SAP Calls on Companies to Embrace "The New Value"

NEW YORK — Executives at German software giant SAP aren't entirely sure when the economy first started to take a turn for the worse. They also don't claim to know if we've turned the corner yet. What they do believe, though, is that it's time for companies to rise up and seize the opportunities that can come during harsh economic times.

"We can spend hours debating whether we've seen the bottom or when we're going to come out of it -- there are all kinds of assumptions," said Robert Enslin, president of SAP North America, in his keynote address here this morning at the New York stop of the SAP World Tour. "There is one thing that's in our hands, though: how we leverage technology to move our business agenda forward."

Enslin's message echoed those espoused in May during SAPPHIRE '09, SAP's annual user conference: that clarity and speed are what's necessary to drive business today. The explicit challenge to become proactive in investments and business strategies, though, marked a stronger tone than the one taken by the company earlier this year. "You have to look at the world as two separate parts," Enslin said. "There are those that want to shape where they go, and there are those who are being shaped by it. To emerge stronger from the downturn, we must shape the new reality and have transparency and clarity in everything we do."

It's easy to tell companies that they should be investing in technology, but much harder to get them to do it -- especially as organizations struggle to make the most of both their capital and their operational budgets. Nevertheless, Enslin insisted, companies are investing in information technology -- they're simply looking to bolster and optimize existing processes instead of ripping and replacing entire infrastructures.

"The current market is teaching us that companies must employ new strategies to win, and shift from a cost-focused approach to a value-focused one," Enslin said. "Being ‘on-time' and ‘on-budget' are still important, but there should be a focus for ‘on-value' as well."

SAP executives pointed to sustainability as a critical aspect of the new value in which companies must begin investing. Peter Graf, chief sustainability officer and executive vice president of sustainability solutions for SAP Americas, told the crowd that information technology holds the key to solving what he called "the greatest challenge that is changing mankind." Citing McKinsey & Co. statistics on the relationship between information technology and greenhouse-gas emissions -- that technology is responsible for 2 percent of emissions, but has the ability to help avoid 14 percent to 16 percent -- Graf argued that the time is right to look at sustainability as a business opportunity -- not merely a nice-to-have.

There are three emerging trends, Graf told attendees, that reveal the extent to which sustainability initiatives have become mission-critical:

• the interconnected nature of businesses;
• the quick-moving and uncontrollable nature of information on the Internet; and
• the scarcity of natural resources.

And yet many companies refuse to commit. "More than 50 percent of the customers I speak with have a ‘wait-and-see' attitude to sustainability, which is a pity," Graf said. "By creating a competitive advantage here, you can reduce the risk of price volatility [of resources including oil]. That creates a potent business case, as there's a lot of low-hanging fruit here."

Graf explained the need to expand the parameters of the corporate conversation. "In the past, people operated under the assumption that business was all about the economy," he explained. "Now, you must tie in social and environmental pressures as well. They must be managed holistically, or else you'll be subject to a big backlash."

SAP is putting its money where its carbon footprint is. The company has established twin goals of becoming not only an exemplar when it comes to sustainability solutions, but an enabler as well. The company uses its own business suite and reporting capabilities to monitor its energy, commuter, printing, carbon impact, and sustainability metrics. (For proof of the steps SAP has taken to reduce its own carbon footprint -- a goal to reduce it to 2000 levels by 2020 -- check out its 2008 Sustainability Report.) "I've been in this company for 14 years, and this project energized SAP the most," Graf said.

Closing out the morning keynotes, Larry Bossidy, former Honeywell chief executive officer and co-author of Execution (2002) and Confronting Reality (2004), characterized many business executives today as being in a state of denial. "Reality changes all the time, regardless of the business you're in," he said. "You must be willing to change even when you're winning."

Bossidy explained that, aside from denial, lack of execution and risk-taking are the most-common causes of corporate failure over the past 25 years. "It's a discipline of creating, energizing, and sustaining an integrated business system for actually implementing -- not just announcing -- strategy," he said. "You can't cost-reduce yourself to prosperity."

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