Spotlight is a new article series about initiatives rising from the Combient network. In the series, we will cover interesting spinoffs from the Combient network companies, collaboration efforts between them, as well as other innovation stories.
There has been a lot of talk about flight shame, but you never hear about Netflix shame, isn’t that weird?
Meet Mikael Cato, Chief Digital Officer and SVP at Scania. We are not talking about trucks today though, but about the CO2 emissions and energy consumption of IT systems. Mikael is also Executive Chairman of Gaia Generation, a startup incubated and financed by Scania.
Green IT cuts emissions and costs
CO2 emissions from the software industry are today comparable to the airline industry and rising fast - according to some estimates, the industry could emit up to 8 % of global GHG emissions and consume up to 13 % of the world’s electricity in 2030. But compared to transportation for instance, this impact is less understood and less visible. After all, there’s no exhaust gas or contrails coming out of laptops.
“Before joining Gaia Gen, I wanted to work for a cause but I was not aware of the climate impact of IT companies. The enthusiasm of Gaia Gen’s founders towards green software development made the difference and it has been an amazing journey”, says Deepthi Ushus, who joined Gaia Gen as a Full Stack Developer 1.5 years ago.
Gaia Gen wants to empower software organizations to build and run climate efficient cloud-based software. In practice, this means tracking and reporting the use of systems running in multicloud environments, such as AWS or Azure, and cross-referencing this data with country energy mixes for instance. This is a story of 3 Rs: Relocation, Rightsizing and Rearchitecting. Large companies have not necessarily paid attention to the regional distribution of their cloud setup in spite of massive differences in the energy mix of different countries, so there are obvious low hanging fruits there. The cloud transformation came with promises of 24/7 uptime, but not all systems need to be running at full capacity when office lights are off…
Rearchitecting is a longer road, which can be tackled when providing data and good practices to IT teams. “They are software engineers, they are paid to solve problems”, Mikael chuckles. “If only it is a prioritized problem, from our experience they have reached tremendous results without very hands-on design support”. The results from the first implementations are indeed impressive: 98% reduction in CO2e emissions, energy consumption slashed by 80%… and cloud spend savings of 15%!
A structured approach to nurture employee ideas
But let’s rewind, how did we get from trucks to clouds? One of the co-founders, David Ahlbeck was working in Scania’s cloud adoption team when all departments of the company were tasked with determining carbon emissions baselines and reduction targets. There was no visibility into cloud emissions, so David developed an algorithm to solve this issue. He later pitched this idea at an internal event called Scania Hack, back in 2019. It went so well that he got a “golden ticket” to form a team with three colleagues and join Scania’s Innovation Factory, an internal entrepreneurship program.
In each cycle of the program, four to six teams of Scania employees are chosen to enter a 3 to 4 months incubation period and work full time on transforming their idea into a business that can generate revenue. Teams have access to business coaches, lean startup tools and frameworks and are pushed to test as fast as possible with customers if the value proposed by teams is a need to have - and one worth paying for. At the end of the incubation period, a decision should be made to spin out the startup, to spin it in if it fits Scania’s value proposition, or have members return to their regular jobs and disseminate sharpened entrepreneurial skills within the organization. Gaia Gen emerged from this entrepreneurial nursery as a startup backed by Scania Ventures.
An attractive business opportunity for Scania
Scania is not only a key client for Gaia Gen, but also provides financing and support services such as payroll, legal and HR. Reducing IT emissions and cutting cloud spend sounds quite remote from Scania’s core business, but Mikael notes that the value delivered through their products is increasingly software driven - a statement that applies to the whole Volkswagen Group actually. Besides, corporations such as Combient Associated Companies spend hundreds of millions, or even up to a billion SEK on cloud hyperscalers, so Gaia Gen’s value proposition is also very attractive from a financial operations perspective. Gain Gen expects to benefit from tightening regulation as well.
This year is a baselining year for CSRD but, as Mikael explains, the data provided by hyperscalers today is not granular or timely enough. “You can’t really do anything with that data because it doesn’t help understand the current situation and you see the result of modifications a month later. It’s not a usable process”, he says. And there are perspectives beyond cloud systems, with another energy guzzler knocking on the door. “Everybody is now jumping up and down on the possibilities of Generative AI, but the emissions and the energy consumption required to train the LLMs and to put them in operation are huge”, Mikael sighs. Something to address together with the Combient community, perhaps?
Gaia Gen launched their SaaS solution early 2023 and visualizes the emissions of cloud systems of a community of happy clients who provide monthly revenue - and very active feedback and feature requests, notes Deepthi. How did Gaia Gen get from an internal hackathon pitch to generating MRR? There was a good idea obviously, captured in a working piece of software that had been tested in the Scania context. According to Mikael, who witnessed the original pitch, the basic idea hasn’t changed much along the way, even though there has been a lot of development of how to monetize it and make its value proposition understandable. Another critical success factor is the team itself. “The key thing in the process is to identify people with a startup mentality. These people don’t necessarily join large companies like Scania, but they are required to make things fly” remarks Mikael. Corporations interested in supporting entrepreneurship should accept that failure is part of the learning process and commit for a longer period of time - “starting off with 3 to 5 years, because nothing really happens overnight”.
