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Cut to the Chase: Why Sustainability Matters to Business and IT

by Dave Hannon | insiderPROFILES

October 1, 2010

This year’s SAPPHIRE NOW conference provided practical advice on both how to build a business case for sustainability and how the IT organization can support sustainable business practices with technology. Get expert advice from 16 sustainability experts who presented at SAPPHIRE NOW and learn why sustainability matters not only to the business, but also why it matters to the IT organization.

Caption: SAP Co-CEO Bill McDermott delivers his SAPPHIRE NOW keynote address in Orlando, Florida, in May 2010

Sustainability Defined

SAP’s definition of sustainability reads: Increasing short-term and long-term profitability by holistically managing economic, social, and environmental risks and opportunities.

Recently, there has been talk — a lot of talk — about sustainability in business. And any time a topic receives that much attention, businesses are challenged to separate the “buzz” from the sound business strategy they should be implementing.

That’s precisely the challenge for organizations today — to find out what the real business case is for sustainability (Hint: Almost all companies will have a different one) and then how best to execute a successful sustainability strategy (Hint: It involves IT).

This year’s SAPPHIRE NOW conference provided practical advice on both how to build a business case for sustainability and how the IT organization can support sustainable business practices with technology. What follows are 16 highlights from sustainability experts who spoke at SAPPHIRE NOW.

Why Sustainability Matters to the Business

1. “Sustainability is about profitability. It needs to matter to businesses or it won’t matter at all. The business case for sustainability is easy to describe:

  • You reduce operational risk, which saves money.
  • You need a sustainable workforce to embrace new markets. Sustainability becomes a factor in people’s choice of where to work.
  • You increase your resource productivity, or use resources more efficiently.
  • You protect your brand through sustainable consumption.
  • And lastly, it’s a sustainable business model. Once you start looking for waste, you find huge opportunities.”

Peter Graf, Chief Sustainability Officer, SAP

2. “There’s a massive misconception that green equals cost. In reality, at its core, green is about doing more with less, which means saving money. Ecoefficiency in areas such as heating, lighting, IT, fleet, and distribution adds up. Companies have cut billions of dollars out of their cost structures by reducing energy and fuel consumption in this economy. Information and data will be the heart of sustainability practices and smart strategic business decisions going forward. Having that data and the right software will be critical.”

—Andrew Winston, author of Green to Gold 

3. “Sustainability is important to us at Lexmark because our customers are requiring it of us. As sustainability became more common, it was clear buyers were incorporating sustainability data points into their RFQs. The SAP BusinessObjects Sustainability Performance Management tool automated the data flow and pulled the sustainability data out of the business for internal review and made it easier to provide to the customer, rather than searching for the sustainability data in a variety of systems to respond to RFPs.”

John Gagel, Manager of Sustainability Practices, Lexmark

4. “One of our biggest drivers for implementing SAP Carbon Impact was managing risk. A lot of bills in legislation around the world could affect us if they pass, but we are unwilling to wait. We want to gauge our risk ahead of time. Also, we have a lot of customer requests to build and market green products, and we need to report this information at least at a level that the industry allows at the moment. Spreadsheets don’t give us the transparency we need. They are too time-consuming and prone to human error.”

Kelly Witherspoon, Social and Environmental Responsibility Program Manager, Jabil Circuit

5. “Businesses need to integrate safety with their business processes so risks, preventive measures, and corrective actions are visible to people in the value chain. Also, companies need to execute these preventive measures and corrective actions on the spot. The key is having access to and availability of data so you can audit your performance and measure against your KPIs and roll that data up.”

Stephen Illes, CEO, TechniData America

6. “People feel good about working for a sustainable company. And people feel good about buying from a sustainable company. If you want to be a world-class company, you have to be sustainable. Instilling that vision and passion into the company can create a lot of benefit. Engage your people and talk to them. Use the resources that may already exist in your company. People know how to waste less already.”

Brenda Lunger, SAP EHS Lead, Olin Corporation

7. “Part of the corporate strategy at Lockheed Martin is to start looking at energy as a national security issue. This approach also supports our customers’ objectives. Carbon regulations are coming. It’s good business practice to be ahead of the issue rather than trying to catch up. It’s also an important part of being a good corporate citizen. Employees are definitely interested in sustainability. We’re not just pushing this out to them; they are pulling it, too.”

Jessica Milne, EHS Engineer, Lockheed Martin

8. “I think five years from now, the topic might not be labeled sustainability, but it will be at the top of management’s priority list. Five years out, we won’t debate the merits of sustainability, but will be more focused on how companies deliver against transformed societal expectations.”

John Elkington, Chairman, Volans

Peter Graf

SAP Chief Sustainability Officer Peter Graf leads a Sustainability Roundtable at the Orlando SAPPHIRE NOW event

Why Sustainability Matters to the IT Organization

9. “All companies are getting pressured to show their corporate social responsibility reports. The investor community is also pressuring companies for metrics to show progress in these areas. But whatever you choose to manage, you need data around it. The biggest issue around sustainability is getting quality data consistently. Where most companies fall down is in trying to manage all these complex regulations and requirements through a variety of spreadsheets. Instead of managing this data in silos, it’s important that you unify this data in one system and get consistency. You have to ensure your data is automated and provable and that you can produce a true audit trail.”

Steven Bogart, Partner, CSC

10. “Valero uses SAP technology to track real-time energy consumption. This company created real-time visibility and saved $120 million in 2009 by getting that visibility and allowing the plant managers to run their refineries based on best practices. A sustainable energy strategy is not just about buying wind or hydro energy; it means reducing your consumption. You don’t need to believe in global warming to stop wasting resources. It’s just good business, and that’s how sustainability should be looked at — as a good business practice.”

Peter Graf, Chief Sustainability Officer, SAP

11. “Sustainability starts with information, and that’s the IT organization’s business. We are well positioned to support sustainability. Getting the right information is the start. With many systems and methods for making calculations, pulling this data together is tough — but it enables IT to be part of the initiative. So rather than just being dragged along, we’re supporting sustainability and driving it forward.”

Pieter Schoehuijs, CIO, AkzoNobel

12. “About 80% of the company’s greenhouse gas emissions result from our airline flights. The quality of the data we were collecting on flights was not adequate, so we cleaned up our historical data and are working on gathering better data. With our lean IT and operations departments, there is no way we’d be able to track our carbon footprint without using software.”

Rob Farris, Vice President, Hitachi Consulting

13. “A growing trend is looking at sustainability outside your four walls. The 80/80 rule says that for 80% of the companies in this economy, 80% of their emissions come from their supply chains. So the big levers in an organization aren’t with the Environment, Health, and Safety department; they’re with the purchasing department. It’s a shift toward looking at your supply chain for efficiency. For example, in 2005, Walmart launched its sustainability initiative and, in four years, increased its fleet efficiency by 60%. And Walmart was not an inefficient company. Looking at your company through a new lens of sustainability will allow you to see new efficiency gains.”

Jeff Rice, Director of IT Systems and Strategy, The Sustainability Consortium

14. “In order to drive sustainability, IT’s role is to capture and manage information and make it visible to people inside and outside the company. In that sense, sustainability is part of our day-to-day work.”

Giles Mann, Head of IT – Technical and Production, Nestlé

15. “The most difficult part of compliance is workflow management. The fact that we have global data and one instance of SAP Environment, Health, and Safety Management has really helped us. Within two years, we have seen an ROI in several ways: We decreased costs of compliance by automating the process and the methodology we use to manage projects. We increased staff productivity and, in the end, reduced IT costs. When you have a strong methodology, it becomes a repetitive activity and you don’t need as many people.”

Vincenza Orlandi, Global Project Leader for SAP EHS, Dow Corning

16. “Under the US stimulus package, there is an accelerated tax deduction for energy-efficient building improvements. We’re finding many companies are missing that deduction and are leaving a lot of dollars on the table. So the question is: How do you track these efficiency improvements across all your facilities? To help companies with this problem, we partnered with SAP. Using SAP BusinessObjects Sustainability Performance Management, we built a template that you install on top of your business intelligence platform.”

Daniel Dekemper, Director, PriceWaterhouseCoopers

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