SAP: ‘It’s about business’

By Brian Back, Sustainable Industries

For those who might live in a bubble, or even just a conscientious, pedestrian-friendly community, Orlando, Florida, is a bit of a write off.

And yet here we are at SAPPHIRE NOW, on the mega-conference circuit, with its hidden-fee hotels, cheesy chain restaurants and seas of parking lots, down in the dark depths and forced air of the massive Orlando Convention Center – to talk about sustainable business innovation at SAP.

The ubiquitous SAP. Four decades old. Largest enterprise software company in the world, with tentacles of business activity in nearly every sector of the economy. The German-based corporation enjoyed a spectacular recovery from the global recession. (SAP’s stock, which cascaded like many of its peers in the recession, hit a low of near $30 per share in late 2008 but rebounded to record highs of over $60 per share by early 2011 – and tipped above $70 per share this year.)

SAPPHIRE NOW attendees were gifted a Van Halen concert at the closing party. But they weren’t exposed to a major track on sustainability content at the conference, which attracts more of a business- than a tech-focused audience. That’s largely because sustainability is interwoven throughout most of the overall content (and the real star of this year’s show – SAP’s new Hana product).

According to SAP’s Peter Graf, this can be attributed to integrated thinking, and a striking increase in the sophistication of sustainability technology and innovation in the corporate world since 2009, when he moved from SAP’s deputy chief of marketing role to the chief sustainability officer spot.

At the time, SAP set out by interviewing 100 customers across a variety of industries to assess their broader views on risk, compliance and energy price volatility in a world of finite resources. Finding solutions to these business concerns is the basis for SAP’s four-pronged approach for investment in sustainability, laboriously repeated by SAP execs in clear, consistent messaging:

  • Operational risk management
  • Sustainable supply chain and product footprinting
  • Energy and environmental resource management
  • Sustainability reporting and analytics

Said Graf: “It’s about business.”

SAP works on sustainability in every line of its business rather than relegate it to “an island of tree-huggers,” Graf said. He estimates 800-1,000 of SAP’s roughly 60,000 employees – about 1.5 percent – work directly on sustainability for some 2,000 customers

Its employees, vendors and customers seem to have sipped the Kool-Aid. According to Graf, 89 percent of SAP employees report their belief that sustainability is an important corporate pursuit. Mention sustainability to an ordinary SAP employee and you may get what I heard: “We have a solution for that.”

As outlined in a SAPPHIRE NOW presentation by Marty Etzel, SAP’s VP of Sustainability Solutions, SAP handles Autodesk’s sustainability reporting and analytics. It provides supply chain and product stewardship solutions for Unilever. It collaborated with The Sustainability Consortium on metrics for corporate social responsibility reporting. It helped Danone (The Euro version of Dannon) reduce greenhouse gas emissions by 30 percent.

SAP also works with a lot of heavy industry – mining, oil and gas, etc. And it shows up in all sorts of places – as revealed in interesting claims such as: SAP customers produce 70 percent of the world’s beauty and fragrance products. Or it touches more than 70 percent of the world’s beer and chocolate production. Or 86 percent of the world’s athletic footwear.

The extent to which its customers seek to go “beyond compliance” certainly varies, though at SAP sustainability drives operational risk management. Graf noted how BP might have benefited from greater consideration of this two years ago in the Gulf of Mexico (although to be sure, the oil behemoth was still reporting large profits just a few months following its environmentally and economically disastrous spill).

As a software solution provider, SAP’s success increasingly comes from playing in world where business value exists in intangible assets, according to one conference speaker, packaged in what co-CEO Bill McDermott refers to as “surreal time.”

The company enjoys awards and kudos for its online sustainability report and its tendency toward transparency (what Seventh Generation’s Chris Miller calls being “flawesome”), as exemplified below in 14 key sustainability indicators.

From 2010 to 2011 SAP’s greenhouse gas footprint increased by more than 7 percent, largely attributed to the aforementioned recession-defying growth. In 2010, however, SAP was able to cut emissions while also experiencing marked revenue growth.

As Graf put it: “People would rather hear the bad news than be left estimating how bad it really is.”

Another indicator, perhaps one of the more sensitive, is the percentage of female executives at SAP. At 18.7 percent after increasing nearly 1 percentage point over the past year, these numbers reflect the always shocking and persistent industrywide male dominance in corporate leadership and management roles in the year 2012. SAP’s underwhelming yet reasonable goal is to get to 25 percent female management in the next five years. And while the company has made well-intentioned investments in female entrepreneurship in Ghana, for instance, such heart-warming narratives don’t quite make up for the gender gap in its own business units around the globe.

And then there is the company’s ambitiously sweeping statement that “SAP protects 900 million people” by doing the business it does. At the end of a few days in Orlando, one can see how such ideas are increasingly contagious as SAP, and crucial to a tech-hungry world chock full of challenges.

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