Achieving sustainability with S/4HANA while transitioning to a more efficient business model

Eco-consciousness is at the forefront of business development with sustainability investment growth expected to continue to increase at an average of 5.7% over the next 3 years. Prioritizing sustainability not only benefits the environment but gives companies a competitive edge. Research comparing companies with consistently high Environmental, Social and Governance (ESG) performance and those with low ESG performance between 2013 and 2019 found that high ESG performers achieved 4.7x higher operating margins and experienced lower volatility.

With a clear motivation to set sustainability targets for the greater good, the success of the company and to comply with governmental initiatives, there is a need for technology advanced enough to support these aims. SAP’s S/4HANA is a powerful Enterprise Resource Planning (ERP) tool aligned with the goals of sustainability-conscious organizations.

Having built a close partnership with SAP over the past 30 years, we are well-positioned as partners to support companies with their migration to S/4HANA. Our vast experience and advanced technical knowledge in SAP technology has led to our recognition in the latest Gartner Magic Quadrant as a Leader for SAP S/4HANA Application Services. We are proud of this acknowledgement since it reflects our commitment to create tailored solutions that precisely meet our client’s strategic requirements, expanding the innovative capabilities of S/4HANA to more companies.

So, what are the capabilities of S4/HANA in the area of business sustainability?

How does S/4HANA support sustainability and foster efficiency?

The constant changes that happened over the past years, the skyrocketing of energy and commodity prices as well as the Ukraine war, have created uncertainty, fear and the need for companies to become more agile and to promote sustainability. On top of this, major regulators like the European Union have increased the responsibility of businesses in terms of supply chain emissions.

SAP enterprise resource planning (ERP) software was a major game changer from its inception for thousands of companies. Organizations were able to move from separate applications to a single, integrated platform that offered a view of the truth in most business applications. However, companies still had to maintain separate application suites to manage supply chains, customer relationships, compliance data, and key internal functions.

Due to its advanced capabilities, S/4HANA is at the forefront of next generation ERPs. With its compact structure, a single integrated database, powered by real-time data, and optimized for cloud hosting, S/4HANA has the potential to be a true game changer. It is now driving agility, operational excellence and higher levels of sustainability in all aspects of a company and its value chain.

With this in mind, here are 3 ways the capabilities of S/4HANA as an ERP drive efficiency and therefore sustainability.

Streamlined migration to the cloud

Every business consists of various systems and processes that need to run simultaneously for it to function. Financial accounting, purchasing, payment management, payroll management, customer relationships and compliance data is a condensed list of the key functions required in a business.

While many companies have moved away from hardware to software on the cloud, not all are using the cloud to its full potential. Previously, different functions have been managed on separate applications reducing the efficiency and usability of the systems within the business. S/4HANA enables full integration for all business systems on the cloud.

The cloud is an important resource to advocate the use of because research compiled by Specialists found that cloud migration “can reduce CO2 emissions by 59 million tons per year which equates to taking 22 million cars off the road”. The easier cloud applications are to use, the more willing businesses will be to take advantage of them. S/4HANA as an all-encompassing cloud solution has efficiency and sustainability benefits in itself.

Managing the sustainability of the supply chain

Working towards sustainability goals can be a challenging task for organizations. Regulators such as the European Union require companies to implement sustainability throughout their entire supply chain. Therefore, companies are responsible for their own carbon emissions, the carbon emissions of their direct suppliers, of their entire supply chain and soon the emissions they avoid when they change practices.

SAP has created specific applications within S/4HANA’s product suite to ensure compliance and accurate tracking of the environmental factors in the production of a product. The SAP Product Footprint Management Tool calculates the footprint of a product across the entire lifecycle. This is valuable information for businesses with ambitious sustainability goals.

With S/4HANA ERP capabilities, the emissions of the entire supply chain can be logged and reports created in real-time within the same system as the rest of operations. This makes taking responsibility for the whole supply chain easier to manage.

Sharing real-time data

In order to make environmentally-conscious and growth-driving decisions, businesses need accurate data from all departments. Issues with sharing and timely reporting of data have caused delayed responses in the past. The integrated and optimized database of S/4HANA enables real-time data to be reported and shared automatically.

With this level of control over operations, evidence-based decisions can be made about purchasing, stock, supplies and consumer behavior. Such a powerful tool gives companies the agility needed to survive in today’s climate.

For example, overproduction does huge damage to the environment and is a financial blow to companies. By using the data collected about stock, supplies and consumer behavior as well as the data analytic capabilities of S/4HANA, future trends can be predicted. Being able to prepare for dips in demand in a timely manner prevents waste such as this. The collection and sharing of real-time data across departments improves the workflow substantially.

Migrating to S4/HANA

From this overview alone, it is clear that S/4HANA has some of the most advanced ERP software for large organizations championing sustainability. As a fully integrated software, ease of use and collaboration is a given which for many has been a barrier to complete migration to the cloud. This move in itself has a positive environmental impact.

The ability to manage the whole supply chain and track sustainability data complies with regulators and moves businesses towards sustainability goals. The accessible and shareable real-time data allows businesses to make the best decisions for their own success, to serve their customers and to reduce waste of all kinds.

Our over 19,000 consultants across more than 50 countries are ready to support your move to efficient and sustainable Enterprise Resource Planning with S/4HANA. Ready to start your transition to intelligent operations?

Nicolaj Vang Jessen
Global Head of the SAP Technololgical focus area and Executive Vice President at NTT DATA Business Solutions