SAP plays up sustainability angle

The company plans a big push for maximizing supply chain efficiency as a green initiative

Organizations seeking ways to conserve energy and profit from being green may find the true gains won’t come from "greening" their datacenters, but rather by maximizing the efficiency of their supply chains, said Peter Graf, the chief sustainability officer for SAP.

"I find [green IT] a little bit exaggerated. Green IT is usually positioned as reducing the energy consumption of the datacenter," Graf said, speaking at the National Retail Federation’s annual convention, being held this week in New York. Only an average of 2 percent of the world's greenhouse gas emissions are created from computers, he noted. "I'm not dismissing it, but the real opportunity is in logistics, production, in distribution and production."

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The theme for the opening keynotes for the 99th annual NRF conference is sustainability, or the drive to improve profitability through greater efficiency. Matt Kistler, the vice president in charge of Wal-Mart's sustainability efforts, spoke at the show about the retail giant's own efforts in cutting inefficiencies, and Graf's own talk positioned SAP as being a “leading provider of solutions for sustainability.”

SAP released a sustainability performance management package in 2009 and plans to introduce some more sustainability-related supplemental software packages this year, Graf said.

All these packages are designed to give organizations reports on how efficient their business processes are and how much waste is being created in day-to-day operations.

Graf, who drives the company’s sustainability marketing effort, said the term "sustainability" is more suitable than the term "green" because it is more encompassing. Green may be just about saving energy and reducing waste. Sustainability balances this goal against keeping a business profitable.

Staying green and maximizing profitability are not as mutually exclusive as one might imagine, Graf told the audience of retailers. Reducing waste reduces costs. Also, today's Internet-driven economy promotes transparency, so retailers shouldn't risk the bad publicity that may come from environmentally detrimental practices.

Kistler noted that Wal-Mart has been working on various sustainability projects for about five years. The retail giant had found that, of its own carbon footprint, only 8 percent came from its own infrastructure, such as stores, trucks and so on. The rest came from suppliers. As a result, the company has put a program in place to encourage suppliers to manufacture goods more efficiently.

The key to improving efficiency is analyzing the processes in the supply chain in order to learn where the waste is, Graf said. SAP itself is in a good position to offer sustainability tools, he argued. Such tools, which would take the form of dashboards or report generators, could do things such as tally the company's overall carbon emissions. SAP can easily hook these tools into its existing logistics, supply chain and enterprise planning software products.

"We can make [sustainability] visible. For us, it is already in the data. We already run these systems," he said. Overall, SAP has about 5,000 retail customers, he noted in a separate interview with the press.

Graf said that SAP itself is analyzing its own processes. It wants to cut its carbon emissions to the levels the company emitted in 2000, when it had employed half as many people. It plans on cutting its carbon footprint by 7.5 percent each year to hit this goal. The company is analyzing employee travel, use of company cars, and even how much paper each office uses.

"Most people underestimate how the little changes add up," Graf said. He noted that at SAP itself, each employee prints out 8.5 pieces of paper per day. Added up over the course of a year, this adds up to 85 million sheets of paper printed out.

Copyright © 2010 IDG Communications, Inc.

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