SAP & IBM: How ERP is driving sustainable change

Environmental sustainability is now ranked as the number one priority for top executives, rising from the fourth spot in 2021, new data reveals. 

Although more organisations are setting ESG objectives to fulfil their purpose-driven motives, they encounter various hurdles as they strive to convert their aspirations into practical action. 

In fact, 41% of corporate executives worldwide regard insufficient data as the most significant obstacle to achieving ESG goals, followed by regulatory constraints (39%), inconsistent criteria (37%), and inadequate expertise (36%). 

The effects of data-related difficulties are becoming evident to stakeholders, as consumers base their purchasing and employment choices on a company's ESG progress.

What are the benefits of ERP?

A study from IBM Institute for Business Value (IBV) and SAP – which reached 2,125 senior executives – found that organisations with the best financial and environmental outcomes had the most engaged enterprise resource planning (ERP) systems. 

ERP has a significant impact on almost every business process within an organisation. It has the ability to link financial and environmental objectives while maintaining responsibility and accessibility for metrics.

When combined with other systems, ERP provides visibility into costs, resulting in more consistent and reliable decision-making for critical business, regulatory and environmental matters.

The hidden possibilities of ERP

Obtaining an organisation's sustainability data can be a challenging task due to isolated business processes, unreliable data and conflicting business priorities. 

However, ERP can help to overcome these obstacles by providing real-time access to critical material information from various business functions and delivering a seamless user experience for corporate decision-makers and operators. With this data transparency, businesses can easily record, report and act upon their ESG commitments and tackle the intricate sustainability challenges they face. 

Moreover, the newfound visibility allows stakeholders to witness the impact of their decisions and place trust in the reported results, ultimately accelerating the cultural shift necessary to foster sustainable business transformation.

What’s more, the IBM and SAP study found that a small group of exceptional business leaders (15%) - the Environmental Sustainability Enabled (Enabled) – prioritise environmental sustainability and implement well-defined and publicly-promoted plans to achieve their goals at a significantly higher rate than their counterparts. 

The study reveals that Enabled organisations place equal importance on environmental sustainability and financial performance, recognising that sustainability is a driving force behind financial outcomes.

In addition, the study found that the Enabled rely on ERP data structures to address sustainability goals, among other standout findings, including:

• The Enabled report 47% of sustainability performance data is collected in their ERP, with an expected 17% increase by 2025 (55%)
• 94% more of the Enabled believe ERPs are helping manage to manufacture sustainability goals – 31% more believe the same as relates to labour management
• Almost 70% of the Enabled report their carbon capture and energy use metrics in their ERP
• Enabled organisations use ERP to establish standard environmental measures across ecosystems 39% more often than Reluctant, organisations that do not view environmental sustainability as important to their success
• Enabled reports using ERP systems to establish standard environmental metrics across their ecosystems 39% more frequently the Reluctant organisations, that do not recognise the significance of environmental sustainability
• 43% more Enabled versus Reluctant organisations use ERP to establish shared environmental targets

IBM and SAP, as strategic collaborators for SAP S/4HANA and SAP Sustainability solutions, offer a comprehensive range of technologies and services alongside enterprise-scale platforms to help businesses eliminate silos and integrate solutions throughout crucial business functions and operations.