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SAP PaPM: Game Changer for Digital Sustainability Management

By Giedrius Rumšys, February 10, 2023

The sustainability revolution is happening now

Sustainability is a process, represented below as the plan-do-check-act cycle, symbolizing continuous improvement. The cycle was popularized by W. E. Deming, who began the quality revolution. We recall this quality revolution in the 1970s, 1980s, or 1990s when all companies were crazy about implementing ISO standards into their management systems. Now I see that many companies will need to implement sustainability management systems, which leads us to the beginning of the sustainability revolution.

When we begin our sustainability journey, we anticipate that businesses will have certain long-term objectives for achieving their ESG targets. To support the sustainability management process companies will look for a suitable solution.

Challenges in selecting a tool for sustainability management

1. Track similar KPIs across various standards for various stakeholders

There are around 500 sustainability reporting standards in the world. Similarly, before the creation of ISO, businesses relied on national standards. Each country had its management system standard until 1987 when the common quality standard ISO 9001 was born. When it comes to sustainability, there is no one common standard. Consider scenarios where different stakeholders, such as your banks, may request similar KPIs calculated according to different standards.

2. Adapt to changing requirements

You want to have a solution responsive to changes. If anything changes, you don’t want to repeat the development process of the calculations; instead, you want to apply the rule immediately and observe how it affects your KPI, so just save the maintenance time for your calculations.

3. Create a new process in the organization

In organizations, sustainability is forever. Non-financial disclosure reporting will continue for many years since the United Nations and the European Union have set sustainability goals for 2030 and even for 2050. That is why you need a tool that can assist you in developing ESG procedures. Sustainability management is a process, not a one-time event.

4. Integrate sustainability data with other company data

Euros are concealed underneath each CO2 gram. To visualize euros, you must combine sustainability data with financial data. Add HR data as well if you monitor gender equality. You will eventually want to connect to external sources, add procurement, manufacturing, and access other relevant data. To feel the greatest advantage, you need a solution enabling collaboration between departments.

Solution: MS Excel vs. SAP PaPM

To address the challenges above, you can try using Excel, the king of all solutions. While Excel is a very popular choice among sustainability managers, it has some limitations. First, Excel is not well- designed for process management. In addition, it lacks capabilities for data integration across company departments. And finally, when you use Excel for a longer period, you start noticing that it’s not easy to maintain.

That’s why I would recommend using the database-based solution, which is also process friendly: SAP PaPM. The SAP Profitability and Performance Management (PaPM) system was first created for the finance sector to enable fast cost item allocation and financial data forecasting, but it is now equally relevant to sustainability. Even though the tool has a SAP badge, it might be installed as a stand-alone solution for non-SAP systems.

  • SAP PaPM is process friendly: you may create a process and track who is accountable for various activities such as data entry, calculation, and reporting.
  • SAP PaPM runs on the HANA in-memory database. It not only means fast calculations but handling huge amounts of data should be no problem. The solution will smoothly run “what-if” simulations even with complex models.
  • SAP PaPM is designed to be maintenance friendly. If you need to alter something between calculations, simply go to the model and make the necessary changes to the rule. It is not necessary to redesign the whole calculation model. No coding is required; do not spend money on programmers and lose time.
  • SAP PaPM, being a database solution, combines and integrates data from many internal and external platforms. You can utilize this aggregation hub for sustainability KPIs alongside financial, manufacturing, HR, procurement, and external data in your sustainability reports and what-if simulations.
  • Standards are maintained by professionals. SAP PaPM includes sample content that provides best practice examples for companies. This is especially important for businesses that are just starting on their sustainability journey and want to know where to begin and collect ideas on ESG metrics. Each sample content consists of a calculation model with fictional corporate data. You can copy this model for free and adapt it to your needs. For example, you can utilize EU taxonomy sample content with the newest data by sector. Each sample content is updated regularly.

SAP PaPM in action (videos)

  • SAP PaPM Reporting & What-if simulations. To fulfill the transparency requirements company can embed the sustainability report into the website. In reporting part one can drill down, create own reports, download them to pdf, and run what-if simulations.
  • SAP PaPM Process Orchestration. Sustainability managers can create teams, and roles and deploy processes. In each process, activities are defined. Each activity has its timeline, responsible roles or team, and dependability on other activities.
  • SAP PaPM Calculations. Modelers and analysts have to create the calculation model for reporting and process part to work. This is the core step for sustainability management. The best part is that you do not need IT people involved because no coding is required. Instead of coding, various functions, and their parameters are used. Just to name a few functions: Join, Allocation, Calculation, Machine Learning, Query…
  • SAP PaPM Data Entry and Import. Data entry is the step where calculations start. SAP PaPM is a great business data aggregator and can connect to various databases, as well as gather information from .csv or .txt files. Since it is a stand-alone tool, it can connect to various systems (SAP, Teradata, Oracle, Hadoop, Microsoft SQL, Netezza…)

This presentation is a part of the “ESG starter package: from theory to action” conference material:

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