Late last year, ASUG had a conversation with Michael O’Donnell, National Vice President of the Utilities Industry for SAP, about how the utilities industry is changing. In our conversation, we touched on the topic of sustainability. We sat down with Michael again to focus on sustainability, and to learn how SAP is working with its customers in all industries to make sustainability a priority. In the first part of this two-part feature, we discussed the role sustainability plays in SAP strategy and the basics of its new solution, SAP Sustainability Control Tower.
This is an edited version of our conversation.
Q: Why is sustainability such an important part of SAP strategy and its portfolio?
A: If you look at our history, we have been at the forefront of sustainability for many, many years. It has been part of our DNA. We’ve rated number one on the Dow Jones sustainability index for the last 15 years. When you think about what we do as a company, helping to drive efficiency is at our core. If you think about what sustainability is and the whole idea of the circular economy, it is at the core of our business model.
I would just say that the part for us that’s been interesting over the last several years is that all industries—not just utilities—are now starting to focus more on what it means to be sustainable: the types of business practices that they need to implement to be sustainable, and then how to effectively report and measure that sustainability.
To us at SAP, the focus has transitioned. How do we help in that journey toward becoming more sustainable? How do we help our customers measure and report so they’re improving and making progress in their sustainability journey?
Q: Can we talk about SAP Sustainability Control Tower and how it helps customers?
A: Let me start by saying this: the word “sustainable” comes up all the time in conversation, but it can mean different things. The contextualization of the word and how we go about “doing sustainability” is interesting. Because I would say that SAP Sustainability Control Tower is really about the gathering, the measurement, and how you report out that data. In the utilities industry, there are all sorts of different government regulations that need to be met. We’re helping organizations meet the standards of these regulations.
Our entire business model is shifting so we can actually operate and run in the cloud. Look at RISE with SAP. That offering is helping our customers evolve into the next iteration of SAP. That model sets our customers up to drive the type of results they want from a sustainability perspective. Think of SAP Sustainability Control Tower as the measuring and reporting. And there’s other stuff in there from a financial perspective, but a lot of it focuses on that data. Helping our customers move to SAP S/4HANA Cloud via RISE with SAP, and fundamentally changing the way they deploy, operate, run, and maintain the solution—in a much more iterative, quicker fashion than they historically have with on-premise systems—is exciting. That’s the part that’s going to drive the efficiency, which equals sustainability.
Q: In the 2022 ASUG Pulse of the SAP Customer study results, sustainability was one of the top five customer focus points for this year. How is SAP continuing to make sustainability a key focus for all of its customers moving forward?
A: Essentially, what’s happened out there—and this is not unique to utilities—is that organizations have finally made the decision to put a line in the sand. Whether they want to be carbon zero by 2030, 2040, or 2050, they put that goal out there, and now they need to figure out what needs to happen to reach that goal. I think people have always wanted efficient work processes that are sustainable and good for the environment. But I think with everything that transpired in the last few years around the focus on climate change and then the Paris Agreement, organizations understand what the implications are of avoiding this issue now.
We have seen some structure set up around sustainability. The work SAP has been doing with our customers is figuring out how to operationalize sustainability goals and get things in place. There are all sorts of innovations that need to happen in the utilities space regarding how electricity gets generated, how it’s distributed to consumers, and all the different things that go in that value chain and how that gets done.
Figuring out how to do things sustainably adds another layer to an organization’s operations that creates a significant challenge. In the utilities industry, having a centralized generation facility that then sends the transmission distribution out to consumers probably isn’t the most sustainable model. Now, you see this movement toward distributed energy resources such as wind, solar, and battery power. These are all factors in what the future of their grid will look like. Working with our customers and helping them plan effectively on how to deploy, run, and manage everything that needs to be done from an efficiency perspective is a real focus. Then, it’s about taking all the data that’s coming from all these different devices and pieces of technology, and using it to understand the carbon footprint. It’s a huge task and focus for us as a company.
Q: When you’re talking with utilities customers, what are their views on sustainability? What steps are they taking to make their organizations more sustainable enterprises? What is the mindset of the customer base?
A: There’s the long-term strategic view. Utilities organizations do a lot of long-term planning. We’ve already touched on some of those fundamental things that they’re working on, such as how to make the generation end of the equation clean and green.
We’ve also done a lot of work on the supply chain piece of the equation. When you think about SAP Ariba and that whole end-to-end process of sourcing and consuming all the materials needed to help effectively run and operate a utility, there’s a lot of output from operating a utility that usually produces quite a bit of carbon. Having those considerations integrated into that whole process is vital to drive down your carbon footprint and to source necessary materials.