While at the 2011 SAP Influencer Summit yesterday, Scott Bolick, Vice President of Sustainability Solutions, commented “The real battle in sustainability is going to be on the energy side.”
I met up with him later in the afternoon to follow up on this (and to discuss the state of the Red Sox, but that’s another story). What makes the energy side the biggest area for sustainability right now?
As you can probably tell if you heat your home with oil or drive a car, energy is rising in term of cost – there is quite a bit of volatility in pricing. In fact, Bolick estimates that the pricing volatility has increased 50% from just ten years ago. Plus, governments are starting to look at legislation to force companies to comply with energy-efficient processes. For example, next year Australia will levy a carbon tax on its 500 largest companies in an effort to get them to limit emissions.
As a result, companies are trying to manage their energy costs while accounting for the volatility. Now Excel spreadsheets might be good for managing your fantasy football league, but not so good at monitoring energy use and connecting this use to business processes. But how do companies use SAP sustainability applications to keep energy costs in check?
Bolick gave the example of Valero, an oil and gas company with 16 refineries. The SAP sustainability application was able to bring real-time energy manufacturing intelligence to devices on the shop floor. Executives can look at dashboards to see energy consumption and shop-floor workers can look at the real-time data and check if they are meeting their energy goals. Bolick commented that in the first year of using SAP sustainability technology, it was able to “save $120 million in the first year and expects to save up to $200 million going forward.”
In another example, Bolick told how Lockheed Martin uses SAP Carbon Impact not in a day-to-day approach, but to benchmark how energy efficient their buildings are and ensure compliance with Energy Star requirements.
In the end, Bolick explained that SAP is “a core believer in applying sustainability to mitigate economic, societal and environmental risk while increases profitability. For us, what is most important for business is that they’re putting effort into these strategies and initiatives” to improve business processes.