SAP unveiled a program aimed at combating global climate change from an enterprise level by helping companies become sustainable and reduce their carbon footprints.
The Climate 21 program was announced this week at SAP Sapphire Now Reimagined, the virtual version of SAP's annual conference for users, customers and partners.
The Climate 21 program is a new aspect of SAP's vision of the intelligent enterprise, a concept where companies build data-driven applications on SAP's core advanced platforms S/4HANA for ERP and C/4HANA for customer experience and bring together data and analytics to make faster, smarter -- and now more sustainable -- business decisions.
"Intelligent enterprises can turn insights into action, [in this case] reducing the carbon footprint," Thomas Saueressig, a member of the executive board heading SAP product engineering, said during a prerecorded keynote presentation. "CO2 emissions are part of the whole end-to-end process, from procurement through manufacturing, transportation, distribution and sales, and even further to disposal. The carbon footprint of products accumulates along the value chain."
Companies can design and use intelligent enterprise systems to become more environmentally sustainable, which will not only lead to economic benefits but provide a competitive advantage as well, Saueressig said.
"[Global climate change] is the biggest challenge of the 21st century, and it's at the core of business," he said. "As companies, we are all under pressure, but we are also convinced that sustainability represents a clear, competitive advantage and a financial and economic benefit."
Sustainable organizations perform better
Saueressig cited an IDC study that found digital retail organizations with high scores on sustainability efforts outperform competitors with low sustainability scores.
"We can assume that a digital DNA coupled with sustainability helps organizations to perform much better than their counterparts in the long run," he said.
Details are still forthcoming, but the Climate 21 program is described as a multiyear initiative in which SAP works with co-innovation partners to develop applications that embed sustainability metrics into SAP technologies. Doing so will help companies understand, analyze and optimize the carbon footprint of their products and operations.
The first application, SAP Product Carbon Footprint Analytics, is focused on carbon emissions in producing, marketing and delivering products. The application takes data from SAP S/4HANA and third-party sources and analyzes it within SAP Analytics Cloud.
"Companies want to know what their CO2 emissions are, which products cause [those emissions] and how they compare with competitive products," Saueressig said. "SAP Product Carbon Footprint Analytics focuses on understanding the carbon footprint in an agile delivery mode. We will add more and more capabilities to analyze and optimize the carbon footprint."
Climate 21 embodies the intelligent enterprise because it spans end-to-end business processes and involves the entire modern SAP portfolio, Saueressig said, including SAP S/4HANA, C/4HANA, SAP Cloud Platform, SAP Analytics Cloud and Qualtrics.
Good start, but success depends on execution
Paul Saunders, research director at Gartner, said the Climate 21 initiative is good, and it should get proper attention because it's being driven from the top by Saueressig and CEO Christian Klein.
"However, as with all things with SAP, it comes down to execution, value delivery and simplicity," Saunders said. "For this to be really successful it needs to span SAP and non-SAP workloads and data."
A typical scenario for Climate 21 could involve a consumer-oriented application that allows shoppers to evaluate the environmental impact of products at the point-of-sale, Saunders said.
Consumers could see the size of the carbon footprint of products and get recommendations on alternatives that meet their sustainability preferences. Alternatively, manufacturers can see how sustainability is influencing product decisions and adjust production levels and locations based on data like consumer sentiment and the environmental costs of shipping products.
"Manufacturers could shift manufacturing between factories, reconfigure product lines in real time and adjust contingent labor as needed," Saunders said. "If customers opted in, the vendors would be able to recommend, cross-sell and upsell -- and create improved retail experiences while driving sustainability. For example, they could compete with online sales by showing the environmental impact of buying the product then and there versus having something shipped from a remote warehouse."
This scenario can't just rely on SAP systems and would have to involve a variety of stakeholders, applications, technologies and data sources to work properly, Saunders said.
"It can't just be SAP systems," he said. "SAP will need to help customers in turning this into a reality, which is something they haven't done so far with the intelligent enterprise."
The focus on sustainability is long overdue and allows companies to begin to focus efforts on global sustainability, as Climate 21 can tie climate issues directly into business processes, said Mickey North Rizza, IDC program vice president for enterprise applications and digital commerce.
"In addition, sustainability is another set of data that can help make an enterprise more intelligent," Rizza said. "When the different data sets start coming together, enterprises need to understand it and synthesize it to create actions, which can bring about better performance if it's done right. Bringing together massive data sets, tying them to analytics and turning data into action in real time is at the heart of an intelligent enterprise, and sustainability is one more set of data.