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Market Dynamics 

Drivers

Regulatory Pressures and Compliance Needs

One of the key drivers of the sustainability management software (SMS) and services market is the increasing regulatory pressures and compliance requirements around environmental sustainability. Governments worldwide are tightening regulations around sustainability reporting in response to international environmental commitments, such as the Paris Agreement. These regulations mandate businesses to provide detailed reports on their environmental impacts and sustainability practices. Such compliance requirements are complex and challenging to handle manually. SMS solutions simplify this process by automating data collection, monitoring, reporting, and ensuring regulatory compliance. They also provide alerts and updates about changes in regulations, minimizing risks of non-compliance. These solutions help businesses save time, reduce costs, and improve accuracy in regulatory reporting, making them an invaluable tool in the current regulatory climate.

Rising Awareness and Adoption of ESG Principles

The growing awareness of environmental, social, and governance (ESG) issues, and the increasing adoption of ESG principles by businesses, is another major driver of the sustainability management software (SMS) and services market. Businesses are recognizing that incorporating ESG principles into their operations can enhance their corporate reputation, attract socially conscious investors, and improve their bottom line. However, managing and reporting on ESG performance is a complex task that requires sophisticated tools. SMS solutions provide the necessary capabilities to track, measure, and report on ESG performance effectively and transparently. They allow businesses to demonstrate their commitment to sustainability to their stakeholders, including investors, customers, and regulators, and to benchmark their performance against industry standards. As the importance of ESG continues to grow, so will the demand for SMS solutions.

Restraint: Perceived High Cost of Implementation

One of the primary factors restraining the growth of the SMS market is the perceived high cost of implementation. Many businesses, particularly small and medium-sized enterprises (SMEs), view the implementation of SMS solutions as a significant financial investment. They are concerned about the costs of software licensing, system integration, training, and ongoing maintenance. These concerns in the sustainability management software (SMS) and services market are compounded by the fact that the financial benefits of implementing SMS - such as cost savings from improved efficiency and reduced regulatory fines - are not immediately apparent and can take time to materialize. Therefore, despite recognizing the importance of sustainability, some businesses may hesitate to invest in SMS solutions due to cost considerations. Efforts to lower implementation costs and demonstrate a clear return on investment (ROI) could help to overcome this restraint and boost the market's growth.

Segmental Analysis 

By Verticals 

The global sustainability management software (SMS) and services market witnessed the manufacturing segment leading the market in 2023, capturing the largest market share of 22.1% and valued at USD 347.0 million. This sector's dominance can be attributed to the increasing adoption of sustainable practices and environmental regulations within the manufacturing industry. 

However, the energy & power segment also showcased significant growth potential, with a market value of USD 201.7 million and a projected CAGR of 9.5%. Meanwhile, the healthcare segment is expected to exhibit the highest CAGR of 10.1%, reflecting the growing emphasis on sustainability and environmental consciousness in healthcare organizations. These findings highlight the expanding opportunities for sustainable management software and services across multiple sectors, indicating a widespread shift towards sustainability practices in various industries.

By Deployment 

The global sustainability management software (SMS) and services market is witnessing the dominance of the cloud-based deployment segment. In 2023, this segment generated a substantial revenue of USD 897.5 million and is projected to grow at a notable CAGR of 9.4%. Cloud-based solutions refer to applications, services, or resources accessible to users over the Internet through the servers of a cloud computing provider. Organizations are increasingly adopting cloud-based computing to enhance capacity, functionality, and services without investing in expensive infrastructure or extensive internal support staff training. The scalability of cloud-based software allows companies to expand their capabilities as needed, while ensuring the security of confidential information. 

Cloud-based sustainability management software is particularly popular among small and medium-sized enterprises due to its cost-effectiveness and budget-friendly pricing options. The on-cloud segment is expected to witness the fastest growth during the forecast period, further highlighting the increasing preference for cloud-based solutions in the market. This analysis of the sustainability management software (SMS) and services market highlights the growing adoption of cloud-based deployment models in the sustainable management software and services market, driven by their flexibility, scalability, and cost advantages.

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Regional Analysis 

The dominant position of North America in the SMS and services market can be attributed to several key factors. Firstly, the regulatory landscape in North America, and particularly in the United States, has played a significant role in driving market growth. The region has implemented robust sustainability regulations and guidelines that necessitate businesses to adopt SMS to ensure compliance. This regulatory environment creates a favorable condition for the growth and development of the SMS market.

Additionally, North America's position as a global hub for technology and innovation significantly contributes to its dominance in the market. The region is home to many of the world's leading tech companies and startups. These businesses, with their focus on continual innovation, drive advancements in a variety of software sectors, including sustainability management.

Another factor that contributes to the regional sustainability management software (SMS) and services market’s leading position is the growing emphasis on corporate social responsibility, specifically in the context of environmental sustainability. Many North American companies have shown a strong commitment to adopting sustainable practices. Furthermore, there is increasing consumer awareness and demand for businesses to engage in sustainable practices, which encourages the further uptake of SMS.

The high level of investments and funding available for businesses developing innovative software solutions in North America plays a significant role in driving the market's growth. This financial support stimulates the development of new and advanced sustainability management software, further bolstering the sustainability management software (SMS) and services market.

Recent Developments:

• June 2021: Oracle pledged to power all its global operations, including its facilities and cloud services, with 100% renewable energy by 2025. This move underscores Oracle's commitment to environmental sustainability and aims to significantly reduce its carbon footprint.
• February 2022: HP Inc. announced the expansion of its HP Amplify™ Impact program to an additional 24 countries. Through this program, HP is collaborating with over 10,000 partners across 43 countries on its sustainability initiatives, with a focus on climate action, human rights, and digital equity.
• November 2022: IBM unveiled new additions to its IBM Sustainability Accelerator program. This program leverages IBM's technologies and expertise to enhance, improve, and scale projects that tackle environmental threats, including climate change.
• January 2023: Microsoft introduced its Microsoft Cloud for Sustainability, a platform designed to assist organizations in tracking and managing their environmental sustainability efforts, both internally and externally.
• May 2023: Accenture announced its intention to acquire Green Domus Desenvolvimento Sustentável LTDA, a leading sustainability consultancy focused on decarbonization strategies. This acquisition aims to bolster Accenture's Sustainability Services team.

List of Key Players Profiled:

• SCHNEIDER ELECTRIC
• BROADCOM
• SPHERA
• SAP SE
• IBM
• URJANET INC.
• ACCURENT
• ACCUVIO
• FIGBYTES INC.
• ENVIZI
• ENABLON (WOLTERS KLUWER)
• GENSUITE
• Other Prominent Players

Market Segment Overview:

By Component          

• Service
  • Outsourcing & Support Services
  • Implementation Service
  • Consulting Service
• Software
  • Performance & Project Management
  • Infrastructure Management Software
  • Collaboration & Communication Software
  • CSR data Management
  • GRI Reporting Software
  • Others

By Deployment Type

• On-Premise
• Cloud

By Verticals

• Manufacturing
• Energy & Power
• IT & Telecom
• Healthcare
• Automotive
• Oil & Gas
• Government
• Others

By Region

• North America
  • The U.S.
  • Canada
  • Mexico
• Europe
  • Western Europe
    • The UK
    • Germany
    • France
    • Italy
    • Spain
    • Rest of Western Europe
  • Eastern Europe
    • Poland
    • Russia
    • Rest of Eastern Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Australia & New Zealand
  • ASEAN
  • Rest of Asia Pacific
• Middle East & Africa
  • UAE
  • Saudi Arabia
  • South Africa
  • Rest of MEA
• South America
  • Argentina
  • Brazil
  • Rest of South America