As SAP detects needs in its global customer base for software and services to track, analyze, report, and improve across the Environmental, Social, and Governance (ESG) spectrum, resources for opportunities grow. Christian Klein, SAP CEO, regularly cites progress and new offerings in financial updates and customer meetings. Enterprises turn to SAP to understand what impacts their business among the many standards and practices, then to seek solutions.
Christian Butzlaff, Chief Sustainability Solution Architect, SAP Customer Innovation Office North America, is central to driving SAP ESG efforts for the ASUG community. For two years, Butzlaff’s focus has been to expand the SAP sustainability portfolio and direct work with clients on their sustainability roadmap and architecture.
In the following interview with Butzlaff, ASUG continues its sustainability content exploration. Here he briefly describes the SAP sustainability business and technology strategy, position, and demand factors He also conveys the SAP Sustainability Control Tower’s importance and offers advice on how and why to accelerate sustainability across the enterprise.
Q: How would you articulate the overall SAP Sustainability business and technology strategies?
A: SAP is unique in the sense that much of the needed sustainability data lives in SAP systems (even as our solutions also support non-SAP data sources). Many supply chain partners in a business—whether first-tier or second-tier suppliers or customers in the supply chain— run SAP. SAP can make a real difference by reducing the carbon footprint of entire supply chains. Our Business Technology Platform (BTP) with SAP/4 HANA is the core of our technology and cloud strategy.
Q: How has SAP seen the demand for “sustainability solutions” evolve in recent years amid its NA/Americas’ customer base? Where are they on their journeys? What have been the challenges?
A: From my personal view, I can see the demand is growing exponentially. We can see in real-time how our climate is changing. Topics like diversity and inclusion are becoming the center points of company policies. Some of the demand is driven by government regulations. Take the example of the plastic tax in Great Britain. This drives the demand for a solution to support the calculation of these fees and adjust the product design to reduce plastic in the first place. Of course, there are challenges. Do we have all the data needed at the right level of granularity? Are our partners in the supply chain ready to provide the right data, etc.
Q: What is the SAP Sustainability Control Tower and its position in the SAP strategy?
A: The Sustainability Control Tower (SCT) helps companies get an actual view on the different Environmental, Social, and Governance (ESG) key performance indicators (KPIs) they care about. It lets SAP customers compare actuals against company targets and steer the company toward their sustainability goals. In addition, it supports the creation of external stakeholder disclosures, whether they are mandatory or voluntary. These voluntary disclosures come in the form of sustainability standards and frameworks, such as World Economic Forum (WEC) Framework, the Task Force on Climate-Related Financial Disclosures (TFCD), and the Global Reporting Initiative (GRI) standard, and more. The mandatory ones include the European Union (EU) Taxonomy and the proposed U.S. Security and Exchange Commission (SEC) rules for adding emissions data to 10K reports. SCT automates data collection from various SAP and non-SAP systems, with data assurance and a full audit trail for executive attestation.
Q: When and how did the idea, and vision, behind SAP Sustainability Control Tower surface?
A: Initially, SAP held customer councils to gather market requirements. At the same time, SAP relied on its own experience to influence the development of SCT, as SAP sets an example and a leader in sustainability, especially with our integrated reporting approach. Both sources of inputs led us to realize that customers lack ESG visibility to their sustainability progress and often struggle to create the external reports they need.
Q: How, when, and where was it developed and tested?
A: Largely developed at our headquarters in Waldorf, the first version of the SCT was released to customers in December 2021. We tested the concepts before the release with a customer council.
Q: Is Sustainability Control Tower used within SAP’s own business, and if so, what has it provided, and delivered in terms of results?
A: SAP is using its own software. We were using SAP Analytics Cloud for our sustainability tracking before we released SCT in 2021. We are in the process of migrating to SCT.
Q: From a customer standpoint, what business need does SCT answer and what results can it deliver?
A: Traditionally, ESG needs were mainly around the creation of yearly, voluntary disclosures based on various standards. This is a clear business need that SCT helps address. However, with the growing trend that ESG reporting become increasingly mandatory, the reach within organizations increases. SCT goes beyond that and addresses the growing need to provide an actual view on ESG metrics for all company stakeholders, allowing them to feel confident in the reports and visualize where they need to take action.
Ultimately, the impact of this tracking and reporting affects every employee in a company. Companies then ensure they have additional sustainability solutions to certify that when an employee books business travel they can now choose flights, not only by price, but also by carbon impact. Or procurement solutions that allow vendors to be selected not only based on price, quality, and availability, but also on the environmental impact associated with their purchase.
Q: From a customer technology standpoint, how does SCT fit within a user’s SAP, and non-SAP portfolio?
A: The SCT solution is built on the BTP. It is a cloud solution and integrates into other SAP solutions, such as S/4 HANA, SAP Success Factors, SAP Ariba, etc. Realizing that not all our customers’ sustainability data lives in SAP, SCT also allows for easy integration to other enterprise solutions and data lakes.
Q: In addition to Sustainability Control Tower, what sustainability solutions has SAP unveiled in the last year to advance the understanding, and track sustainability KPIs among its NA customers?
A: It is worth mentioning that we see sustainability embedded in every business process in a company, from procurement to supply chain planning, business travel, manufacturing, and even finance.
It also has a tight relation to Environmental Health and Safety Management (EH&S), where SAP has had a solution suite available and a strong customer base for many years.
With that said, we recently released three new solutions, specifically to support sustainability goals. One is SCT, and the other two are Product Footprint Management (PFM) and Responsible Design and Production (RDP). PFM helps customers to calculate and manage the carbon footprint of products. Think of a bag of cereal, which has a nutrition label. Now imagine a second label indicating the carbon footprint associated with this bag of cereal, coming from the fertilizer used by the farmers, transportation, production activities, packaging, and so on.
RDP supports your Extended Producer Responsibility (EPR) reporting requirements. In some countries, like Great Britain, there are fees associated with the packaging waste of a product. RDP calculates EPR schemes and plastic tax. However, this product helps make sustainable design decisions when designing and producing the product in the first place.
Q: Who buys and drives Sustainability Control Tower in organizations?
A: Traditionally, software budgets live within IT organizations. The solution selection process is mostly performed by an alignment between business (in this case the Sustainability team) and IT.
Q: Sustainability Control Tower has been called an early solution, in public settings. What does that mean? How will it evolve?
A: SCT was released in December 2021 and is a new product. Every new product will grow over time with added new features. New requirements are also emerging. In particular, the sustainability area is a fast-evolving field with new regulations, which products will need to adjust to (i.e., UK plastic tax, SEC announcement on sustainability reporting). As a cloud product, SCT has the capability to react quickly to the changing nature of sustainability.
Q: What are your best pieces of advice for ASUG members considering Sustainability Control Tower?
A: A lot of sustainability is about data. Where do I get the data from, at what level of granularity, at what frequency, and do I require data from business partners? Our advice is to define an achievable scope and implement that first. Start there, keeping the bigger picture in mind. It’s kind of a crawl, walk, run strategy. From this initial scope, advance into other areas of sustainability, other areas of your business, and other geographic areas.
Q: One ASUG mission: help organizations and individuals achieve the best value from their technology investments? How would they do that with Sustainability Control Tower?
A: By using BTP, upon which SCT is built, customers no longer need to customize their core technology investments. Instead, they can natively integrate these systems with BTP based applications like SCT. Thus, it helps organizations achieve the best value from their technology investments.