SAP Speaks for the Trees: Sustainability, Cynicism, and the Coming Data and Analytics Gold Rush

One of my kids’ favorite books is the Lorax, by Dr. Suess, in which the politically radical Dr. Suess (who actively campaigned against fascism during World War II, well-before the U.S. entered the war) showed his environmentalist chops in a way to make any lover of The Cat in the Hat or Horton Hatches an Egg smile. So I couldn’t help thinking of SAP’s new sustainability initiative in terms of the Lorax, who wages an all-too gentle and losing battle against a heartless polluter with his memorable tag line: I speak for the trees.

A couple of observations on what SAP’s sustainability push means. First, let’s address the cynics’ perspective that sustainability is just a ploy for marketing and revenues, the rewards of a pseudo-virtuous, highly self-serving opportunity. Balderdash: I’ve talked to more than my share of sustainability-minded people across industries, and especially within the software business, and sustainability is a real virtue that is being embraced as a moral imperative, revenues and cost-savings aside. Individuals across our industry are genuinely compelled to contribute to their company’s sustainability efforts by this moral imperative, and SAP is hardly alone in this. Oracle kicked off an internal sustainability initiative last year, and I was told that the number of employees interested in participating was off the charts. Turns out lots of people in our industry want to speak for the trees, and for reasons well beyond perceived self-interest.

Let me also address the green analyst quoted in my local paper, the San Francisco Chronicle, who apparently told the Chron that the SAP is not “a leader among companies trying to shrink their carbon footprints because software is not a heavily polluting industry.” (BTW, considering the reporter said that SAP makes “process management software”, it’s likely the analyst was misquoted as well.) I beg to differ: SAP’s customers, according to SAP, produce 1/6 of the world’s carbon emissions (a dubious distinction that I’ll nonetheless add to my Enterprise Ball post). That means that anything SAP can do to support sustainability, efficiency, and other green concepts could have a profound effect on its customers, and therefore a significant quantity of the world’s emissions. And, as one of the main goals of SAP’s sustainability initiative is to build software solutions that can lower these emissions, and support more efficient and responsible use of other scarce resources like water, enterprise software companies like SAP can indeed become leaders in these efforts.

Finally, let’s talk about the data and analytics gold rush that sustainability will engender. In order to make it possible to fine tune the global economy and help all of us limit our use of scarce resources, and otherwise do business in a more sustainable fashion, we need to have lots of data, and an equivalent data analysis capability to go with it. This means capturing the incredible wealth of data on the factory floor, in the logistics supply chain, and in the distribution and retail networks, and analyzing those data in order to understand the impact of key business decisions on inputs (energy, water, etc.) and outputs (emissions) with respect to profitability. To be sustainable we need to understand at design time how each individual part contributes to the product’s green footprint, and we need to understand that footprint in terms of how the product travels through the logistics chain. And at every business decision point — every out-of-stock, every change in demand signal, every delayed container or constrained part — we’ll want to calculate not just the cost of change in terms of dollars or euros, but the cost of change in terms of sustainability.

And that’s before we start looking at the data and analytics needed to meet the sea-change in reporting and regulatory oversight that these new sustainability initiatives will create. The result will make analysis for Sarbox compliance look like a third-grade algebra test.

The complexity of this undertaking is why I think of it as a data and analytics gold rush: we can do a lot relatively interesting, initial steps towards sustainability measurement and analysis using the baseline functionality of big enterprise software systems, which is why SAP is well-positioned for leadership, despite mumblings from the green punditrocracy. SAP’s initial Environmental Health and Safety offerings fit into this category of “what can be done quickly with what’s already available.”

But if we are to take software-driven sustainability to its highest possible level, we’re going to need a lot more data than we have today. And much of that will be data far different than the relatively finite relational data sitting in SAP’s and other’s transaction systems. Much of what we’ll be need is time series data about smoke-stack emissions, factor-floor productions, and real-time consumer and business energy consumption, among others, that must be analyzed alongside the core relational data in the ERP stack. That kind of analysis is hard, very hard, and knowing what to analyze and what to throw out turns about to be more tricky than we would like to believe. And providing business users and consumers with the right analysis for their specific needs — and not just the right data, or some broad template full of dozens of reports — will be the trickiest problem of all.

Turns out speaking for the trees is the easy part, and not always that effective, as the poor Lorax found out. Hopefully, initiatives like SAP’s will be part of a movement that galvanizes the entire software industry — and their customers — to start working on the actual solutions to the problem. And that will mean looking at the data flow, and turning it into an information flow, and then turning that into actions that will start to mitigate the damage to the planet. Before it’s too late, assuming it isn’t already.