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Using Sustainability to Drive Global Business Impact – Futurum Tech Webcast Interview Series
by Daniel Newman | June 8, 2022

On this special episode of the Futurum Tech Podcast – Interview Series, I am joined by Paul Sheeran, Managing Director for HPE Financial Services. Sustainability has shifted from a nice-to-have to a business imperative. We used to think we had to compromise on cost to be sustainable but being a force for good is also a source for business value. In this episode, Paul and I explore how introducing circularity into your tech estate can help drive innovation, increase profitability, and accelerate your organization’s global impact.

In our conversation we discussed the following:

  • A dive into some of the trends that we are seeing in regards to sustainability
  • Insight from Paul on practical ways companies can improve their sustainability strategy
  • What it means to create circularity and how it can help organizations operate at peak efficiency
  • A look into what HPE Financial Services is doing to help address the demand for ESG and sustainability initiatives in the future

It was a great conversation and one you don’t want to miss. To learn more about HPE Financial Services and their initiatives, check out their website here.

Watch my interview with Paul here:

Or listen to my interview with Paul on your favorite streaming platform here:

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Disclaimer: The Futurum Tech Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Daniel Newman: Hey everybody. Welcome back to another episode of the Futurum Tech Webcast. I’m your host Daniel Newman, principal analyst, founding partner at Futurum Research. Excited about this podcast today. HPE Financial Services Paul Sheeran is joining me. And we’re going to be talking about sustainability and driving global impact and business value. This is a big topic. It’s become a nice to have to a must or a business imperative for companies.

We used to think that getting into sustainability is something that you could just do when you got around to it. We’ve seen over the past few years, it’s picked up a lot of momentum. And today we’re going to talk about this. So I’m really excited to have Paul join me. So without further ado, Paul, welcome to the show.

Paul Sheeran: Hi Daniel. It’s a pleasure to be here. Thank you for the invite.

Daniel Newman: Yeah, it’s always great to have these conversations. As I alluded to early on, I just think this is a topic that’s coming into focus in a big way. Over the past couple of years, as we’ve been in these pandemic lockdown, we’ve seen more and more companies coming out with their sustainability and impact reports, coming out with positioning, talking about everything from how they’re manufacturing, to what they’re doing to their supply chains, to really just how they’re running their businesses.

And you guys have a significant role to play with the many of your customers and partners. And so we’re going to talk about that. But since this is the first time joining the show, why don’t we do the hello’s and hi’s and give everybody a quick introduction, Paul, to yourself and the work that you do at HPE Financial Services?

Paul Sheeran: Yeah, sure. So as I said, I’m in Paul Sheeran, I’m based here in beautiful sunny Dublin, Ireland, at least it is today. And I’m on the global leadership team of HPE Financial Services. And as you say, we’re part of the Hewlett Packard enterprise organization. And what we really do is bring asset management and Financial Services solutions to our customers around the world. In particular, what I do, Daniel, is I look after our SMB and channel business around the globe.

Daniel Newman: Yeah, it’s a big role and a big responsibility. And so what I’d love to start off doing here is as an industry analyst, I talk to lots and lots of organizations, many of your partners, your competitors, others in your ecosystem. And as I suggested early in the conversation, this is happening and become more and more focused point. In fact, our firm has launched a sustainability practice as a high tech industry firm because of how much impact we’re seeing this have, but you, you’re out talking to the customers, the folks that you’re deploying. And so I was really interested in just kind of starting, all the things I said, are you seeing the same thing? What are customers telling you as it pertains to sustainability?

Paul Sheeran: No, totally Daniel. The conversation really has changed and it’s changed its speed, which, I believe is a good thing. So a few years ago, sustainability was an important part of corporate social responsibility. It used to be a conversation about trade offs. What do I have to stop to be sustainable? What do I have to give up? What do I have to sacrifice? But it’s really moved to a conversation about, Well, if we don’t embrace this, we will not grow as a company, we won’t be successful. And given the world I’m in, part of HPE, I talk to customers and partners about information technology. And right now, digital transformation is top of mind for most customers. The pandemic has accelerated that. We do have a lot of customers now who are trying to link that digital transformation along with sustainable transformation, which is really the way to go.

Actually, I was reading some research from Accenture and they talk about companies that can actually make that link between a digital transformation and a sustainable transformation, are two and a half times more likely to actually outperform their peers going into the future. So it is definitely moved. It’s not just a tops down conversation from the boardroom, it’s also employees are demanding the organizations they work in embrace sustainability. So for an organization to keep their key talent and to attract new talent, it is something that has to be woven into the DNA of an organization now. So definitely the conversation is totally shifted.

Daniel Newman: Yeah. And that’s an important shift. And I appreciate you mentioned a few things because these are also items that I’ve been talking about. For instance, companies need to have sustainable practices that align with their business value, growth and strategy. They can’t operate in a vacuum because what ends up happening then is you end up adding costs, which is going to be negative in the perception of shareholders. And so the offset, of course you have to go down this route, we have to do things to be more sustainable, but you can’t do it at the cost of the business. So that’s the first thing.

The second thing that you mentioned that I really like and appreciate is the whole thing about moving digital strategy faster. How do you kind of tie in these two things to accomplish that? We all know how important culture is. Culture, eat strategy for breakfast, we’ve heard that many times before. And then the third part though, what you sort of alluded to as well is with a younger talent pool that’s more environmentally conscious coming into the workforce too. We’ve already seen this tight labor market and the competitive nature of the marketplace to find great talent. People want to work for companies that they feel have these kinds of values.

And so I think many of us are understanding that it’s going to take time, but we certainly don’t want to work for a company that we feel doesn’t prioritize things like climate and sustainability. So I’m going to kind of jump to question I sometimes ask later in an interview, Paul, but I want to get you to put out early in this conversation, and that’s, how do companies approach this practically? Because we hear about this and I worry that there’s this demarcation between posturing and practical and enablement and real deployment of these strategies. So what are you seeing? How are they doing this in a practical way?

Paul Sheeran: Yeah, that’s a good question. The good news is I’ve yet to meet a customer or partner around the world that says I don’t care. So it is top of the agenda. But to your point, practicality and where you go is hard. So on one side you could argue the theory, creating a vision leading into a strategy is nearly the easy part. Is how do you take the next step to really get a set of practical objectives that is embedded into an organization. And Daniel, what we talk about when we talk to our customers and partners from an IT perspective, is three things really. First one is creating circularity. So from a technology perspective, keeping technology in use for longer. Prioritizing reuse as opposed to up cycling. So that’s the first one. Secondly, it’s operating a peak efficiency. So making sure you can move to an Azure service type of model, a pay per use type of structure, simplify your IT environment.

Easier said and done. And last but not least, it’s all about transparency and tracking. It’s the governance. So you get what you inspect. So how do you make sure you have those rigorous controls in place to do that? So they are the three areas that we talk about. It’s not a one and done, it has to be embedded into a cycle. But it can be a beautiful thing because then momentum can build up. But it is a challenge, especially for larger companies, international companies. Head office might get it and they bake it into the procedures. But how do you make sure all your subsidiaries around the world are applying the same standards? So it is a challenge, but with the right approach, those practical steps can really come to life for our customers.

Daniel Newman: I always like when you can boil something down to a couple of steps. And of course it’s not necessarily that easy, but I think what I asked you, Paul, that was great, because here’s some practical things you take right now back to your office, back to your team, back to your leadership, back to your board. And it does really have to start at that level. The board level really does tend to drive these things, but then once again, it starts to get deployed into an organization, into the operations of the business, into the financial departments of an organization. They’re trying to look at well, Okay, what can we do? Well, you just mentioned a few of those things.

And one of the things that you said that I think I’d like to drill down a little further into is creating circularity. I think we hear the words sustainability quite a bit. And I think for some folks, if you’re in the high tech space, you’ve maybe heard about this, the circularity or circular economy, but that was something you guys brought to my attention several years ago. The first time I actually went out and visited your offices in the east coast and they were talking about the circular economy. And so talk a little bit about what you mean by that, creating circularity and how this creates peak efficiency within your operations.

Paul Sheeran: Sure. So in terms of secularity, I love the rule of three. So again, three areas I would highlight is first of all, using technology for longer. And as I said, prioritizing the reuse of technology is important. Secondly, looking for assets in the IT estate that are just not used. We call that trapped capital. So many organizations of so much technology lying around where there’s actually value in those assets that are sitting there. Not just in the data center, in our business, we also cover PC and print space. So across the whole entire IT estate, you’ll be amazed of the amount of underutilized assets. So there’s value there. And there’s a way to actually untrap the capital there and make sure those assets are handled in the right way when they come back to somebody like HPFS. And last but not least, it’s sort of mingling certified pre-owned technology with new technology.

So a lot of legacy systems and workloads are running on old technology. So rather automatically going out and buying new, there are ways to actually use certified pre-owned technology that’s been used before. And guess what, that’s also good for customers’ budgets because that can help them also free up some dollars to keep investing in their digital transformations. So that’s what I would say about circularity. In terms of peak efficiency, the way forward really is a pay per use or as a service structures, that’s the way the IT world is going. And within HPE, we’re very proud of our GreenLake offering. I’m sure you’re familiar with our GreenLake offering. That is something that’s growing rapidly. It’s bringing that cloud economics and flexibility that our customers want in a way that helps them simplify their IT estate. But ultimately it’s based on as a service.

So customers pay for what they use. So in terms of over provisioning. Big issue in IT is over provisioning, too much technology’s not being used properly. A solution like GreenLake can help reduce that. So by definition, you reduce your power, reduce your cooling and reduce your cost loads. So that as a service motion is really critical to help customers operate at that peak efficiency. So combining the two together can be a powerful thing. My favorite customer example, I love talking about, is current county. One of our customers in the US. A growing local population in California, they needed to go through a digital transformation, but they had all these legacy assets. So how do you move to something like a GreenLake when you’re stuck with all these legacy assets?

So luckily they worked with HPE and HPE Financial Services. We took their existing assets and we’re able to move them into a GreenLake solution, but also go and look at their IT estate for assets that weren’t being used properly or underutilized. Take them back and actually free up capital that they could invest to get into newer technologies. So a good story where I think 42% saving over just a typical capital expenditure type of acquisition for a customer. So it’s real, it’s happening. And if you can combine the two, it could be a powerful thing.

Daniel Newman: Yeah. It’s interesting to put together the utilization of the circular or the HPE Financial Services model for assets, as well as GreenLake’s model. As companies are making that shift, how can the efficiencies created on one end, end up helping to underwrite and create cost savings on the other end. We’re seeing a extraordinary global shift towards, as a service, initially brought on by cloud models that are becoming increasingly popular on Prem, because companies are seeing and realizing the benefits of both. And they are substantial, and I’ve talked about this a lot of times.

So that current county example does provide a very good example, but I also like how you tied those two things together because I think it’s kind of important that people realize that these things can be interdependent. They are not necessarily mutually exclusive. You can approach your old technology, your technical debt and turn it into an asset and turn it into a meaningful way to improve the economics of your business. Now, I’d like to pivot a little bit and talk about regulation. Last year, just to kind give you a little background, I’ll read this off to you, but the world generated 53.6 million metric tons of e-waste in just 2019.

That’s expected to grow to 74.7 million metric tons by 2030. The plan to address the growing negative impact of e-waste to new regulations being in implemented, but they’re needed, but they’re not really here, is what I’m kind of reading into this. So we’re seeing increased regulation or we’re seeing increased interest in regulation. We’re seeing increased discussion on ESG, how companies are going to prepare, how they’re going to manage risk, how they’re going to, you mentioned earlier transparency, and then of course reporting. All these things have to happen. Talk a little bit about what you’re seeing, you’re hearing as it pertains to regulation and how companies and of course the listeners might want to be thinking about that.

Paul Sheeran: So it is a little bit daunting, Daniel, for sure. We actually counted over the last six years at 250% increase in the regulations around the world. So guess what? We’re keeping an eye out and tracking it and they come fast. I’m sure you saw that the SCC press release recently where companies are going to have to make climate related disclosures on their periodic reports. So it is becoming quite onerous. So what I would say it is crucial for customers to work firstly, with a partner or an IT company that embeds this properly into their DNA, practice what you preach.

So in terms of technology hardware, it’s important to make sure that customers are working with vendors that really design in sustainability and circularity into how products are designed and manufactured, that they’re designed for efficiency, that they’re designed for longevity, they’re designed for recyclability. But leaving that aside, then it’s all into the use of technology and what happens to that technology when it’s reached the end of its useful life.

How can you make sure you comply with all the rules and regulations? So in terms of, for example, monitoring and tracking usage, a solution like GreenLake ticks those boxes, because there’s rigorous controls and processes built in to help customers monitor the IT usage that’s going on across their organization. Secondly, what happens to the technology when it reached the end of its useful life? What happens to the data on those technologies? Lots of rules and regulations around data cleansing, and the last place you want to end up is on the newspapers where some corporate sensitive data is in the wrong hands. So again, you need a partner that can take those assets back, angle them in a consistent way, make sure that the data is sanitized in a way that complies with all the regulations, whether it’s US regulations or here where I am in Europe.

There’s a lot of regulation associated with this. You do not want to get it wrong. And last but not least, it’s about creating accountability within the organization. Helping executives, link it to their KPIs in terms of tracking. So for example, one of the things we’re quite proud of in HP Financial Services is what we call our circular economy report. So when IT assets come back into our refurbishment centers, we can track exactly what happens to those assets, the carbon footprint that’s been reduced by those assets coming into our world. So creating that visibility and governance is critical. So just some areas from our side that I think should be top of mind, Daniel.

Daniel Newman: Yeah. I like that you mentioned the challenges with e-waste. And we use all this hardware and it’s interesting, because technology’s made us more productive, it can reduce our carbon footprint in many ways. Obviously the electricity is always a concern, but the fact that say, we could avoid getting on a jet a number of times because now we’re able to, I think it’s a significant positive in terms of how tech can help. But it’s also interesting with sustainable technologies how we often have a challenge of fully appreciating the complexities. I look at autonomous vehicles, the battery dilemma.

So we’re solving a big problem with carbon and fossil fuels, but at the same time, now we’ve got a new issue. So in a lot of ways, when people go, Where does the battery go? Well, you guys are kind of that answer for IT. Where does that it go? Where do all those data centers and racks and servers go? Well, it’s going to be organizations like yours that are coming up with solutions and saying, I believe it was Jerry Gold from your organization that said to me, One organization’s old is another organization’s gold. But there’s a great line in that. And it’s just something to really think about is we need solutions for that.

Because as technology is adopted at higher rates, as there’s more, even though we’re making more cores and smaller servers, we’re still using more compute, the footprint keeps getting bigger because of how important it is to digital transformation. So with all that in mind and everything you just said and all the complexity regulation, how do you make it achievable for your global customer? How do they do it efficiently? How do they do this cost effectively? And how do you even make it possible for them to meet all this regulation and all these desires that they have?

Paul Sheeran: Well, you said it well, Daniel, e-waste is a real issue. And I think industry has a moral responsibility to address this and do the right thing and promote the circularity we were talking about earlier. From our perspective within HPE Financial Services for our global customers, yeah, we have created a combination of a centralized approach mixed with a local approach. So we have two very large technology refurbishment centers, one in Europe and one in north America. We’re actually the largest IT manufacturer refurbishing centers in the world. We have, I think 400,000 square foot of facilities.

And what we try and do is make sure then that in countries where we don’t have those centers, that we have a whole network of partners. We have 80 partners across 50 countries, and we make sure we vet those partners, that they adhere to rigorous standards. And the important is consistency. That there is consistency across the world in terms of how we handle those assets. And if you’re a global customer in particular, you strive for that consistency.

You can’t have accidents in one corner of the world, it just would defeat the whole purpose. So we take back nearly 4 million units of technology a year. 85% of that gets recycled and goes back and finds another home. So that again, creates that circularity. And at the 15%, we make sure that’s recycled at the various high standards. So it’s definitely a global approach. It’s a lot of moving parts, but you need a partner who can do this properly and do it in the right way.

Daniel Newman: So let’s sort of bring this all together, because we’ve gone from the macro to the micro and I want to zoom back out a little bit here. Clearly HPE Financial Services is playing a significant role in the asset management space and tying that to companies’ ambitions and desires to meet sustainability goals. How do you see this playing out? How does the organization continue to address this demand? Are there any things in the future that you see being more significant or are we still, in your opinion, really in the early days in terms of companies really even taking advantage of what’s available to them now?

Paul Sheeran: Well, it’s certainly evolving and it’s evolving at speed, Daniel. ESG is now, as well as sustainability, ESG is also now on that top three of board agendas you’ll find around the world. And it’s such a broad area. It’s not just sustainability, but it’s clearly social governance and so many different areas. So we need to keep on top of our game, it’s evolving fast. Organizations like mine need to stay ahead of the curve to be able to help customers and partners efficiently and properly.

We need to be able to understand the direction it’s going. So it is evolving. Company like HPE, if you look, actually very soon, we’ll be announcing and publishing what we call our living progress report that captures what we do as an organization for ESG. Fairly sustainabilities in there, but also an awful lot more. So yeah, it’s an ever ending challenge. I don’t know if we’re at the start of the curve, Daniel, but for sure it’s not boring and it’s changing constantly.

Daniel Newman: Yeah. It’s a great recap. I think a lot of people could benefit from sort of looking at the way technology’s adopted to do a little bit of a comparison to how ESG initiatives are being implemented and adopted. Especially if you go back to your quote about Accenture and the tie between digital and ESG and how the two succeed when done together, whether it’s been companies modernizing architecture and moving workloads to the, I wouldn’t say to the cloud, but to the right destinations. It’s a little bit of the same here with ESG, as companies are identifying the right, the best, the most profitable and successful strategies and concurrently then sort of figuring out which things are maybe not.

It’s figuring out what are the right ways to measure and the right things to measure and what are the right areas maybe that won’t immediately add value because it adds too much complexity and doesn’t help the company operate to meet both their fiduciaries and their goals of returning to shareholders while concurrently their goals to the planet. So I think it’s a great place to start. The circularity of course has a big impact, Paul. Focusing on operating at peak efficiency. I think every company wants to do that. I don’t think it’s just about ESG and sustainability, it’s really about trying to run the best company.

And then of course I love that you continue to mention tracking and transparency. I continue to put my thumb on technology companies and saying, I love that you’re going to do A by 2030 and B by 2040 and C by 2050. But how can we see what you’re doing right now? And how do we measure that and know that you’re making the progress that you’re promising to your employees, your stakeholders, your shareholders, your customers, and everyone else in your ecosystem? So, Paul, I really love that you joined me today. Such a big topic, great having an expert like yourself that’s in front of customers all the time. I hope you’ll come back and join me again on this show really soon.

Paul Sheeran: It will be a pleasure. Thanks Daniel. Thanks for your time.

Daniel Newman: Have a great day. All right, everybody. Thanks so much for tuning in to this week’s Future and Tech webcast, really enjoyed having this conversation with Paul. Hit that subscribe button. Be sure to come back, join us again, check out the show notes. We’ll have links to some of those reports that Paul mentioned throughout. But for now, I got to go. It’s time to say goodbye. We’ll see you all later. Thanks for tuning in. Bye now.

About the Author

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio