SAP co-CEO Leo Apotheker recently said he'd like ERP to stand for "Environmental Resource Protection" some day.
So it's not surprising that corporate sustainability, and how SAP products can facilitate it, will take a front seat at Sapphire this coming year, according to James Farrar, vice president of corporate citizenship at SAP, although he didn't give many clues about how that product roadmap would look.
SAP already sells specific modules that are geared to recycling administration and energy and emissions management. But the vendor's broader goal is to help businesses use their ERP systems to facilitate corporate sustainability initiatives, and to make sustainability part of business processes.
Farrar said, "There's this line you need to walk here. Green washing is not acceptable, as we all know. But for a company like SAP with its strategic importance to society, 'no washing' is not an option either."
SAP has for some time been pursuing its own corporate sustainability strategy and recently released its first report on how well it's going. SAP is a leader in the Dow Jones Sustainability Index, which tracks the financial performance of the world's leading sustainability-driven companies -- where SAP is ranked No. 1 in the software sector. By early next year, the vendor plans to announce its goals for reducing its carbon footprint.
What does this all mean for SAP's customers? Farrar offers his thoughts in this interview and also invites customers to weigh in with what's important to them on SAPvote.com.
What products can customers expect in the coming year to help with sustainability initiatives?
What we're still lacking is carbon dioxide accounting standards. SAP research has been pretty busy in working with a number of industry bodies … so we have a common standard for carbon dioxide accounting.
What do sustainability conversations with customers sound like now?
As our customers are screening their supply chains, SAP is getting caught in the dragnet of compliance itself. Most major corporations are screening their own supply chains, and we have to answer those questions.
They quickly and often blossom into questions about functionality: "Really, we're interested in finding ways to better manage this process." And it's moving into conversations about requirements.
The strongest signals [for sustainability] are coming from energy-intensive industries -- companies worried about getting energy costs under control. Data center managers and CIOs, they've never even seen an energy bill, and that's starting to change now. The cost of energy as an input is becoming more and more manageable.
By extension, the question of carbon dioxide is closely related. I think customers that have an intensive footprint in carbon dioxide are getting ready and getting worried. They have the most urgent need to understand the cost of carbon.
The other [conversation] is around brand protection. They're looking at better ways of pulling together that data across heterogeneous environments to be able to drive initiatives across the enterprise.
It's coming from the ground up as well. Maybe the retail trade is thinking of being responsive to stronger consumer demand for greener initiatives.
Has this economy dampened enthusiasm for investing in environmental initiatives?
I think at the moment I can see some divergence going on.
The companies that really view sustainability as something as a transaction cost, their [spending] is going to shrink.
Companies that see it as an integrated part of the core business are actually going to be spurred by the economic crisis.
The truth is you can't get to any serious level of integration on sustainability without thinking about business process design. There's no getting away from that.
[Business needs to decide the question] Is sustainability for our firm … a transaction cost item that we're prepared to bear? Or is this something we engineer and design at the business process level?
And that's what you see leaders doing -- that level of integration and business process change.
The CIO has to drive it strategically.
Where does IT start a sustainability initiative?
They've got to start with compliance. I mean in the broadest sense, compliance to regulatory requirements, but also compliance to legal standards locally. Then, crucially important, comes compliance to voluntary standards. If you don't, you risk a reputation crisis or backlash [from customers]. The next level of compliance is across the supply chain. What's the risk of compliance lapses?
How will you measure success in corporate sustainability initiatives?
It's true that IBM and the hardware players are the gold standard. But defining the issue for software -- it's less tangible.
The reality is that we have not as a global society been able to decouple economic growth from environmental damage, particularly carbon dioxide. What is it to be sustainable? It's an idea -- a better potential balance among social, economic and environmental development. All businesses are trying to be more sustainable to help their value chains be more inclusive of value chains in society, but also to reduce environmental impact.
I say this because we need to be realistic about what success looks like. It's the greatest social and economic benefit with the least environmental cost.