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SAP releases its Integrated Report 2012 – an integrated financial and sustainability report

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SAP released their first Sustainability report in 2008 (their 2007/2008 report). Like the reports of most other companies at the time, it was released as a PDF document but SAP quickly shifted gears. SAP’s 2008 Sustainability report, was released as a website. This had the dual purpose of making the site more accessible, and also allowing SAP to see which areas of the site had more traction. The following year they made their report more social and every year since they have added something new.

As well as releasing its Sustainability reports each year, SAP also published its annual financial reports. This year, for the first time, SAP have integrated the two reports and they have just published their SAP Integrated Report 2012. It takes the form of a highly interactive website with built-in analytics and downloadable PDF’s.

This was an idea GreenMonk first mooted when I asked SAP’s Chief Sustainability Officer Peter Graf in a 2011 interview whether SAP had any plans to integrate the two documents.

On a conference call at the launch of the integrated report, SAP Chief Accounting Officer Christoph Hütten went to great pains to stress that this wasn’t merely the content of both reports in one, but that the content was very tightly bound together. The report demonstrates how connections and inter-dependencies between financial and non-financial performance impact each other, he said.

The document/website contains all the financial and sustainability-related information you would expect to find in reports of this type. And the report also has a nice page showcasing and explaining the connections between the financial and non-financial performance.

Other nice features of the report are an integrated tweetstream showcasing mentions of the #sapintegrated hashtag on some pages, an option to make notes on pages (with the ability to download those pages as PDF’s subsequently), and the download centre for downloading the annotated pages, as well as financial statements, graphics and other reports.

For the first time also, SAP are releasing their 2012 sustainability information in XBRL format (.zip file) – something GreenMonk also suggested to SAP back in 2011. If you are unfamiliar with XBRL, it is an XML-based global standard for exchanging business information.

Impressive as well was the fact that at the end of the conference call launching the report, Peter Graf mentioned that SAP are actively looking to co-innovate. He asked that anyone, be they in the financial or sustainability reporting space, who is interested in integrated reporting get in touch with him to work together to bring integrated reporting to everyone “at the lowest possible cost and highest possible precision”.

The video above is a demo of the report and I have placed a transcript of the video here.

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GreenMonk TV Moderated Sustainability ScreenCast on Operational Risk Management with SAP’s Jeremiah Stone

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As a new product for clients, GreenMonk are now offering moderated screencast videos – the inaugural one is with SAP’s VP of Sustainability Solutions, Jeremiah Stone. In this screencast Jeremiah and I discuss Operational Risk Management, what that has to do with sustainability, how SAP are moving from systems of record to systems of engagement, and seven minutes into the video, Jeremiah gets out his iPhone and iPad and gives a really cool demo of how their software can be used in the field.

Here’s the transcription of the screencast:

Tom Raftery: Hi everyone, welcome to GreenMonk TV. We are doing a moderated screen cast with Jeremiah Stone from SAP.

Jeremiah is VP, Sustainability Solutions. So today we are going to talking about operational risk management. Jeremiah could you first of all give me a quick intro on why you think operational risk management has anything to do with sustainability?

Jeremiah Stone: Hi Tom good morning. Thank you for having me on GreenMonk. I am a big follower and I like what you guys do. So it’s really a lot of fun for me to come on with you.

When SAP has worked with our customers, and we have a customer base in manufacturing of close to 30,000 customers, the common thing that comes back to us is that companies are engaged and interested in running more sustainably and that means using less energy, it means producing less emissions. It means recruiting people for the long term and making sure that they can adapt to changing labor conditions and changing demographics.

But there are sorta some prerequisites before people or companies can be successful with that and one of those is to cut operational losses and also to be able to adapt and change within their operations because often these factories, these plants, these operations are sort of steady state designed entities where they are very static and they are not really amenable to change.

Tom Raftery: What kind of operational losses you are referring to Jeremiah?

Jeremiah Stone: Well Tom it’s easy to think about the types of catastrophic accidents that happen throughout the world I think the Gulf oil spill is something that people think off, Bhopal thirty plus years on is still high in people’s minds. So those sorts of process safety incidents, we regrettably had a fire here in the California Bay Area not two weeks ago up at the Richmond Refinery.

These things happens, sort of, every day and what we are seeing is that as manufacturing operations and manufacturing I think of oil and gas, I think of utilities, I think of mining, but even transportation logistics air planes that sort of thing. We’ve built these systems that are very complex and sophisticated but they are not very change friendly.

So, to change them, they need to change, they need a radical change for sustainability purposes they need to have systems in place whereby you can change and continuously improve the static designed system whether it’s an energy refinery or a transportation network without having accidents, without hurting people, without creating environmental spills, et cetera. And we find that our customers are fundamentally lacking that ability.

Tom Raftery: Okay, tell me something so about or — tell me about this operational risk management solution that SAP have.

Jeremiah Stone: Okay, well maybe first we can start with what we just talked about and saying that what our customers are asking us for.

Our customers are asking us to help them innovate their operations and become more sustainable and really what that has boiled down to when you dig into it with customers is that they typically have environment health and safety management programs.

However, they really run at an individual operational entity level and so it is difficult to compare different factories, it’s difficult to compare different operations, and it’s very difficult to get proactive and move beyond very reactive, “oh no an incident happened how do we deal with that?” setting. But rather identifying risk before it turns into an incident and dealing with it.

You cannot remove risk from these operations but you can manage them. And that’s really what our customers are asking us for. And when we — we’ve gone out and we’ve worked with I think close to 50 co-innovation customers now and working with means going with our teams into their operations interviewing people throughout the company and determining what the problems are and where software can help.

What we found consistently is that it’s an information flow problem. It’s an information flow from the corporate level where the purse strings are, the ability to spend money down to the individual level and some of the problems we find is that there is a really strong and meaningful commitment to safety at the corporate level in the boardroom, however it’s very difficult to understand where to spend the money, because you have this very large sophisticated operations and it’s difficult to know where to make the investment and getting beyond a better laminated sign on the chain link fence outside the operation is tough.

And then when you get to the operational level oh gosh, every — these days margins are razor thin, the current economic situation most of your line level management or leaders are really focused on hitting outcomes, hitting on, hitting their targets. And they may be in a position to make bad decisions, here we say can we put in a bigger pump to increase production, well if you put in a bigger pump how do you know that in your, in your facility that’s not going to burst a seal somewhere?

That’s really standard process safety management, but doing that in a consistent repeatable way successfully is rather difficult and then at the individual worker level understanding the operational environment in knowing how to behave, take the right processes, be safe is a challenge, but we are completely missing the inbound engagement conduit if you will, when they see something wrong how can one, an individual worker if they see something wrong report that.

All to often, when there is a problem and we do an investigation after an incident, well gosh the workers who are in that environment knew that there was something wrong, they didn’t have a means to communicate.

Tom Raftery: Okay, so how do you fix that?

Jeremiah Stone: Well there is a lot of discussion these days in the enterprise software community moving from systems of record to systems of engagement and this is something we focused quite a bit on and I like to show you a couple of applications right now where we are taking what would be a typical approach to a system of record to identifying a risk, which would be sort of one of SAP’s typical enterprise applications at a specialist enterprise health and — environment health and safety management professional level and moving that both directions.

And so if we look at this you could imagine that you are going to have your EHS professionals that are site level managers but they are the only ones that really have that information today and they don’t have a means by which they can push that information up to corporate nor do they have a means where they can gather at large scale that information from the workers.

And what I’d like to do is that I’d like to show you how we are addressing that today in terms of a mobile application. So I am going to share with you now my iPhone. Hopefully this, comes through, can you see my iPhone?

Tom Raftery: Yep.

Jeremiah Stone: Okay, so what I’d like to do is I’d like to show you our safety issue application. Our safety issue application, let me back out of here, this is the entire application and so we are trying to really take a note out of consumer design and have one screen application without lots of tabs and drill through menus. And we have designed this application around the, “if you see something, say something” design principle and actually John Astill one of the mentors has worked on this app, that’s part of his sustainability activities.

And I’ve got a example here, I raided my son’s toy chest this morning, and just to give you an example here. You can imagine here is our little repairman out in the setting. And he notices there is something wrong with this hauler. Rather than walking all the way back to the shop, he can simply take a picture of what’s wrong with the hauler. He can say okay, I am going to use that photo, he can press the record button here and record description of what’s wrong, I am not going hit that record button because then you loose the screencast. Maybe enter quick description here, “Axle wearing too quickly on hauler,” accept that description and then simply submit the safety issue.

And so you can see there that in a few seconds we have gone from seeing something wrong, recording a description with audio and then and then sending that off to the safety experts and this is uploading like it would to YouTube or anything else. And what you haven’t seen me do is enter my name, or enter where I was, or any of those such things because we are using location based services, we are using the enterprise backbone to say who saw the thing that was wrong, where are they, et cetera.

And because we also have the entire asset infrastructure in the background, we can similarly then say, oh well actually we know which truck that was, because we have near field communications et cetera. So that’s how you get more information into the system.

Tom Raftery: But nobody ever reads these reports, do they?

Jeremiah Stone: That’s an interesting point. Now imagine you are in this world where you drop the hey I saw something wrong into the box on the wall or you submit that paper issue, how do you know what happened if you were the person that reported that. I am glad you asked that because as you can see here we have the ability to capture the safety issue, but we also have this button here that says my issues.

So if I click into that my issues what’s it’s going to do is it’s going to look for every issue that I have submitted. And I can drill in, and I can see the real time status on that issue and if it’s being worked on or not. So now I am creating mutual accountability with the safety organization, you say nobody every reads that, well guess what, you would actually know if anybody had ever, ever read it, because we are tied into the core SAP system in the background.

And now there has been a workflow sent to the responsible safety mentor and we are are using that enterprise backbone now to facilitate communication.

So, now, rather than dropping that paper form off or submitting a form, it just goes into somebody’s inbox, now we are using much, much the same in any kind of social media. We are using mobility and social media now to push that information to the responsible safety person and along with a GPS of where we are, okay it’s not picking up, but well I think I must be in my Faraday shielded office here. But, this would then be picking up my my GPS, it would also be passing out through to the application. So now the safety manager and the employee have a relationship driven by the application.

Tom Raftery: But now the safety manager has gone from receiving one notification every three months to receiving 300 everyday.

Jeremiah Stone: That’s correct.

Tom Raftery: How does he work with that or she?

Jeremiah Stone: Well I’m not going to drill into that right now, but that’s the thing we’ve always been really good at, at SAP is how to deal with the large volumes of data. And so we have the ability to sort, slice and dice this information coming in, we have heavy duty analytics to show trending, to hot spot on the basis of the information put in. We also have as you see here this little flag, immediate action required, yes or no to help to raise it or lower the priority.

And our safety manager tells us hey that’s okay, my problem in the past was really a lack of data, not too much data and I want more data. There is a well known, in the industr,y sort of a ratio between near misses to incidents, its about 300 to 1, about 300 observations or near misses to an individual incident. And if you actually go into the day to day — any of these companies and they say, oh you know, we had 100 reportable incidents but we had 6,000 reported near misses.

Well they are usually quarter, a couple of orders of magnitude off between an observation or near miss and an actual incident. And so these professionals actually want more data not less.

Tom Raftery: Cool.

Jeremiah Stone: And we give them the tools to deal with that data, but now I’m going to show you how we expose that data to people who aren’t used to dealing with that data and that’s that upper level of management that I talked about before.

So that upper level of management, who is not giving any data at all, if we were to throw 300 observations at them per day, they wouldn’t have any idea what to do with it. But if we take those people who are good at dealing with the area and we expose the output of their analysis to upper management in a mobile device as you see here in a way that they can consume it, we can get better investments.

So what you’re seeing now is incident root causes and so somebody would have entered a safety observation with the iPhone app on the left and then there is a safety professional in between who has processed that, done an investigation, identified root causes.

Now we have the ability, let’s say your upper management are rather visual learners, I can drill in here to a word cloud and rather than looking at this with boxes and rows et cetera, we can expose the root causes to management or other users, let’s say you’ve got people coming into the organization now that are not used to looking at spreadsheets their whole life but they are used looking at Tag clouds or something that you get online and we can give them their information in a way they can consume it.

And so here we can see okay we’ve got a training problem, but let’s just say for the sake of argument that we’ve got a non-millennial here looking for the root causes and they want to look at a pie graph and then they want to say okay well I understand the root cause, but I understand what injuries have been happening.

So I’m going to add another dimension here, so now I’ve taken my route causes along the bottom here; defective equipment, lack of training, we still see that spike on lack of training that we saw before but now we’ve added that body part that’s been injured and now I’m just going to sort by occurrences.

So now we can see we’ve got a — main root cause is lack of training and we have arm injuries. And so the probability here is that we’ve got new equipment, we can dig a little bit further, we probably have new equipment in the setting and people are getting hurt by that.

We talk about environmental spills, we talk about explosions but big problem with sustainability is it’s also how you’re treating your labor force and the long-term consequences of what we maybe perceiving as smaller incidents, but let me tell you if you lose a finger, you lose an arm that’s a catastrophic incident to you as a worker.

So, we want to be able to help with that as well, and also from an employer point of view, your long-term liabilities with regard to workers compensation, et cetera, and what’s great about this app is we know that managers work in primary in email, well I can now send this to let’s say my safety manager, update training and go ahead and send that off and I can go ahead and you know I’m really amazed I should have you in there.

Well and anyway I can send that off to you Raftery at Greenmonk or whatever and then what this would give you is all of the data but also that graphic and say okay let’s look at this data I’m looking at, let’s work on this together.

So we’re really trying to move from what would have been a system of record approach to safety and risk, to a system of engagement approach by pushing out the ability to identify risks, here we can see we can take a picture there, the ability to identify risks in the operational setting and also the ability to understand what those risks are and take action at the management level.

Tom Raftery: And what kinds of industries would typically be interested in solutions like this?

Jeremiah Stone: So that the types of industries we tend to work with in solutions like this tend to be what we refer to as asset intensity industries, so these are industries that have lots of trucks, planes and also large equipment and they are high risk. So you typically think of oil and gas, both upstream on the exploration and production side and downstream on the refining side.

Also think of any type of large construction, so we’re staying in the energy field here, you could do a thing of utilities, what some people refer to as large construction companies with generation capacity. And anybody who is going to be putting up say a windmill farm or solar, et cetera, it’s going to be a same challenge here in terms of people in it and with lots of stuffs moving in, lots of heavy machinery, mining, mill, production.

I mentioned utilities, that also would include utilities like phone, et cetera and then transportation logistics, think of your airlines, US, FedEx, US Post that sort of thing. There is definitely a large demand in those types of industries for this, because they are large far flung organizations where training is a big deal, they are very fast moving and risk is also a big deal and so you see the potential to have major issues there.

Tom Raftery: And what about the current economic climate, is that impacting on sales?

Jeremiah Stone: I’d say it’s driving sales even more quickly. We’re seeing in this portfolio about a 35% compound annual growth rate over the last three years since the crisis onward, and that’s because companies are becoming even more loss averse in the current environment.

So it works both ways, when you’re trying to grow and you are investing you don’t want to have incidents because you want to be fast and agile to market, but also when you’re concerned about potential production stoppages or issues with regards to your liability, say an environmental spill or people spill or people incident, you want to control that as well, and so it’s really a cycle proof investment area in that sense, because it’s both something you need when you’re growing quickly and investing and something when you are at more of a steady state and you’re looking to control loss.

Tom Raftery: We are coming on time to wrap up now, just one last thing, where do you see things going from here?

Jeremiah Stone: Well what we’ve done today is we’ve taken our portfolio as we have it and as I mentioned we have these base capabilities in your incident management risk assessments, workers safety management, management changed and we’ve moved these into more systems of engagement at both the individual worker level and the corporate level.

Where I believe we are is we barely built the foundation for what we can do here, and the next step will be utilizing our abilities to deal with big real time data and so not just having the intelligent sensor of the human pushing data in, but imagine the internet of things pushing information into a system like this and then imagine taking predictive analytics and start to not only identify a risk when we see it from a professional point of view but now put algorithms at that.

Let’s point R at that from a particular algorithm point of view and start to identify latent and hidden risk in our operations. We can have predictive safety as well and then just have to utilize our assets as well in the cloud, so for example the recent success factors, acquisition, you’ll notice something that you don’t see on the screen here is training, qualifications, ongoing learning, informal learning via collaboration.

The true moving the system engagement, we should be utilizing Jam here from SAP to help grow communities of practice and communities of expertise around safety across companies and across even value chains and we’re starting to see that as well, so I think we’ve really barely taken the first step with what we can do here.

Tom Raftery: Well, fascinating. Jeremiah that’s been great. Thanks a million for talking to us today.

Jeremiah Stone: Thank you so much Tom. Bye, bye.

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Logica’s Sustainability Analyst briefing

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Logica's Annual Report cover

Logica held a Sustainability Analysts day in London recently and they invited me to attend.

Pictured above is the cover of Logica’s 2011 Annual Report [PDF] – their Annual Report mind, not their Sustainability Report [PDF]. And yet the title of Logica’s Annual Report is Shaping a Sustainable Future. This is a good indicator of Logica’s proactive stance on Sustainability.

The half-day briefing was a mix of Logica staff talking about the company’s Sustainability products and services, as well as a couple of customers (Carbon Disclosure Project and National Centre for Earth Observation) discussing the value they get from their relationship with Logica. While it was nice having a couple of customers presenting at the event, the fact that neither of these customers are commercial enterprises, per se, could lead one to wonder whether Sustainability is lower on the agenda of traditional enterprise.

Having said that, Logica’s Tony Rooke had a slide with a long list of commercial customers for Logica’s sustainability services. Interestingly these were typically infrastructure companies like utilities, Airwave and Network Rail.

The Logica led sessions were around what Logica is calling Smart Utilities, Sustainable Mobility and also Logica’s Engagement Carbon Calculator.

In the Smart Utilities space, Logica’s Rich Hampshire talked about Logica’s three-pronged strategy (security of supply, affordability, and decarbonising energy). Logica have a Smart as a Service offering here for utilities, and Logica have traditionally been very strong in this sector.

In the burgeoning Sustainable Mobility field, Logica’s Theo Quick talked about a 10,000 point electric car charging network that Logica are rolling out in the Netherlands with eLaad.nl. This was rolled out using the Open Charge Point protocol to allow interoperability between charge points. Logica’s EMO is a vehicle emission monitoring product which, according to Logica, saved a postal company 10% of its fuel in the first three months of use. Theo also mentioned a research project called EPTIMS being rolled out in Manchester – this is a Smartphone app to encourage use of public transport by telling people when they have reached their stop, and one called eCoMove which is an FP7 funded project to reduce the number of trucks traveling around empty (transporting air).

And, Logica’s Stuart Williams mentioned their Engagement Carbon Calculator. This is a Logica offering which is in late beta mode right now. What it does is for any project that Logica carries out, it takes the client’s emissions in a business as usual case, subtracts the actual emissions, as well as the emissions of Logica’s project involvement, to give a savings result for the project.

It was heartening at this event to see Logica’s commitment sustainability, in a time when for most companies sustainability is a fancy word for cutting energy bills.

In the days following this event, Logica announced it had agreed to be purchased by Canadian company CGI. Hopefully with the change of ownership, there won’t come any diminution in Logica’s sustainability focus.

Disclosure – Logica paid for my travel and accommodation to attend this event.

Photo Credit Tom Raftery

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GreenMonk Sustainability Customer Reference series – AkzoNobel

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I have recently started a cool project – it involves my going to SAP customers and interviewing them about the sustainability solutions they have implemented. The first SAP customer I visited was AkzoNobel in Sweden.

There I chatted with Lisbeth Svensson about their rollout of the SAP product safety solution.

Here’s a transcription of our conversation:

Tom Raftery: Hi everyone, welcome to the GreenMonk Sustainability Customer Reference Series, sponsored by SAP. With me I have Lisbeth Svensson from AkzoNobel. Lisbeth can you tell me a little bit about your role in AkzoNobel and also a little bit about AkzoNobel itself?

Lisbeth Svensson: Yes, I am a Development Manager in the area of regulatory affairs and in my role I have been managing implementation projects and development projects in the area of product safety.

Safety is, of course, very important for us to give the correct handling information, risk reduction measures and such.

Tom Raftery: Okay and AkzoNobel?

Lisbeth Svensson: And AkzoNobel is the largest global paints and coatings manufacturer and also a major player in the area of specialty chemicals.

Tom Raftery: With your job function being around regulation and your company being involved in producing chemicals, I imagine there are a lot of issues that you have to deal with.

Lisbeth Svensson: Yes, chemicals need to be regulated in different regulations all over the world and we have to comply with that and its differences from one country to the other. And to do that of course we need to have some — some IT solutions for — to support the product safety area. So I have been involved in implementing solutions for — to support REACH and GHS, which is Globally Harmonized System, and classification and labeling requirements.

Tom Raftery: And you recently rolled out the SAP product, safety solutions, how does that help you meet these challenges?

Lisbeth Svensson: It’s helping us in a way that we can manage input data from one location and still manage to get the compliant safety data sheets and labels in different countries all over the world.

And that helps us also if we want to put a new product on the market, that we already have a system in place to manage the safety data sheets and labels for that country.

Tom Raftery: Okay and finally Lisbeth what are your plans for the SAP product safety solution going forward?

Lisbeth Svensson: In the next few years, we will finalize all the implementation in the business units in specialty chemicals and when we have done that, all our safety data sheets and label will have the same look and feel across all the countries, all the business units and that will give us a perception of one AkzoNobel.

Tom Raftery: Lisbeth that’s been great, thanks a million for talking to us today.

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CarbonSystems EPS chosen by Microsoft for its global environmental reporting

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Microsoft

In my reviews of tech companies sustainability reporting, one very obvious laggard has always been Microsoft. Hopefully that’s all about to change.

Why? Microsoft has just signed up with CarbonSystems to use CarbonSystems cloud-delivered Enterprise Sustainability Platform (ESP) to manage its energy efficiency initiatives and for reporting its environmental performance globally.

This is big news. Microsoft has 600 facilities across 110 countries worldwide. For the first time, the full energy and environmental footprints of all these sites will now be managed from within a single cloud-delivered resource, the CarbonSystems ESP system. The levels of transparency this will give Microsoft will be immense. Perhaps now, unlike many of its competitors, Microsoft will be able to join the EU’s ICT Footprint initiative.

This move should also enable Microsoft to report on the energy and emissions associated with its own cloud infrastructure – something, like all other cloud providers, Microsoft has failed to do to-date.

This move is a big deal for CarbonSystems too. CarbonSystems are an Australian company and have done quite well there but have more recently been eying the EU and US markets. Being selected by Microsoft for a global rollout has suddenly catapulted them up the credibility charts. Had you asked me previously which 3rd party platform Microsoft might have chosen I’d probably have mentioned SAP, Hara, CA, or Enablon.

Now with this win, CarbonSystems too has a seat at the big boys’ table.

Photo Credit ToddABishop

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The whole interest in sustainability is wearing off isn’t it? SAP’s Scott Bolick answers

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At the SAP TechEd event in Madrid recently, JD-OD.com had an interview scheduled with SAP’s Scott Bolick. Scott is responsible for SAP’s Sustainability Solutions. Dennis Howlett, of JD-OD, knowing my interest in sustainability, asked if I’d like to conduct the conversation with Scott.

I was happy to oblige and so here’s a transcript of our chat:

Tom Raftery: Hi everyone. This is Tom Raftery of GreenMonk TV, doing interview for JD-OD. And with me I have Scott Bolick from SAP. Scott, would you like to introduce yourself?

Scott Bolick: Thanks Tom. My name is Scott Bolick as you said, and I’m responsible for SAP Sustainability Solutions and those solutions are across at four different areas and hopefully we can chat a little bit about those now.

Tom Raftery: Sure. So Scott, sustainability it’s a – the whole interest in sustainability is wearing off isn’t it, nobody is really into sustainability these days. Am I right?

Scott Bolick: Well I think you are wrong, I think there is a caveat. I think one of the things that we’ve seen in the market which I think is actually a good sign is that sustainability was a topic de joure in 2008, 2009. It’s still there, you still see more and more CSOs coming online but what you are seeing is instead of a centralization of power within those chief sustainability officers, what you are actually seeing is the sustainability officers setting the strategy for the company.

And then whenever you look at the actual execution, when we look at where people are actually purchasing IT that really is coming down into the LOB, so it’s R&D for sustainable products. It is the supply chain when you look at sustainable supply chain. It’s manufacturing whenever you look at sustainable operations. So I think to say that it’s not there, it is wrong, I think it’s there, it’s stronger than ever. I think what people are discovering is it’s sedimenting back into the underlying businesses and that’s where it should be fundamentally.

Tom Raftery: Okay, but I mean with the current state of the economy, are people really willing to get their –stick their hand in their pocket and spend money on sustainability solutions?

Scott Bolick: Yeah, absolutely. And I think when you take a look at why people buy for sustainability, I think there is three reasons people buy. First and foremost is compliance, and there are increasing regulations around the globe whether it be for product or whether it be not just for — whether it be safety and showing that you are increasing the safety within your operations. And so one of course whenever you take a look at that and you look at the complexity of business, it’s spread out on global operations, they need solutions that are IT solutions to be able to adhere to those regulations in a timely and in a low cost manner.

Second you continue to see people interested in those solutions that help them save money, energy management obviously being top of mind.

And third, there are those companies that are spending on aspirational, really trying to understand what is the product footprint of the products that they sell into the market and how they can lower that footprint whether it’d be carbon or whether it’d be other substances.

Tom Raftery: And where are you seeing most of the traction these days? What is the most – what is the area of the largest – well either spend or interest for SAP at the moment?

Scott Bolick: I think if you take a look at some areas that are really hitting for SAP, one of the areas is operational risk management. And if you would go back and you just look at the last couple of years, what you see are these big events that these events happen and then there is a tremendous impact on the brand reputation, there is a tremendous impact on the financial valuation of those companies. And so what you are seeing is companies on a trend, the first trend on operational risk was really about compliance, am I compliant to regulations, now you are seeing people increasingly looking at proactive prevention, how do I actually go out and report incidents before they happen, how do they then analyze those incidents, put them in a risk framework and then how do I actually execute management of change. So we are definitely seeing a tremendous amount of interest from across multiple industries.

And finally what we are beginning to see is some really interesting stuff where people are looking at the tremendous amount of data they have and trying to figure out how they can correlate that data and actually get into predictive analytics around risk. So that’s one of the areas we’re definitely seeing.

Tom Raftery: Okay and when you talk about data I mean a lot of – the various solutions have massive amounts of data associated with them, how is SAP going to handle that, the big data issue?

Scott Bolick: I think one of the things that we are fortunate is that unlike some players in the market, we within SAP have strong technology both for analytics and then when you look at big data obviously we have HANA. So some of the things that we are doing is working with customers and determining how we can leverage HANA to push them over limits that they might otherwise have. Limits in terms of their own operations and limits in terms of processes.

One of the ones I love is we have an embedded product compliance customer who is now looking at putting embedded product compliance on top of HANA. So this company has 100,000 different recipes, they produce 3000 to 4000 documents a day and obviously that’s on the backend, but on the front end they have got to really make sure during the design process that they understand whether or not the substances, whether or not the ingredients are going to be compliant to regulations. One of the things they are doing is by putting it on HANA is they can get the check back in a second rather than getting a check back in terms of minutes or hours. And obviously if you are in R&D, the last thing you want to do is your designing — is to sit in front of the computer and wait to determine whether or not it’s compliant with regulations and obviously those regulations are regulations that are country specific.

Tom Raftery: Sure. So sustainability is here to stay.

Scott Bolick: Absolutely.

Tom Raftery: Great. Scott, thanks a million.

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Sustainability software update from SAP’s Jeremiah Stone

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SAP invited me to attend their combined Sapphire/TechEd event in Madrid last week. While there I took the opportunity to have a chat with Jeremiah Stone to get an update on the state of play in sustainability solutions.

Here’s a transcript of our conversation:

Tom Raftery: Hi everyone welcome to GreenMonk TV. We are in Madrid for SAP?s SAPPHIRE event and with me I have Jeremiah Stone. Jeremiah, you are on the SAP sustainability team. What is your role there?

Jeremiah Stone: So, I?m a senior director for solutions management and what that means in SAP is that I?m responsible for the business cases for producing our products, so developing new products. And then I work with our key customers as well in making sure that our products continue to meet their needs and that we do quite a bit co-innovation with customers and that?s my team that tends to drive that as well with our strategic customers and so really managing the business case and then we build and execution, and rollout of products.

Tom Raftery: So there is a business case for sustainability?

Jeremiah Stone: Well, at SAP there sure is. It?s a interesting aspect I think of our sustainability case that people typically are surprised by is that every single one of our investments is actually a bottom up business case just like any other piece of software at SAP where you have to build the customer business case first. So really what is the customers tangible pain, how much are they spending to deal with that pain today, what are their alternatives, how much can we generate in terms of value for the customer with some development, and then is there a reasonable value capture for us, in other words can we charge the customer a reasonable amount of money to justify us investing in the software. And so we do that for every investment that we make and so that also helps the conversation of course from a business point of view because then we?ve done all that work upfront, we can go to the customer, we can explain the customer business case that we?ve developed and we can validate that and from them to make sure that there is a return on that investment and then they can treat it like any other IT investment. And the other thing, you know with sustainability at SAP is its embedded into our business and so when I?m competing for development resources I?m competing right next to the guys who are developing for HANA, the people that are developing for HR, people for financials, CRM et cetera. So we would, be really treated just as any line of business at SAP, we don?t get preferential treatment et cetera and then really is based upon business case for each investment that we make.

Tom Raftery: Cool. And what is the hot button topic for people right now in sustainability?

Jeremiah Stone: It?s a good question, I think right now we see you know phasing of a development of the market, it continues to be really around management of risk and compliance primarily in the safety of operations. So and that goes really there’s asset intensive and asset non-intensive industries, so I?ve customers in transportations and logistics, major airlines, looking at how they can be safe and that is a bottom line number for them. Obviously if they are damaging aircraft or whatever they are not going to be performing well and so that there is really a safety org from a compliance point of view, that is access to markets. So as public and governmental toleration of eco-toxicity of hazardous materials et cetera is declining, there is this more and more transparency around products and their constituent chemicals et cetera and substances.

The regulatory bounds and burden is going up and on companies to declare the substances in their products so that they can sell them in those markets. That?s primary driver skill, we definitely see energy management is the fastest growing area and that?s really energy and environmental resource management, so not just energy but you can think really sort of all of the inputs into the business whether that?s energy for other resources in other words very much you could think of it as a traditional SAP strength, you think around energy. Although, it is a different challenge as you know because there is the utility as well, involved in that and that?s somewhat complex, there is definitely demand for that, is one of the fastest grown, it?s not biggest business yet, but it is the fastest growing. And then we continue to see a smaller market, but still increasing around analytics, reporting strategy management, setting targets, managing to those and then reporting out to I don?t know the global reporting initiative et cetera on sustainability performance, but for the majority where we are making our money today with our product lines is really around that risk management and compliance activities.

Tom Raftery: Okay and the whole sustainability area is a relatively new business area, is it one that you see is going to be going big time, is it, I mean we?ve seen a jump in last couple of years just because companies started getting into it, but you know is it on a hockey stick or is it kind of plateaued or where about is it?

Jeremiah Stone: Well yeah, I mean it?s very rapidly growing market. We see the overall market size growing compound annual growth rate of around 18% to 20%, so it?s a pretty significant growth in the current spending environment. Lot of that?s because of loss control. So if you think of the current global environment, access to credit isn?t available, stability of financial market we?ve learned, interested in making capital investments if they can?t ensure that that capital investment will be safe.

Tom Raftery: Yeah.

Jeremiah Stone: So in ironic way you know really is that sort of resource constraint or fear of loss that?s driving sustainability as well from any investment. So it isn?t necessarily a, you know there is a joke even people when they spend money on software for you know greed, fear or aspiration, most people assume it?s aspirational in nature when people make sustainability investments, because you want a halo or improve your brand image which — there is some of that, but most of our customers it?s really around the loss management. And to a certain extent the — you know the ambition to grow your brand, grow your business. We do have customers like Solvay for example, I think you may have gotten to talk to them over here.

Tom Raftery: I?m going to see them this afternoon, yeah

Jeremiah Stone: Okay, so I mean they — you know, really say that they are more competitive as a result of the investments that they make in sustainability. So it is a growing, it is an evolution of some older lines of business in this case environment health and safety management that has been there for a very long time. And you know we invested and purchased data that?s strategic to us a couple of years ago but we are on a pretty furious trip to double the pre-acquisition revenue relatively soon. So it is a fast growing market, we are having a lot of success with it and you know we believe that it will continue to be a strategic fast growing market, so.

Tom Raftery: Fantastic. Thanks a million Jeremiah. That was great.

Jeremiah Stone: Thanks for having me Tom.

Disclaimer – SAP paid for most of my travel, food and accommodation expenses to attend this event.

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App idea: Using gaming and social media to reduce your energy footprint

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Energy footprint

SAP runs an event called InnoJam at its developer TechEd conferences. The SAP InnoJam events are held during the weekend prior to TechEd. During these events, people from the SAP community compete against each other in teams building working prototypes of solutions to real business cases, using SAP technologies.

SAP solicit ideas for business cases to be developed at these InnoJams – I added one this morning on building a residential energy management application. The application would use a combination of gaming techniques (leader boards, achievement badges, etc) and sharing to social networks to keep customers engaged and incented to try their best to reduce their energy use.

Here’s my submission:

Energy management applications being rolled out by utility companies have a very short Mean Time to Junk Drawer (MTJD) – they are ‘all shiny’ for the first couple of weeks but the shine quickly wears off and they are soon put away in the proverbial Junk Drawer never to be opened again.

How do you make energy management applications more engaging, bringing utility company customers back again and again to try to improve on their previous energy reduction steps? You do it by turning it into a game and allowing customers to share their progress on their social network of choice!

SAP have a new application for utility customers called Smart Meter Analytics which runs on HANA. The flood of data which will be coming from Smart Meters means HANA is necessary to do meaningful analytics on Smart Meter data (Centrica talk of going from their current 70m smart meter reads per annum to 30bn when all of their smart meters are rolled out – that’s a lot of data).

Smart meters give far more granular reads on energy consumption, allowing for residential energy management applications to be built and indeed SAP’s Smart Meter Analytics application has an Energy Efficiency Scorecard for residential customers.

But, if you build an application for energy management which allows people to compete against each other. If you introduce point scoring, leaderboards, and achievement badges and add to it the ability to share your progress with your social networks (a bit like FourSquare), then the application becomes far more compelling.

Also, the mobile app would want to have a way to check energy consumption remotely, and if a device has been left on (TV, aircon, oven, etc.), remote power-down from the mobile app.

Now, for utility companies to get this to really fly, they could offer prizes to schools in their locale – the school district with the greatest energy reductions gets a new energy efficient computer lab, or new energy efficient lighting, or… (you get the idea) – pester power from the pupils in the schools on their parents, combined with educating the younger generation on the importance of energy reduction is a major win-win!

The cool thing about this is that because it is based on the utility company’s Smart Meter Analytics, it is the customer’s actual energy use, not pledges, or estimates – so reductions reported are real, and realtime.

What do you think? Do you think this is a good idea?

Photo credit Tom Raftery

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SAP’s sustainability customers are talking up SAP!

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Cash register

When I interviewed SAP’s Jeremiah Stone last May about SAP’s Sustainability story at SapphireNow, he mentioned that SAP was committed to an increasing focus on sustainability customer success stories

I?m excited to hear less about SAP being sustainable in our vision and a lot more about SAP?s customers embedding our technology to have more sustainable business and more sustainable products of their own.

At SapphireNow, according to Jeremiah, around 80% of the Sustainability events were customer-led.

SAP seems to have continued that momentum, having recently published a series of videos of customers talking to SAP about how SAP’s sustainability solutions boosted their Sustainability programs. There are interviews with Lexmark, CSC, Dow, Air Products, amongst others.

It is one thing to be reporting on your own sustainability initiatives, as SAP do in their online Sustainability Report, but quite another when you can roll out customers who are willing to go on record saying your products helped them become more sustainable. That definitely helps take the credibility up a notch.

Now, imagine if you could quantify the sustainability savings your customers have achieved as a result of deploying your software…

Photo credit skpy

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SAP starts highlighting sustainability customer success stories

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I had a great chat with SAP’s Jeremiah Stone (Senior Director, Sustainability Solution Management) while we were at Sapphire Now in May. Craig Cmehil was good enough to video it for us, so here we are talking about SAP’s Sustainability solutions and SAP’s move to letting its customers recount their sustainability success stories.

Here is the transcription of our conversation:

Tom Raftery: Hey everyone; we?re at SAPPHIRE NOW. I?m Tom Raftery, and, with me, I have Jeremiah Stone from SAP. Jeremiah, can you tell us, first of all, what?s your role at SAP?

Jeremiah Stone: Hi Tom! Thanks for having me, I?m glad to be here on GreenMonk. I?m part of the Solution Management Organization within SAP for Sustainability. So, we?re really responsible for the roadmap and investment in our products and working with our customers to understand what their needs are and making sure that we have the right products to meet those needs.

Tom Raftery: Okay. Just before we get in to the whole SAPPHIRE NOW thing and what?s been happening here, what are the, products that you guys have around sustainability?

Jeremiah Stone: We have a wide range and it?s a good question, because sustainability means all things to all people and, I think, Vinnie Mirchandani said, ?Don?t talk about religion, don?t talk about politics, and now don?t talk about sustainability, because it?s such a hot topic.?

SAP defines sustainability as products that help our customers? businesses succeed not only in the traditional sense of what we always do to the profitable business, but also how to stay in business for the long-run. So, in a world with changing resource situations with volatility around natural resources, needs to curb pollution, be able to grow a workforce, be able to have more sustainable products, we build products that help customers have better run businesses.

So very concretely, software that helps you have a safer business, identify risk and have improvements in people, not getting hurt, which is a nice way to have a longer-term business – you?re not hurting your employees, you make that a box.

So, we have product compliance solutions to help people design and take better products to the market that have less toxicity in them, for example. One of my favorite example there is Molex that makes little connectors in computers. They were able to remove halogens from those connectors so they have a less toxic product then.

In the long-run where you have an end of life because it has no use in your home and it is off gas or that sort of gas. We make products for energy and environmental resource management. So, really how to cut your energy use and emit less. We have solutions focused on sustainable workforce. How do you engage your employees that are on the top for sustainability? Then also in a long-term have the long-term workforce. That?s really the analytics layer and how do you make the decisions on the basis of your business data. So, we have products in each of these categories.

Tom Raftery: Awesome, and, I?ve been at a couple of Sapphires at this point. In the last couple of Sapphires there was a lot of talk from the CEO?s on downwards about sustainability. This year less so. There seems to be a shift in focus. Can you talk a bit about that?

Jeremiah Stone: Well, I think that reflects to a degree the maturity of the topic and I think it?s not necessarily a topic where they are excited about it in the sense that it is new and defining. It?s now, I think, reaching the point where and I?m excited about this, because when things get mundane and boring it usually means you make someone successful with them.

Now, it?s assumed that sustainability is going to be on the floor, it?s assumed that we?re going to be focusing on it, it?s assumed that its part of it. And you did hear about it in the keynotes, but it just blends in. Vishal Sikka talked about it today that one of our on-demand products in sustainability will be adopting in-memory technology.

So, a lot of the major technology investments that companies make around mobility, around in memory analytics, these sorts of things are part of our investment strategy and portfolio for sustainability. Now, it just becomes assumed with SAP products that we?re focusing on sustainability, which is what makes me excited as a solutions guide for that is that we don?t think if it is a separate category that we have to crow about; it now becomes part of our business.

SAP?s purpose is to help the world run better, to create enduring prosperity for people everywhere and that sustainability is just part of that purpose.

Tom Raftery: Sure and there seems to be a lot more customer sustainability events going on this month than ever before?

Jeremiah Stone: Absolutely, and that was great. I think something on the order 80% of the activities we?re doing – the forums, the customer roundtables, those are the things that were led by our customers using the products and it?s a great…

Tom Raftery: From what I was seeing, it seems to be a lot — this event, the whole SAPPHIRE NOW thing seemed to be a lot more on sustainability from the bottom-up rather than the top-down.

Jeremiah Stone: Absolutely! That?s a great way to put it and we were talking about this before. I?m excited to hear less about SAP being sustainable in our vision and a lot more about SAP?s customers embedding our technology to have more sustainable business and more sustainable products of their own.

That?s what we?re really starting to see in this you know there?s a lag when people buy the software and implement it and start to use it. I think we?re through that lag phase and it?s just great to see the momentum and the tipping point pass and people are starting to use this and then customers? getting up and being really proud about the successes they?re having and how it?s helping their business.

Tom Raftery: Awesome. Jeremiah, that?s been fantastic, thanks again.

Jeremiah Stone: Alright, thanks Tom, I appreciate it.