SAP sustainability tracking rollout focuses on data consistency, outlier detection

The complexity and hard science elements of environmental sustainability programs make them among the most complex and challenging compliance areas for CIOs. In May 2023, SAP announced that it was pursuing such a sustainability program, and on Friday it finally rolled out the program, in the sense that it said that it “has finished beta testing and is now generally available,” according to SAP spokesperson Hanna Heine.

“SAP Sustainability Data Exchange helps facilitate standardized carbon data exchange between partners along the supply chain, supporting organizations to move from estimates to actuals in their upstream emission data,” SAP said in a statement. “The application allows users to share emissions data to help implement their net zero strategy and take climate action by identifying products or processes with high potential for CO₂ reduction, avoiding double emissions counting, and optimizing footprints with actual supplier data. It helps drive scalability, standardization, and trust in carbon data exchange across the supply chain.”

Addressing data accuracy issues

The program gathers its data in two ways: directly, via monitoring sustainability-relevant data within SAP ERP systems used by suppliers and other partners, and indirectly, via questions answered by those same companies. 

The response portion has historically suffered from some fundamental data quality issues from various vendors. The first problem is that the task of answering lengthy and detailed questionnaires often falls to lower-level personnel, who might not have access to all of the necessary information and might not fully understand it. That leads to inaccurate replies. 

The second data accuracy problem is that some companies will choose to just tell SAP what they think it wants to hear, rather than the truth. 

SAP is trying to negate those data accuracy issues through extensive use of data outlier detection, where the answers from all companies — SAP claims “millions of participating companies in 190 countries” — are compared with each other to discover anomalies and flag them, according to a CIO interview with James Sullivan, the SAP global product management lead. 

“We are focusing on assurance and validation of data. You can look at [the SAP integrated] outlier detection and [anomalies] will pop up as an error in the system,” Sullivan said. “You can see that in the system as you are calculating.”

Data outlier systems are generally quite effective, but they do suffer from the risk of coordinated deceptions. In other words, if a large number of suppliers coordinate or conspire to all give the same answer, anomaly detection systems are likely to inadvertently confirm the lie rather than flag it. 

The chief advantage to its system, SAP argues, is that of data consistency, along with lower friction and ease of use. In today’s typical enterprise environment, IT executives must do a lot of chasing and begging to get all of their partners to share all of the relevant sustainability data.

SAP suggests that its approach will be far superior. From the enterprise perspective, SAP argues, a company might have 20,000 partners whose sustainability practices the enterprise must understand. If most or all of them already use SAP, the data will already be available as soon as that partner fills out their form and SAP accesses its internal data.

From the supplier perspective, it works the same way. When they fill out the information once, assuming it is updated as circumstances merit, they are done, as long as their enterprise customers are already SAP users. 

Even more critically, if most suppliers are filling out identical forms, data should be more consistent.

SAP is ‘the connector’

“The piece of the puzzle that is difficult is getting this information from your suppliers. It is really burdensome,” said Amy Cravens, an IDC research manager working on sustainability strategies. “This is all standardized. Fill out this form once, it’s uploaded into the SAP system, and then it can then be shared with anyone. This is really enabling the green ledger.”

SAP, Cravens said, is acting as “the connector.”

Sullivan argued that SAP is in the ideal position to gather, verify, and then share the information to enterprises. 

“We already have access to the data. … [For enterprises,] even if you have the activity data, it’s tough to get that supplier data,” he said, adding that questions must be asked about things like where the emissions are coming from. “Without that information, you can’t really go back and improve your operations with suppliers,” Sullivan said. 

What took so long?

IDC’s Cravens said she did have questions about why it took so long for SAP to roll out this program, some 18 months after they announced it. 

“I do think that the development has been a little slower” and that SAP may have initially thought of it as “more of a concept” than a program, Cravens said. “It was somewhat miscommunicated. I think it was announced too soon, before they really had all of their ducks in a row.”

SAP’s Sullivan said the delay was simply because there are a lot of players, and standardization efforts had to take place to make sure that the resulting material addressed the questions from all regulators and enterprises. 

“Sustainability has been a priority, but the data exchange requires broad consensus around marketplace standards,” Sullivan said. “It required a lot of work behind the scenes in the standardization approach. There is always a gap between a PoC [proof of concept], and then going to the working level, and then when things are actually scaling.”

Also, Sullivan stressed, none of the necessary elements are static, so work has to be repeatedly redone as requirements change. “Sustainability is complex. You are trying to tie into existing planetary processes. The standards in place are evolving,” Sullivan said.