Companies across diverse industries — including mining, high-tech, consumer products, and aerospace and defense — are implementing SAP Carbon Impact OnDemand for a wide variety of reasons, depending on the size of their energy spend and the distribution of their emission scopes. Yet, across all of our customers, there is a clear corporate focus on the continued and sustained reduction of both the environmental inputs (including energy and water) and outputs (including greenhouse gas, or GHG, emissions) of their operations.
A combination of three key factors is driving this emphasis on reduction efforts:
- Lowering energy use across the value chain provides a significant opportunity to reduce costs and improve operational efficiency.
- Managing brand risk is increasingly critical, since more stakeholders are demanding that companies remain credible and transparent with their sustainability data.
- In the face of uncertain global climate change regulations and in response to localized GHG emissions regulations, mature companies want to be prepared and stay ahead of the regulatory curve.
Our SAP Carbon Impact OnDemand customers have underscored the need to respond to such drivers. At a customer panel at the 2010 SAPPHIRE NOW conference, defense contractor Lockheed Martin emphasized the importance of corporate-level, enterprise-wide energy management, while Jabil Circuit, a large electronics manufacturing services company, underscored the pressure from customers who are deeply concerned about their supply chains. For example, Jabil’s original equipment manufacturer (OEM) customers are now asking about the environmental footprint of Jabil’s processes to ensure that they are creating greener products themselves.
Jabil also reiterated that, with new and pending legislation that may affect its processes, having an auditable system of record that can quickly and accurately summarize a company’s carbon impact is critical.
5 Essentials of Energy and Environmental Management
Our customers’ experience with SAP Carbon Impact OnDemand has been highly instructive. In working with Lockheed Martin, Jabil Circuit, and others, we’ve identified five core themes.
1. Companies need reliable information about their energy use and environmental performance.
This information must reflect the entire company; the energy and carbon intensity needs to be normalized and measured (by facility, process, and production unit). Performance must be benchmarked, both internally and externally.
Yet, aggregating, verifying, and validating this data across different regions and locations is immensely time-consuming. Many organizations have simply never tracked energy usage in any operational system. Or, if energy information is tracked, it is frequently measured at the cost level, not the usage level. The usage-tracking process can be painstaking, involving tracking down utility invoices for hundreds of buildings, contacting numerous plant managers to ascertain the use of propane, purchased steam, and other energy, and estimating the energy use of truck fleets, remote offices, and generators. And this is all to simply get a baseline; the data still must be structured for proper analysis.
Customers have found that SAP Carbon Impact OnDemand greatly speeds this process with embedded best-practice processes to aggregate energy use information; flexible hierarchies to structure the data in accordance with organizational structures in their ERP system; data verification protocols; and language support for more than 50 countries.
Lockheed Martin, for example, reduced the number of quality control cycles it has to undertake. At Jabil Circuit, they no longer have “teams of people working months for reporting.” And, the company has increased the frequency of data collection (monthly) from various locations. This up-to-date insight into the variance of its energy supply’s cleanliness and quality in different countries helps make comprehensive global energy decisions much easier.
2. To effectively assess energy use and environmental impact across a company’s operations, the system of record must automatically aggregate data from different sources across multiple regions in different local formats.
Meeting this need, however, is complicated by variances in technical maturity across regions, facilities, and suppliers — including differences in asset metering, utility bill formats, supplier readiness, and the local systems to aggregate the data.
Thanks to feedback from customers, SAP Carbon Impact OnDemand has prioritized integration to the major sources of energy and environmental data, such as metering systems, utility data, SAP ERP, spreadsheets, and public reference sources. The solution also employs well-tested practices — including web surveys — and technical web services to pull in remaining sources of data. This ability to aggregate information gives customers the confidence to report their performance publicly and to regulators and auditors.
3. The real business value is in the continuous, sustained reduction of energy use and environmental impact.
Consider the chief sustainability officer (CSO) of a large firm, who, at a high level, knew that his company’s locations in Germany and the Middle East had higher energy use and emissions, on average. But, at a granular level, he did not know why. The CSO reactively prioritized projects that individual facilities requested: “Those who proposed anything got the budget,” he said. This haphazard method precluded an informed, corporate-wide prioritization of investments to address the company’s aggressive reduction goals. The CSO couldn’t proactively engage in a dialogue with different locations to determine the right projects to invest in (factoring in process inefficiencies, local government incentives, and regulatory situations) — and to then monitor the progress of those projects. There were simply too many variables to consider.
SAP Carbon Impact OnDemand helps customers establish a systematic way to identify all the financial and operational options of mitigating energy and environmental impact across their own facilities and the supply chain. While a system like SAP Carbon Impact OnDemand is only as effective as the quality of the data available and the corporate processes for prioritizing projects, it can augment the processes and the decisions made. The solution provides:
- Analytical tools to assess environmental impact
- Calculation of energy and carbon intensity by myriad variables
- Internal and external benchmark capabilities
- Proven project templates
- Embedded best practices for evaluating and monitoring the corporate-wide project portfolio
With these tools and a defined process framework, companies can model and measure the effects of investment decisions and the ramifications of changing assets, processes, suppliers, and regulations.
4. To sustain reduction efforts, all employees must be engaged.
Our customers have taught us that initiatives are much more successful when employees at all levels are engaged in the process. As companies implement SAP Carbon Impact OnDemand deeper into their organizations, they report that employees are excited to have transparency into their daily decisions around energy use and environmental impact.
Employees and supply chain partners alike become engaged when energy and carbon reduction is no longer a nebulous, do-good concept, but a tangible reality with transparent results. SAP Carbon Impact OnDemand not only provides the necessary dashboards, but also social and loyalty-based rewards functionality for employee and partner engagement.
5. Running in the cloud is safe and cost-effective.
Because SAP Carbon Impact OnDemand is a web-delivered, software-as-a-service (SaaS) solution, implementation time is dramatically reduced. The web-based nature of the platform also ensures that global reference data, voluntary and regulatory forms and requirements, and best-practice templates are continuously updated. Plus, the web environment facilitates the cross-company sharing of best practices. And our customers don’t have to worry about security; ensuring security in the cloud remains a non-negotiable condition and a development priority for SAP.
To learn more about SAP Carbon Impact OnDemand, please visit www.sapcarbonimpact.com.
Sami Muneer (firstname.lastname@example.org) is a Senior Director for sustainability at SAP, focused on energy and environmental solutions. Before joining SAP 10 years ago, he worked at Bain & Co. and MMG, as a consultant to oil and gas companies. Sami is a graduate of the University of Chicago.