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You Can't Manage What You Don't Measure

When it comes to water usage, most industries today still pay little attention to managing their most precious raw material.

When it comes to water usage, most industries today still pay little attention to managing their most precious raw material.

The State of California recently announced 25 percent cuts to water usage to combat the drought threatening the eighth-largest economy in the world. These cuts are going to impact business and point to a future where the ability to operate and grow with periodic or long-term water scarcity will be a critical business attribute. The proposed cuts, however, highlight a much more simple question — do companies even have the ability to actively track the amount of water they use? The answer to this (with some exceptions discussed below) is generally “no” and before anyone can start to conserve water, somebody is going to have to figure out a better way for companies to measure and manage it.

In the era of analyzing real-time data, from Salesforce software to the Fitbit on your wrist, corporations still mostly rely on old-fashioned meters and a monthly bill that comes in the mail. Without an ability to actively monitor water usage during a water scarcity crisis, corporations are in effect like a bus driving down a winding mountain road without a speedometer.

William Sarni, a corporate water policy thought leader and director and practice leader of Enterprise Water Strategy at Deloitte, acknowledged “there is an opportunity for the private and public sectors to continue to develop more robust water data collection and analytics capabilities. Increasingly there is a need to integrate water supply and demand data into business growth and economic development strategies. This represents an opportunity for ‘water tech’ companies focused on data acquisition and analytics, and for technology users in the public and private sectors.”

The lack of business information about water usage is the shared fault of water utilities and corporations. Utilities are not providing information and companies are not demanding it. Water providers, though, have started to adopt new technology, such as advanced metering and smart networking systems. However, upgrade cycles for these new smarter, more connected meters can be on as long as a twenty-year budget cycle. Smart meters can be more expensive, and for many cities it may take a decade or more of updates for advanced metering networks and the sophisticated software to be fully functional. Unfortunately, many of the upgrades are focused on more efficient billing and meter reading, and useful data that may be collected by municipalities (such as up-to-the-second flow logs) are not accessible to the end-user. The result — industries in even the most water-scarce areas of the United States cannot access critical water use information beyond what is found in a monthly bill.

So if water suppliers are not providing the information, why have companies avoided investment into more advanced water metering? Anyone who works with/for large companies knows that expenditures need an expected return or savings. In the case of spending to help manage a resource that is viewed largely as being “free” or “nearly free,” the cost savings or return on investment is often negligible or may take many years. This challenge is not unnoticed by Sarni, who quipped that “the cost of water really only shows up as noise on a corporate P & L statement.” Cheap water is indeed one of the main challenges for advancing water conservation practices but if companies wait for more expensive water to drive the ROI argument, they are putting themselves in considerable risk to scarcity while they wait.

CDP’s Water Disclosure Project is starting to change this. The effort has gained growing legitimacy and has a growing list of participants that are tracking and disclosing water usage for stakeholders. CDP data on corporate water usage, however, points to a significant difference between corporations and the quality of their water usage information. Some companies, such as beverage and semiconductor companies, are highly sophisticated in tracking their water usage. Other industries illustrate more of a work in progress, reporting rather than showing their ability to actively manage it.

Enterprise-wide visualization of water usage will not be provided by local water utilities anytime soon. The only solution to assure the license to operate and grow in times of scarcity will be to embrace water usage as a critical business metric that needs to be actively monitored. Companies that are not doing this now will be at a distinct disadvantage when they are forced to make decisions in the face of increased water shortages without data.