Thank you for standing by. I'm Mia Bayer, your Chorus Call operator. Welcome, and thank you for joining the SAP SRI Update Call. For today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star, followed by one on your touchtone telephone. If any participant has difficulty hearing the conference, please press the star key, followed by zero on your telephone for operator assistance. I would now like to turn the conference over to Mr. Stefan Gruber. Please go ahead.
Good morning, or good afternoon. This is Stefan Gruber, Head of Investor Relations at SAP. Thank you for joining us for the SRI Update Call. The socially responsible investment community continues to grow. In fact, environment governance and social topics are increasingly moving into the mainstream. At SAP, sustainability is an important and integral part of our strategy. We engage regularly with the SRI community. To further this dialogue, we are using the occasion of publishing our third integrated report to hold an update call with the SRI community. Shortly, I will hand over to our CFO and member of the executive board, Luka Mucic. The focus of today's call is exclusively on SRI-related topics. Luka will discuss highlights from the SAP Integrated Report 2014, such as the expansion of our integrated performance analysis, which monetizes non-financial indicators impact.
Daniel Schmid, Head of Sustainability Operations, will also join us for the Q&A. I have a couple of technical comments. The speakers will refer to a presentation, which you can download using the link provided in the invitation. Alternatively, you can download the presentation from our website. If you cannot access the presentation, please send an email to investor@sap.com. I want to say a few words about forward-looking statements. Any statements made during this call that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as anticipate, believe, estimate, expect, forecast, intend, may, plan, project, predict, should, outlook, and will, and similar expressions as they relate to SAP, are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements.
All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission, including SAP's annual report on Form 20-F for 2014, filed with the SEC on March 20th 2015. Participants of this call are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. With that, I would like to turn the call over to Luka Mucic.
Yeah. Thank you very much, Stefan. Ladies and gentlemen, good afternoon or good morning from my side as well. Thank you very much for joining this call. I really appreciate your interest in SAP, but also in the significance of sustainability for the success of our business and the way we interact with the world. As the sponsor for sustainability on SAP's executive board, I would like to give you today an update on what SAP is doing to promote sustainable business practices and how our approach is founded on really viewing integrated thinking that acknowledges and connects three dimensions of our performance as critical. That is the economic, social, and environmental aspects of our overall business performance. Let me start by saying that at SAP, we believe that in order to fully understand and steer a business, you need a holistic view of your company.
This, in our opinion, is not only true for SAP, but as well for every one of our customers. Consequently, in 2012, SAP started submitting an integrated report reflecting that thinking, and we have since then worked hard on further developing our integrated approach, resulting in our third holistic report, which was published last Friday. If you go to slide three of your handout, you can see a picture of our online integrated report, as well as the printed extract. I invite you to take some time with our interactive report, and we obviously always welcome your feedback. The four main KPIs featured in our report are growth, profitability, employee engagement, as well as customer loyalty. You will find these four indicators appearing again and again in our report, but of course, we report many additional KPIs, some of which I will go through later in more detail.
Beyond merely reporting the results for these KPIs side by side, though, we have worked hard on establishing connectivity between the indicators. In fact, the total number of KPIs for which we have done an integrated analysis has doubled since last year from two to four. We already identified the gross effects for employee retention and CO2 emissions in our two preceding integrated reports. We believe this represents a significant step in terms of viewing business holistically, and I will therefore go into more detail on this aspect later. Let me say a few words about the title of this year's report. For everything SAP does internally, as well as in interaction with its customers and its universe of partners, we have declared Run Simple to be our operating principle. The title for our report reflects that.
It suggests that while connecting different KPIs that have so far not been viewed in such close relation to one another is a new effort, this effort, in fact, simplifies as well as potentially standardizes, in essence, how we establish a holistic view of business. SAP recognized a long time ago that you cannot only look at traditional financial KPIs to judge a company's performance, health, and standing. In fact, we conducted our first internal employee survey in 1995 already, and we have been measuring the Employee Engagement Index since 2009. With integrated reporting, we have taken this approach to the next level by formalizing it in our reporting. As we continue on our integrated reporting journey, we discuss KPIs now in a holistic way by complementing the traditional financial KPIs with additional ones, and eventually connecting them logically.
If you go to slide four, I would like to talk about SAP's understanding of its overall role in the world, which we view in a decidedly holistic way to begin with. We have boldly established our company vision to help the world run better and improve people's lives. When it comes to the solutions we offer, this translates into our mission to help our customers run at their best. Running at their best here already implies a holistic view of our customers' businesses and how we can support them in different dimensions, including sustainability. From the perspective of our solutions innovation strategy, we focus on the opportunities of cloud computing and of our in-memory database, SAP HANA, in particular. The impact in terms of sustainability as an element of how our customers run their business is really key to us.
With over 282,000 customers of all sizes across 25 different industries, who are all eager to adopt groundbreaking technologies that are changing the way business is done, we have a vast opportunity as a solution vendor to have a real impact on the world, most notably as a thought leader promoting sustainability. In fact, we were proud and honored to be named software industry leader in the Dow Jones Sustainability Index now for the eighth year in a row. Our software covers core processes across all of these companies, we obviously have a very strong leverage when it comes to both increasing their efficiency and furthering their sustainability-driven innovation. As I said before, our focus in the integrated report is on four KPIs, that is growth, profitability, customer loyalty, and employee engagement, there are many more detailed KPIs that we report.
I would like to go through them one by one, looking at our economic, social, and environmental performance. Let me start with the economic dimensions as we show them here on slide five. We announced our key financial numbers for 2014 just in January, I won't spend too much time on them today. To sum it up, we reported strong growth in total revenue, driven especially by an exponential increase in cloud subscription and support revenues. Operating profit also showed solid growth, which I consider to be quite an achievement given that we are in a full steam transformation to become a cloud company, therefore also have significant investments that go along with those transformations. We also saw a strong increase in customer loyalty as measured by the Net Promoter Score.
This KPI goes beyond measuring simple customer satisfaction, as it is especially geared towards judging the readiness of customers to actively promote SAP to others, measured on a scale from -100% to +100%. We saw a strong increase in this number, which continues the trend already started last year. It is very important for us as a company to be transparent about this KPI. Most companies that measure NPS do not release the results. We are proud of our customer relationships as a key factor, as they reflect both on our own business sustainability as well as our own sustained impact on a loyal customer base when it comes to promoting integrated thinking. Let us now look at our sustainability from the social perspective, you find key KPIs here on slide six.
We are measuring our Employee Engagement Index, our Business Health Culture Index, our employee retention, as well as our percentage of women in management under this category. In 2014, we achieved an overall employee engagement score of 79%, 2% up from the 77% that we had achieved in 2013, as measured by a global anonymous employee survey conducted by an external service provider that also helps us compare our results with others. In essence, employee satisfaction went up in every single category and in nearly all questionnaire items, including topics addressing the confidence of our employees in our strategic direction in particular. These results are excellent compared to industry benchmarks. SAP's efforts to simplify our processes are likewise recognized by our workforce in the survey. The data also shows us that we will still have some work to do in this category.
This will be one area we focus on as we promote the idea of Run Simple inside the company. Our Business Health Culture Index, like employee engagement, is derived from the employee survey and some ancillary data from our employee health support program. In this area, our score increased by 3 percentage points to 70, and we aim to sustain this high level. Employee retention remained stable, and the women in management ratio increased slightly to 21.3%. Let me turn then to the key indicators of our environmental performance, which you see listed on slide seven. Those are greenhouse gas emissions, renewable energy ratio, and our total energy consumption. We lowered our greenhouse gas emissions to 500,000 tons, down from 545. While we reached 100%, and we are very proud of that, when it comes to the portion of renewable energy to power our data centers and facilities.
To achieve this, we purchase high-quality renewable energy certificates. In line with our cloud strategy, we in turn obviously enable our customers to reduce their IT-related emissions by offering them to move their business processes into our green cloud infrastructure. Another area that contributes to our greenhouse gas emission is employee commuting. Last year, we started offering eligible employees in Germany the option of choosing an annual rail pass instead of a company car. We also set a goal of having 20% electric cars in our company car fleet by 2020. In fact, just today, together with Daniel, I picked up my electric BMW i3 from our corporate fleet, and I'm now a proud electric car driver. It's also fitting to mention another area where we are innovating around commuting. That is our mobility app, TwoGo. This app allows people to connect with others for ride-sharing purposes.
We have many employees here at SAP who already use the app to share rides to and from work. Not only does it save CO2, but it also obviously helps make connections among colleagues and foster social relationships. Recently, we were proud to note that BASF just rolled this out for their employee base as well. Our total energy usage increased by 1% to 920 gigawatt hours, which is a strong result, showing how we leveraged efficiency, because this 1% increase in energy usage corresponds to a 5% increase in our company headcount, as well as a stunning 45% increase of our cloud business. Let's turn to the future. If you look at slide number eight, this slide shows you our financial outlook for 2015, as well as our financial aspirations for 2017 and 2020.
In short, we aim to increase our total revenue to up to EUR 28 billion by 2020, which would represent around about EUR 10 billion increase between now and 2020, with support and cloud subscriptions bringing in already a 65%-70% share of revenue by 2017. This shows you the strong financial impact the cloud is having on SAP's financial performance. We also anticipate between EUR 6.3 billion and EUR 7 billion in operating profit in 2017 and between EUR 8 billion to EUR 9 billion in 2020. That is obviously all based on constant currency figures based on the values that we have seen throughout last year. This year's result, obviously, in the short term, are positively influenced by heavy currency fluctuations, as I'm sure you all have noted them over the course of the past weeks.
Please note that for many non-financial indicators, such as the customer Net Promoter Score, we are still learning how these indicators behave over time and what influences them. Therefore, it is quite difficult to issue long-term forecasts for them. Nevertheless, you see here some indicative values also for our non-financial indicators. In short, we aim to increase the customer Net Promoter Score to 24% this year. Likewise, we aim to achieve an 82% Employee Engagement Index value this year. In 2017, we are aiming to have at least 25% of women in management through all the management ranks of SAP, I should add. Finally, we aim to lower greenhouse gas emissions back to their 2000 levels by 2020. A very important point for me is to show what these non-financial indicators really mean for the business.
The answer to this question is included in the integrated report for 2014 that I'm really excited about and very proud of, but you can also see the essence of it on slide number nine. To arrive at 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 therefore sought to create a framework to establish concrete links between non-financial and financial performance. This year, we took our efforts one step further, determining how far social and environmental indicators, that is our Business Health Culture Index, Employee Engagement, employee retention, and carbon emissions, impact SAP's operating profit. We began, as I said before, to report some of these connections already in 2012 and have now made a major step forward with these numbers.
The methodology was developed together with PwC and audited by our auditors, KPMG. We basically quantified the corporate economic gross impact of a one percentage point increase for the KPIs that I mentioned before, as well as cost avoidance related to them to a decrease of carbon emissions by 1%. The results are that for the Business Health Culture Index, we see a gross impact of between EUR 65 million to EUR 75 million of a one percentage point of fluctuation. For Employee Engagement, the same value is between EUR 35 million and EUR 45 million. For employee retention, it's between EUR 40 million and EUR 50 million, and for carbon emissions, EUR 4 million. We believe that going forward, it will help significantly shift the conversation in this context for business leaders, investors, customers, and other key stakeholders.
Engaging employees or reducing our emissions can no longer be seen as a nice-to-have intangible, but it is actually essential to carrying out a successful business strategy and raising profitability. These KPIs should be used not only for reporting purposes, but also to support steering the business on all levels. We will use our results to support the evolution of our own strategy and invest in concrete steps to create positive economic, social, and environmental impact. In fact, we take this so seriously that we have established an internal steering committee that I chair, and that is meeting regularly to ensure we walk the talk and embed sustainability and integrated thinking across all of the board areas in the company. We will also continue to be very transparent about our methodology and our journey in the hopes of inspiring other companies to follow the path of an integrated strategy.
As we have now discussed SAP's own performance holistically, let me come back to an aspect I mentioned earlier in this call, the impact on our customers' performance as supported by the solutions we offer. While it is very important that we as a company take steps to serve as an exemplar, I believe this is the lever where we can have a much, much larger effect on well-being and progress on those characteristics because of our vast customer base. Just to give you some individual flavors here, in February 2015, we announced SAP S/4HANA, which harnesses the disruptive power of the breakthrough SAP HANA in-memory database technology.
We believe that this innovation holds significant potential for an impact on our customers' sustainability, as it first of all increases the real-time transparency of facts and figures across a company, as well as the ability to rationalize and analyze current values and simulate future scenarios. In addition, in the spirit of Run Simple, this new solution can substantially reduce the total cost of ownership, data footprint, therefore hardware sizings for a company, and thereby significantly contribute to a company's efficiency also in terms of sustainability. Looking at what customers are doing already today with our products, that is directly related to how businesses interact with their social and environmental context. There are so many good examples of how our solutions have a clear impact that it is pretty hard to choose. Here are two examples on slide 10 that make this case quite clearly.
As many cities face challenges resulting from rapid urbanization and demographic change, SAP is working with various governments at both the state, municipal, and country level to help urban business, governments, and people to create best-run cities. The city of Boston, for example, uses dashboards from SAP to give city managers and citizens insight and access to information. Residents have the ability to monitor how city agencies are performing and pinpoint areas for improvement. With SAP HANA, Boston is able to proactively troubleshoot issues and reach strategic policy goals. After implementation, Boston saw a 66% reduction in calls regarding problem properties in the city. Given that I've been spending two months in a student dorm in Boston 20 years ago, and I recently returned to the city, I can certainly attest to the progress that has been made in the city since then.
Another good example is the U.K.-based utility provider, Centrica. They are implementing SAP HANA to perform smart meter analytics, which is an extremely hot topic for utility companies worldwide. Smart meters will lead to 120 billion meter reads per year for just a single provider. With SAP HANA, they can analyze this big data to turn it into smart insights. For example, in order to reduce energy usage and costs via more accurate load forecasts, and for achieving their carbon emissions targets. These are just a few of many examples of the economic, social, and environmental impact SAP software has on our customers. In closing, I'm very proud that SAP is taking integrated thinking to a new level this year. I believe that we have truly embraced this crucial new way of thinking and made it actionable.
While this journey obviously is a marathon and not done yet, I'm very confident that our strong financial, environmental, and social performance in 2014 is a very strong foundation for achieving the targets that we have set for ourselves, both for 2015 as well as beyond. Now I would like to take your questions.
Thank you very much. Luka, for the Q&A, I would like to hand back to the operator, and as I said earlier, Luka Mucic will be joined for the Q&A session by Daniel Schmid, our Chief Sustainability Officer.
Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on a touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. I repeat, if you'd like to ask a question, please press star followed by one. There are still no questions.
Okay.
Yeah
In case there are no questions, I would like to thank everyone for joining us for the call today and for your interest. In case you have further questions, please do not hesitate to reach out to the investor relations team, which you can reach through the usual contacts or by email at investor@sap.com.
One second.
might have a question.
We have a question here from Benedict Buckley of ClearBridge Investments. Please go ahead.
Hi, good morning or good afternoon to you guys. Quick question. I believe that in previous years you'd done an analysis looking at your footprint and found that the majority of your emissions were associated with running the software, and that you've been reducing or simplifying the software to enable it to run more effectively. Were there insights that you got from that analysis that you wouldn't have otherwise thought of? Other software companies might say that, of course, they're trying to reduce the energy required for their software to run.
Was there additional insights beyond that you found from sort of taking this integrated approach, this sort of holistic approach, that you wouldn't have otherwise have come to? Thanks.
Yeah. First of all, let me start and Daniel, please join me in answering. First of all, when you take a look at the potential that our specific software architecture that we follow with SAP Simple Finance and in total with HANA holds, that's a pretty unique feature that by itself is at the moment impossible to replicate for all of our competitors. Why is that? Because not only have we with HANA implemented an in-memory database architecture that allows you to compress data to rates that are unmatched elsewhere in the industry, and therefore reduce the data footprint to a level that is dramatically different from what you find with more traditional architectures. We have now gone one step further and actually have optimized the whole application architecture of our traditional suite applications to take optimum advantage of those capabilities.
Our whole notion of S/4HANA as a suite as well as Simple Finance is based on completely removing the redundancies that existed due to performance reasons in the technical architecture of applications to cater for some tables, for aggregates and indices to tune, if you will, the performance of traditional relational database systems. This suite and that impact that allows to shrink your data footprint by 10x while increasing the throughput tremendously and still speeding up the time that it takes for analytics is unmatched in the market because there is simply no other company out there that has done the work that we have done to not only devise an in-memory database, but also revolutionizing the whole architecture of the applications on top of it. In that sense, it is really unique. This is a technological result that we have achieved.
Through the reduced data footprint, you need less hardware and less storage in order to run the software. This has, of course, a positive impact. I wouldn't say that through the connected thinking that we have embedded in our integrated reporting in the way how we try to devise cause and effect chains on the impact of certain social or environmental performance KPIs, we can optimize our financial performance. We have gained any additional insights to that because the impact from the software, the pure software architecture, is really unique in its sense. What, of course, we are working on, and what we have focused on very successfully over the course of last year is on top of these capabilities that the software architecture brings us, make sure that our data center operations are really based on as environmentally friendly conditions as possible.
That's why I've alluded in my presentation to the fact that since 2014, we are now running on a complete 100% green basis. That is, of course, an effect that we are not only doing because we are seeing a positive impact through our customers that are moving into our cloud infrastructure in order to become greener themselves, but also because we are seeing the positive correlations that this has on our overall performance. Daniel, anything to add from your side?
No.
Okay, perfect. I hope that was satisfactory, but if you really take a look at Simple Finance, the dramatic trigger for sustainability here is really at an architectural, technological level, the unique architecture of the system that allows it to shrink its footprint tremendously to an unmatched level in the market.
All right. Thanks.
Thank you. Handing back to the operator. Are there any further questions?
We are waiting for further questions. Please use the opportunity to ask your questions by pressing star followed by one. I think we have a follow-up question from the line of Benedict Buckley.
Yeah, a separate question, actually, regarding the methodology that you did with PwC. Is that a proprietary methodology or would that be something that, A, we can see how that exactly works internally, or do we just see the output of that? Is that something that PwC will be using with other clients, or is that proprietary to SAP? Thanks.
Yeah. Here is Daniel. It is that we would like to encourage others to join us on that journey, and together with PwC, with us, or with others. We are seen here as a front runner, and you find a lot of details about the way how we came to these findings and to the quantification of these KPIs. You find a lot of information in our integrated report. The methodology is described there, and there's, as an example, a visual shown about this cause and effect chain for the Business Health Culture Index, where we have seen this EUR 65 million-EUR 75 million impact per percentage point of change of this indicator. This is described there, and we are happy to share that with others. We already have meetings scheduled, conferences where we will go in more detail in order to encourage others to join.
Exactly. If you're looking for a shortcut, I think it's the Integrated Performance Management section of the integrated report. Please don't hesitate to read the full report. It's, in my point of view, very insightful. End of commercial break here.
Okay, thanks.
If you have a question, please press star followed by one. We are waiting for further questions. It seems we have no further questions.
Okay. Well, then I am repeating what I said earlier already. It was too early on this call. Thank you very much for your interest in this topic. Thanks for joining us today on this SRI call, and if you have any further questions, don't hesitate to reach out to my colleagues in the investor relations team. You can reach them at investor@sap.com. Thank you for joining, and goodbye.