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Integrated Performance Analysis

A Holistic View of Our Performance

Linking Our Non-Financial and Financial Performance: Advancing Our Model

Integrated reporting is based on the idea that social, environmental, and economic performance are interrelated, with each realm creating tangible impacts on the others. To achieve a truly integrated strategy, we believe that we must understand these connections and work to support them throughout SAP.  

Over the past several years, we have created a framework for establishing concrete links between non-financial and financial performance. Building on this, we determined how four social and environmental indicators – our Business Health Culture Index (BHCI), employee engagement, retention and emissions – impact SAP’s operating profit. This year, for the first time, we calculated and documented the complete return on investment (ROI) along one of our cause-and-effect chains using a concrete example. Our results offer hard data showing how an integrated strategy not only mitigates our environmental impact and enhances the wellbeing of our employees, but also boosts our business success. 

We act on this data both within SAP and our broader network of customers and partners. We are transparent about our methodology in the hopes of inspiring other companies to document the benefits of an integrated strategy. And we will use our results to evolve our own strategy and invest in tangible steps to create positive economic, social and environmental change.

  • *Our corporate objectives
  • Impact on operating profit
  • Economic indicators
  • Social indicators
  • Environmental indicators
Connectivity

Employee Engagement A change by one percentage point of Employee Engagement would have an impact of 40 – 50 million € for SAP’s operating profit.

BHCI A change by one percentage point of the Business Health Culture Index would have an impact of 75 – 85 million € for SAP’s operating profit.

Employee Retention A change by one percentage point of Retention would have an impact of 45 – 55 million € for SAP’s operating profit.

Women in Management

Social Investment

Capability Building

Employer Ranking

Revenue

Profit

Customer Loyalty

GHG Footprint A reduction by one percent of Greenhouse Gas Emissions would have a positive impact of 4 million € for SAP’s operating profit.

Total Energy Consumed

Data Center Energy

Renewable Energy

Click on the indicators to see how they are interrelated.

You want to learn more about a specific connection? Simply open the sections below and find written explanations for every indicator and connection in the graphic.

Employee Engagement

Employee engagement is the level of employee commitment, pride, and loyalty, as well as the feeling of employees of being advocates for their company.

Capability Building >> Employee Engagement:
Because it is closely linked to how much a company develops its employees and supports their careers, internal hiring to management and expert positions positively affects employees’ commitment and loyalty. This hypothesis was confirmed by a study of Bedarkar & Pandita (2014), which identified “career opportunities” as the key driver of employee engagement. 

Employer Ranking >> Employee Engagement:
Studies find that a company’s image and the associated pride of employees (important criteria in employer rankings) are key drivers of employee engagement (Global workforce study, 2012).

Employee Engagement >> Employer Ranking:
We believe that SAP will achieve higher rankings as an employer if our employees demonstrate a high level of employee engagement, as employee engagement is an important criterion of employer rankings.

Social Investment >> Employee Engagement:
Mueller et al. (2012) have found that employees’ perception of a company’s commitment to corporate social responsibility is positively linked to their own commitment to the organization. With corporate social responsibility and social investment becoming more and more important to SAP, we expect to see employee engagement increase as well.

Employee Engagement >> Margin:
Since 2014, we used real data from SAP to analyze and proof the financial impact of Employee Engagement. Now we can show what a change by one percentage point of Employee Engagement would mean for SAP’s operating profit, as you can see under the section “Results”.

Margin >> Employee Engagement:
In our view, a high margin, as great business news, can raise employee morale, encourage identification with our vision, and thus drive employee engagement. On the other hand, we believe that a high margin can also have a negative impact on employee engagement. If, to reach an ambitious margin target, cost savings and budget cuts are implemented, employees might feel constrained and dissatisfied.

BHCI (Business Health Culture Index) >> Employee Engagement:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the BHCI. We could proof that there is a significant positive correlation between the BHCI and Employee Engagement (the BHCI is influencing positively the Leadership Trust Index, which is influencing positively the Employee Engagement index, all correlations are significant).

Employee Engagement >> Employee Retention:
Since 2014, we used real data from SAP to analyze and proof the financial impact of Employee Engagement. We could proof that there is a significant positive correlation between Employee Engagement and Employee Retention.

GHG Footprint >> Employee Engagement:  
We believe that lowering SAP’s GHG footprint can have a positive impact on employee engagement because loyalty will rise as employees see their company act responsibly towards the environment. However, because lowering emissions also brings certain restrictions, such as flying less, it may also have a negative impact on employee engagement.

Employee Engagement >> GHG Footprint:  
We believe that engaged employees are likely to want to help SAP achieve its target in lowering its GHG emissions. Yet another possible outcome is that a higher level of employee engagement may lead to more business activity requiring travel and therefore could lead to an increase in GHG emissions.

Employee Engagement >> Revenue:
Since 2014, we used real data from SAP to analyze and proof the financial impact of Employee Engagement. We could proof that there is a significant positive correlation between Employee Engagement and Revenue.

Revenue >> Employee Engagement:
We believe that a higher revenue will have a positive impact on a company’s work environment, thereby increasing employees’ pride and loyalty. This is also stated in a study of Harter et al. (2010), saying that improving financial performance appears to increase general satisfaction and some specific work perceptions.

BHCI (Business Health Culture Index)

The BHCI is a score for readiness of employees to accept change, in particular their perception of affiliation and purpose, leadership, recognition, empowerment, reward, stress level, and life balance at SAP.

Women in Management >> BHCI (Business Health Culture Index):
We believe that a balance of men and women in management will help to create a more balanced working environment, one in which diversity is valued and people feel free to express their individual styles. It is our expectation that such an environment will positively affect our Business Health Culture Index.

BHCI (Business Health Culture Index) >> Women in Management:
McKinsey (2013) found that different elements of the BHCI such as flexible working hours, the ability to work from home, or career flexibility – can make it easier for women to balance work and family life. This leads us to conclude that the higher our BHCI, the more attractive SAP will become to women who are seeking management positions.

BHCI (Business Health Culture Index) >> Margin:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the BHCI. Now we can show what a change by one percentage point of the BHCI would mean for SAP's operating profit, as you can see under the section "Results".

Social Investment >> BHCI (Business Health Culture Index):
We believe that by supporting our employees in engaging in activities with a positive social impact, such as skills-based volunteering, we are enhancing the meaning they find in work. This sense of purpose helps to create a richer and more rewarding work environment that reduces stress and promotes satisfaction and well being.

BHCI (Business Health Culture Index) >> Employee Engagement:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the BHCI. We could proof that there is a significant positive correlation between the BHCI and Employee Engagement (the BHCI is influencing positively the Leadership Trust Index, which is influencing positively the Employee Engagement index, all correlations are significant).

BHCI (Business Health Culture Index) >> Revenue:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the BHCI. We could proof that there is a significant positive correlation between the BHCI and Revenue.

GHG Footprint >> BHCI (Business Health Culture Index):
Many of SAP's GHG emissions are caused by business travel and commuting, which we believe can have both negative and positive impacts on employee health. Some people may experience greater stress through more travel because they have less time to spend at home, are jet lagged, or lose valuable working hours; others may enjoy travel, which enables them to experience other places, meet new people, and get a taste of life as a 'jet setter'.

BHCI >> Customer Loyality:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the BHCI. We could proof that there is a significant positive correlation between the BHCI and Customer Loyality.

Employee Retention

Employee retention is the ratio of the average headcount (expressed in full-time equivalents) minus employee-initiated terminations (turnover) divided by the average headcount, taking into account the past 12 months.

Capability Building >> Employee Retention:
According to the Global Workforce Study (2012) the “chances to advance the career” is the second-most important driver of employee retention. By promoting and thus growing from within, SAP creates career opportunities for its employees. In turn, it is our expectation that this opportunity leads to an increase in employee retention.

Employee Engagement >> Employee Retention:
Since 2014, we used real data from SAP to analyze and proof the financial impact of Employee Engagement. We could proof that there is a significant positive correlation between Employee Engagement and Employee Retention.

Employee Retention >> Revenue:
Meifert (2005) stated a clear relationship between employee retention and the company’s revenue and margin

Employee Retention >> Customer Loyalty:
Koys (2001) has found evidence that employee turnover has a negative impact on customer satisfaction. We believe this effect stems from the fact that experienced employees work more efficiently, have better product knowledge, can build trusting relationships with colleagues and customers, and thus have the ability to better serve customers’ needs.

Employee Retention >> Margin:
Meifert (2005) stated a clear relationship between employee retention and the company’s revenue and margin

Women in Management

Women in Management is the percentage of women in management positions (managing teams, managing managers, executive board) as compared to the total number of managers, expressed by the number of individuals.

Capability Building >> Women in Management:
Like many other companies, SAP has more women in less senior positions than in more senior ones. Given this significant pool of talent, we assume that internal promotions will increase the percentage of women in management positions.

Women in Management >> BHCI (Business Health Culture Index):
We believe that a balance of men and women in management will help to create a more balanced working environment, one in which diversity is valued and people feel free to express their individual styles. It is our expectation that such an environment will positively affect our Business Health Culture Index.

BHCI (Business Health Culture Index) >> Women in Management:
McKinsey (2013) found that different elements of the BHCI such as flexible working hours, the ability to work from home, or career flexibility – can make it easier for women to balance work and family life. This leads us to conclude that the higher our BHCI, the more attractive SAP will become to women who are seeking management positions.

Women in Management >> Employer Ranking:
Several research findings indicate that diversity and inclusion programs (Roland Berger, 2011), as well as the presence of female board directors (Catalyst, 2013), have a positive effect on corporate reputation (an important criterion in employer rankings). Looking at German companies, Roland Berger (2011) estimate that the monetary impact of this relationship amounts to €20.8 billion per year.

Employer Ranking >> Women in Management:
We believe that a highly ranked employer can attract talent more easily. As SAP focuses on diversity – and in particular women in management – women will likely feel more attracted to our emloyer brand. As a result, we would expect to find more women on the short list for management positions.

Women in Management >> Revenue Impact:
Studies show that companies with a relatively high percentage of women in upper management ranks or as board members achieve stronger financial performance compared to those with a relatively low percentage (Catalyst, 2013). We believe that having more women in management positions will increase our revenue as it helps us to better serve our diverse customer base.

Women in Management >> Customer Loyalty:
Diversity programs – including those focused on the promotion of women to management positions – have a direct and positive impact on customer satisfaction (Catalyst, 2013).

Women in Management >> Margin:
Studies show that companies with a high level of gender diversity outperform companies with an average level in terms of return on equity (11.4% vs. an average 10.3%); operating results (EBIT 11.1% vs. 5.8%); and stock price increases (64% vs. 47% over the period 2005 – 2007) (McKinsey, 2007). It is therefore likely that a higher share of women in management positions will result in a higher margin for SAP.

Social Investment

Social investment reflects SAP's activities in volunteering and technology and cash donations.

Social Investment >> BHCI (Business Health Culture Index):
We believe that by supporting our employees in engaging in activities with a positive social impact, such as skills-based volunteering, we are enhancing the meaning they find in work. This sense of purpose helps to create a richer and more rewarding work environment that reduces stress and promotes satisfaction and well being.

Social Investment >> Employee Engagement:
Mueller et al. (2012) have found that employees' perception of a company's commitment to corporate social responsibility is positively linked to their own commitment to the organization. With corporate social responsibility and social investment becoming more and more important to SAP, we expect to see employee engagement increase as well.

Social Investment >> Revenue:
A study by Muritala (2013) suggests that corporate social responsibility (or what we characterize as social investment) is likely to have a positive impact on an organization's financial performance. In our experience, social investments do in fact have a positive impact on our ability to acquire new customers, especially in emerging markets.

Margin >> Social Investment:
It is a common best practice for companies to invest a certain percentage of their annual profits in programs and activities that create a positive social impact. We believe that a higher margin is therefore likely to lead SAP to make greater social investments.

Social Investment >> Employer Ranking:
As a company's social activities such as volunteering or donations are an important criterion in employer rankings, we are certain that our social investment activities will affect our ranking as an employer positively.

Capability Building

Capability building is the internal hiring rate (promotions only) into management or expert positions as compared to the external hiring rate into such positions.

Capability Building >> Employee Retention:
According to the Global Workforce Study (2012) the “chances to advance the career” is the second-most important driver of employee retention. By promoting and thus growing from within, SAP creates career opportunities for its employees. In turn, it is our expectation that this opportunity leads to an increase in employee retention.

Capability Building >> Employee Engagement:
Because it is closely linked to how much a company develops its employees and supports their careers, internal hiring to management and expert positions positively affects employees’ commitment and loyalty. This hypothesis was confirmed by a study of Bedarkar & Pandita (2014), which identified “career opportunities” as the key driver of employee engagement. 

Capability Building >> Women in Management:
Like many other companies, SAP has more women in less senior positions than in more senior ones. Given this significant pool of talent, we assume that internal promotions will increase the percentage of women in management positions. 

Employer Ranking

Employer ranking is the attractiveness of SAP as an employer, measured through external ratings and rankings.

Women in Management >> Employer Ranking:
Several research findings indicate that diversity and inclusion programs (Roland Berger, 2011), as well as the presence of female board directors (Catalyst, 2013), have a positive effect on corporate reputation (an important criterion in employer rankings). Looking at German companies, Roland Berger (2011) estimate that the monetary impact of this relationship amounts to €20.8 billion per year.

Employer Ranking >> Women in Management:
We believe that a highly ranked employer can attract talent more easily. As SAP focuses on diversity – and in particular women in management – women will likely feel more attracted to our emloyer brand. As a result, we would expect to find more women on the short list for management positions.

Employer Ranking >> Employee Engagement:
Studies find that a company's image and the associated pride of employees (important criteria in employer rankings) are key drivers of employee engagement (Global workforce study, 2012). 

Employee Engagement >> Employer Ranking:
We believe that SAP will achieve higher rankings as an employer if our employees demonstrate a high level of employee engagement, as employee engagement is an important criterion of employer rankings. 

GHG Footprint >> Employer Ranking:
According to Brown et al. (2010), corporate sustainability reporting (including GHG) leads to an increase of reputation. Notably, efforts to promote environmental protection are a key differentiator for employers. Because a company's appeal to potential new hires helps to determine most employer rankings, SAP's commitment to lower our GHG Footprint is likely to increase our ranking as an employer.

Employer Ranking >> Margin:
As a highly ranked employer, we believe SAP is able to attract talented employees more easily, which could reduce the costs of searching for talent and hiring new employees, thereby increasing our margin.

Revenue

Revenue is the total revenue SAP receives from the sale of its products and services.

Social Investment >> Revenue:
A study by Muritala (2013) suggests that corporate social responsibility (or what we characterize as social investment) is likely to have a positive impact on an organization's financial performance. In our experience, social investments do in fact have a positive impact on our ability to acquire new customers, especially in emerging markets. 

Women in Management >> Revenue Impact:
Studies show that companies with a relatively high percentage of women in upper management ranks or as board members achieve stronger financial performance compared to those with a relatively low percentage (Catalyst, 2013). We believe that having more women in management positions will increase our revenue as it helps us to better serve our diverse customer base.

BHCI (Business Health Culture Index) >> Revenue:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the BHCI. We could proof that there is a significant positive correlation between the BHCI and Revenue.

Employee Retention >> Revenue:
Meifert (2005) stated a clear relationship between employee retention and the company's revenue and margin

GHG Footprint >> Revenue:
Lowering SAP's GHG Footprint could have a positive impact on SAP's revenue because customers increasingly ask their suppliers to act sustainably. This reasoning is supported by a study of PwC (2013) confirming the existence of a positive correlation between a company's environmental performance and financial performance.

Employee Engagement >> Revenue:
Since 2014, we used real data from SAP to analyze and proof the financial impact of Employee Engagement. We could proof that there is a significant positive correlation between Employee Engagement and Revenue.

Revenue >> Employee Engagement:
We believe that a higher revenue will have a positive impact on a company's work environment, thereby increasing employees' pride and loyalty. This is also stated in a study of Harter et al. (2010), stating that improving financial performance appears to increase general satisfaction and some specific work perceptions.

Customer Loyalty >> Revenue:
Reichheld (2003) found a strong correlation between companies' Net Promoter Score results and their revenue growth rates. We support this view as we believe that loyal SAP customers are likely to recommend SAP products to other companies, which is likely to result in increased sales and stronger revenue.

Revenue >> Margin:
Margin reflects the relationship between operating costs and revenue; so if operating costs grow at a lower rate than revenue, higher revenue will lead to higher margin. 

Profit

Profit (or loss) is the total of income less expenses.

BHCI (Business Health Culture Index) >> Profit:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the BHCI. Now we can show what a change by one percentage point of the BHCI would mean for SAP’s operating profit, as you can see under the section “Results”.

Employee Engagement >> Profit:
Since 2014, we used real data from SAP to analyze and proof the financial impact of Employee Engagement. Now we can show what a change by one percentage point of Employee Engagement would mean for SAP’s operating profit, as you can see under the section “Results”.

Profit >> Employee Engagement:
In our view, a high profit, as great business news, can raise employee morale, encourage identification with our vision, and thus drive employee engagement. On the other hand, we believe that a high profit expectation can also have a negative impact on employee engagement. If, to reach an ambitious profit target, cost savings and budget cuts are implemented, employees might feel constrained and dissatisfied.

Women in Management >> Profit:
Studies show that companies with a high level of gender diversity outperform companies with an average level in terms of return on equity (11.4% vs. an average 10.3%); operating results (EBIT 11.1% vs. 5.8%); and stock price increases (64% vs. 47% over the period 2005 – 2007) (McKinsey, 2007). It is therefore likely that a higher share of women in management positions will result in a higher profit for SAP.

Profit >> Social Investment:
It is a common best practice for companies to invest a certain percentage of their annual profits in programs and activities that create a positive social impact. We believe that a higher profit is therefore likely to lead SAP to make greater social investments.

Renewable Energy >> Profit:
The purchase of renewable energy over conventional energy sources is often correlated with higher costs, and thus we expect a small negative impact on our profit when we augment our purchase of renewable energy.

Employee Retention >> Profit:
Meifert (2005) stated a clear relationship between employee retention and the company’s revenue and profit

Total Energy Consumed >> Profit:
We have found that reduced energy consumption is strongly correlated with a reduction in costs. The thus achieved cost avoidance has a positive impact on our profit.

Employer Ranking >> Profit:
As a highly ranked employer, we believe SAP is able to attract talented employees more easily, which could reduce the costs of searching for talent and hiring new employees, thereby increasing our profit.

Revenue >> Profit:
Profit (or loss) is the total of income less expenses; if revenue as the main part of total income grows at a higher rate than costs, it will lead to greater profit.

Customer Loyalty >> Profit:
We believe that positive experiences among our customers can significantly increase business with existing customers, as well as help attract new customers. Both results can lower the cost of sales, thereby increasing our profit.

Data Center Energy >> Profit:
We have found that reduced energy consumption is strongly correlated with a reduction in costs. The thus achieved cost avoidance has a positive impact on our profit.

GHG Footprint >> Profit:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the GHG Footprint. Now we can show what a reduction of SAP’s carbon emissions by one percentage would mean for SAP’s operating profit, as you can see under the section “Results”.

Customer Loyalty

Customer loyalty is measured with the Net Promoter Score: Percentage of customers that are likely to recommend SAP to friends or colleagues minus the percentage of customers that are unlikely to do so.

Women in Management >> Customer Loyalty:
Diversity programs – including those focused on the promotion of women to management positions – have a direct and positive impact on customer satisfaction (Catalyst, 2013).

Employee Retention >> Customer Loyalty:
Koys (2001) has found evidence that employee turnover has a negative impact on customer satisfaction. We believe this effect stems from the fact that experienced employees work more efficiently, have better product knowledge, can build trusting relationships with colleagues and customers, and thus have the ability to better serve customers' needs.

GHG Footprint >> Customer Loyalty:
We believe that lowering SAP's carbon emissions has a positive reputational effect, thereby enhancing SAP's standing with its customers.

Customer Loyalty >> Revenue:
Reichheld (2003) found a strong correlation between companies' Net Promoter Score results and their revenue growth rates. We support this view as we believe that loyal SAP customers are likely to recommend SAP products to other companies, which is likely to result in increased sales and stronger revenue.

Customer Loyalty >> Margin:
We believe that positive experiences among our customers can significantly increase business with existing customers, as well as help attract new customers. Both results can lower the cost of sales, thereby increasing our margin.

BHCI (Business Health Culture Index) >> Customer Loyality:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the BHCI. We could proof that there is a significant positive correlation between the BHCI and Customer Loyality.

GHG Footprint (Greenhouse Gas Footprint)

Our GHG footprint is the sum of all greenhouse gas emissions measured and reported, including renewable energy and third party reductions, for example, offsets.

GHG Footprint >> BHCI (Business Health Culture Index):
Many of SAP's GHG emissions are caused by business travel and commuting, which we believe can have both negative and positive impacts on employee health. Some people may experience greater stress through more travel because they have less time to spend at home, are jet lagged, or lose valuable working hours; others may enjoy travel, which enables them to experience other places, meet new people, and get a taste of life as a 'jet setter'.

GHG Footprint >> Employer Ranking:
According to Brown et al. (2010), Corporate sustainability reporting (including GHG) leads to an increase of reputation. Notably, efforts to promote environmental protection are a key differentiator for employers. Because a company's appeal to potential new hires helps to determine most employer rankings, SAP's commitment to lower our GHG Footprint is likely to increase our ranking as an employer.

GHG Footprint >> Employee Engagement:
We believe that lowering SAP's GHG footprint can have a positive impact on employee engagement because loyalty will rise as employees see their company act responsibly towards the environment. However, because lowering emissions also brings certain restrictions, such as flying less, it may also have a negative impact on employee engagement.

Employee Engagement >> GHG Footprint:
We believe that engaged employees are likely to want to help SAP achieve its target in lowering its GHG emissions. Yet another possible outcome is that a higher level of employee engagement may lead to more business activity requiring travel and therefore could lead to an increase in GHG emissions. 

GHG Footprint >> Revenue:
Lowering SAP's GHG Footprint could have a positive impact on SAP's revenue because customers increasingly ask their suppliers to act sustainably. This reasoning is supported by a study of PwC (2013) confirming the existence of a positive correlation between a company's environmental performance and financial performance.

GHG Footprint >> Customer Loyalty:
We believe that lowering SAP's carbon emissions has a positive reputational effect, thereby enhancing SAP's standing with its customers.

Renewable Energy >> GHG Footprint:
Increasing the percentage of renewable energy in our overall mix of energy sources directly translates into a lower GHG footprint, as we replace some of the energy generated by fossil fuels.

Total Energy Consumed >> GHG Footprint:
The emissions caused by SAP's energy consumption add directly to the corporate carbon footprint if they are not reduced through offsets or – for electricity consumption – renewable energy certificates (RECs).

Data Center Energy >> GHG Footprint:
The emissions caused by SAP's data center energy consumption add directly to the corporate carbon footprint if they are not reduced through offsets or renewable energy certificates (RECs).

GHG Footprint >> Margin:
Since 2014, we used real data from SAP to analyze and proof the financial impact of the GHG Footprint. Now we can show what a reduction of SAP's carbon emissions by one percentage would mean for SAP's operating profit, as you can see under the section "Results".

Total Energy Consumed

Total energy consumed is the sum of all energy consumed through SAP’s own operations, including energy from renewable sources.

Total Energy Consumed >> Margin:
We have found that reduced energy consumption is strongly correlated with a reduction in costs. The thus achieved cost avoidance has a positive impact on our margin.

Total Energy Consumed >> GHG Footprint:
The emissions caused by SAP’s energy consumption add directly to the corporate carbon footprint if they are not reduced through offsets or – for electricity consumption – renewable energy certificates (RECs). 

Data Center Energy >> Total Energy Consumed:
The energy consumed in SAP’s data centers forms part of the total energy consumed in our operations. 

Data Center Energy

Data center energy is the amount of energy consumed in SAP’s data centers related to the number of employees.

Data Center Energy >> Margin:
We have found that reduced energy consumption is strongly correlated with a reduction in costs. The thus achieved cost avoidance has a positive impact on our margin.

Data Center Energy >> GHG Footprint:
The emissions caused by SAP’s data center energy consumption add directly to the corporate carbon footprint if they are not reduced through offsets or renewable energy certificates (RECs).

Data Center Energy >> Total Energy Consumed:
The energy consumed in SAP’s data centers forms part of the total energy consumed in our operations. 

Renewable Energy

Renewable energy reflects the shares and types of electricity obtained from renewable sources such as hydro, wind, solar, and biomass.

Renewable Energy >> Margin:
The purchase of renewable energy over conventional energy sources is often correlated with higher costs, and thus we expect a small negative impact on our margin when we augment our purchase of renewable energy.

Renewable Energy >> GHG Footprint:
Increasing the percentage of renewable energy in our overall mix of energy sources directly translates into a lower GHG footprint, as we replace some of the energy generated by fossil fuels. 

A Holistic View of Our Performance

As cited in the diagram accompanying our “approach”, recent studies have documented the correlation between such indicators as employee engagement and revenue or margin. In 2014, utilizing our own internal data, we established these links in concrete terms for SAP, putting a dollar value on such measures as how well we engage our employees, support their work/life balance, inspire them to commit to our vision and strategy, and succeed in reducing our carbon emissions.  

Our methodology started with the creation of cause-and-effect chains. These diagrams show how specific actions we take at SAP lead to shifts in behavior, which in turn create impacts for our business and finally produce a financial result. Such analysis establishes more than a correlation between non-financial indicators and financial impact. Instead, they reveal why and how something such as employee engagement ultimately leads to gains or losses in business performance. We believe that such insights are a prerequisite for fully modeling the financial impact of non-financial performance. 

Using Cause-and-Effect Analysis to Document Financial Impact

To create and validate these chains of cause and effect, we turned to both internal and external stakeholders. We started with those inside SAP, meeting in small groups that rigorously examined the cascade of impacts from activities related to each of our non-financial indicators. We next conferred with external stakeholders, including academics, financial investors, and SAP peers, to vet our findings.

We then used real data from SAP to translate our cause-and-effect chains into a documented impact on operating profit. For example, our initial assessment found that by fostering work flexibility, we could improve work-life balance, which in turn enhances productivity. Building on this assessment, our analysis determined that this greater productivity leads to tangible financial gains. 

Since 2014, utilizing such techniques as linear regression analysis, we have been documenting the financial impact of four non-financial indicators: our BHCI (explained in more detail below), employee engagement, retention, and carbon emissions. We assessed the first three indicators in terms of what a change by one percentage point would mean for SAP’s operating profit, and we also assessed what a 1% decrease in emissions would mean for operating profit, as detailed below. Our results for 2015: 

  • Business Health Culture Index1: €75 million to €85 million
  • Employee engagement1: €40 million to €50 million
  • Retention1: €45 million to €55 million
  • Carbon emissions1: €4 million
A Case Study: Documenting the Financial Impact of a Healthy Work Culture

Below we present the cause-and-effect chain for BHCI, illustrating how we established the financial impact of this non-financial indicator. BHCI assesses the health of both our organizational culture and our employees. Our chain starts with activities that support health at SAP, from flexible work arrangements to leadership development to our global health and innovation awareness weeks. Each of these strengthens our organizational culture and helps our employees manage stress, achieve work/life balance, feel empowered in their roles, and perform at their best.

Cause-and-Effect Chain for the Business Health Culture Index (BHCI)

Moving from left to right, we diagram the impact of these activities. Flexibility, for example, enhances stress resilience and work/life balance, which in turn leads to greater productivity. Greater productivity then results in a higher operating profit.  

A Case Study: Calculating the ROI for the “Join In – Stay Fit!” Health Initiative at SAP Deutschland SE & Co. KG

This year, for the first time, we were able to calculate the ROI for a concrete example along one of our cause-and-effect chains, using real data from the “Join In – Stay Fit!” program at SAP Deutschland SE & Co. KG. The result: a positive ROI of 3.9. This means that operating profit increased €3.90 for every €1 invested in the program.

The cause-and-effect chain for our Business Health Culture Index (BHCI) illustrated above was taken as the basis for the calculation. In 2014, we implemented a number of specific measures within SAP Deutschland SE & Co. KG (around 4,800 staff) that were aimed at improving work-life balance (including employee workshops that raised awareness and provided concrete tips on how to change one's behavior). We were able to clearly map the direct and indirect costs of this implementation, as well as measure the difference in the work-life balance plus its effect on the business health culture index (BHCI) before and after the program's launch.

The calculation of the ROI in this example, based on the direct and indirect costs of the measures as well as the positive monetary impact of the resulting change in the BHCI, shows the measures make sense from a financial perspective as well.

 

1 The results reflect a quantification of a gross effect related to a change of a certain KPI and does not allow for any net impact measurement. The evaluation of required investments to change the non-financial KPI's was excluded from the scope. The economic gross impact of a single KPI includes interdependencies to other KPIs, which is why our results do not allow for a cumulative effect across all KPIs included in this report. All calculations are based on non-IFRS figures (as shown in the Integrated Report 2015).

A Holistic View of Our Performance

Producing an integrated report signals our commitment to the idea that traditional financial measures alone do not paint a full picture of a company’s performance. But we also believe that integrated reporting is only as effective as the actions that surround it. Even having an integrated strategy is not enough. We must also implement such a strategy by taking real steps to support our performance in every dimension – economic, social and environmental.

We believe that documenting the financial impact of non-financial indicators brings us closer to taking these steps. Rather than simply stating the business case for social or environmental change, we now have the numbers to back it up. This documentation helps to shift the conversation for business leaders, investors, employees and other key stakeholders. It establishes a level playing field for a wider range of actions that support financial success; engaging employees or reducing our emissions can no longer be seen as a nice-to-have, but as essential to carrying out a successful business strategy.

Moving from Creating a Model to Taking Action

As we move forward, we aim to continually do our part to help spread these ideas and their adoption, both inside and outside SAP. We are working to embed these results more and more into our decision-making and quarterly business reviews, so that they are used to help steer our business along with such factors as revenue and cost. Our goal is for all senior business leaders at SAP to recognize – and be held accountable for – the fact that improving such measures as employee engagement also boosts financial performance.

At the same time, we will continue to share our methodology with our customers to help them win in the marketplace. We now know that companies can achieve higher operating profit – resulting from both greater cost efficiency as well as revenue growth – by acting across economic, social and environmental dimensions. More important, such companies will be better equipped to lead in the future, as they navigate the world’s most pressing challenges and help to bring about long-term sustainable change.  

 

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