonna be able to start making smart choices about, you know, how do they balance those, those needs with, um, with the overall, you know, outcomes they're driving to drive for sustainability as well. So what's your best advice to organizations that, I think everybody kind of gets the idea that there's some goodness in this, but a lot of it just gets lost in, you know, an internal HR slogan or it becomes part of a marketing PR initiative.

But how do we turn this into something, you know, tangible and meaningful? What are you seeing people doing? Yeah, I think, you know, at the broadest level, um, you know, companies that are having a sustainability strategy and plan that is very coupled with their business strategy and purpose.

Um, I think the, the companies I've seen most, um, impactful and, and able to make the most grounds have that all tightly woven together in their why as a business, right? Why as what they're on the planet to do. And then how, um, being, having that sustainability narrative wrapped in there is, is part of the answer.

Um, because when you can drive and really shine the light, you, um, those initiatives and those, um, practices, uh, that you put into place, you know, it's gonna be hard work, it's gonna be hard work over time. And so having that why really crystallized for companies as they push towards their, their targets is gonna be, you know, really important. And, and I think the companies that are moving the fastest have that clarity, um, clarity of thinking and clarity of action.

All right, folks, well, whether you agree with it or not, the fact is we are gonna make it more energy efficient going forward. And so you might as well get on the program now 'cause it's just gonna get harder later. Hey Mandy, thanks for being on the show.

Happy to be here. Thank you. All right, back to you guys in the studio.