SAP Chief Sustainability Office Peter Graf has been working for the company for 16 years, but says that now "is probably the most exciting time" to be there.

It's not that the rest of the company's history has been boring. Every decade or so, the 40-year-old software company has seen fundamental change in the way business is conducted, Graf says.

There was globalization, which changed the division of labor across the planet and offered new challenges and opportunities to software providers. "People who do software who did not see this coming do not have software companies anymore," Graf says. Then came the Internet and, with it, a wave of disintermediation, when consumers began interacting directly with car-rental companies and airlines – for example – without travel agents or other intermediaries.

Now SAP is seeing another transformation, Graf says. A growing population and resource scarcity are creating major challenges, which new technologies can turn into large business opportunities, he adds. "This is an exciting moment where new technologies meet business challenges."

Among other trends, volatile natural-resource prices, the explosion of mobile devices and more regulation around the world are changing the landscape for companies. And the new business environment creates the need for new software, Graf says.

SAP, the world's largest enterprise-software company, already has a hand in the majority of worldwide business processes, touching more than 60 percent, Graf says. Organizations use its software when they search for a new supplier, send an invoice to a customer, hire somebody or track a shipment, among many other examples. As Graf puts it, "It's mind-boggling how deeply we have ingrained ourselves into the world economy."

The company is having its Sapphire Now and ASUG Annual Conference together in Florida this week. I sat down with Graf in advance of the events to discuss the challenge of cutting emissions while growing the company, engaging customers and tapping new business opportunities. Here's an edited excerpt from our conversation:

Jennifer Kho: The ability to grow without increasing emissions is a big challenge for many companies and key to meeting your target of dialing back emissions to 2000 levels by 2020. According to SAP's 2011 sustainability report, its emissions rose 7.4 percent as revenue grew 25 percent last year, while in 2010 the company was able to cut emissions 5.7 percent while boosting revenue 17 percent. Are you running out of low-hanging fruit?

Peter Graf: This is one of the things that's really driving home the message that, around energy and energy management, there are two areas you can look at -- one is transformational and the other is efficiency gains.  If we replace a flight with telepresence, that's transformational; if an airplane uses biofuels and better engines, that's efficiency. We're always trying to improve both.

Efficiency changes are easier because they usually don't drive behavioral change. We've gained more than 10 percent efficiency in facilities, 10 percent in IT, 10 percent efficiency in corporate cars, but the real challenge is the transformational one. That's really where you need to engage people. Most of what we do after harvesting low-hanging fruit is engage the individual. And usually it doesn't work if you say, "Don't be a bad boy; you shouldn't drive your car." What works is saying, "Hey, if you carpool you will have more fun getting to work."

Kho: How are you working to engage your employees?

Graf: You first need to decide on what you really need to engage them on, what's material to your business. That's often a challenge. We really put a lot into understanding how employee engagement relates to revenue and margins. … We engage all of our leaders in the company in order to drive employee engagement and motivation, and every leader has an element of compensation tied to how well she engages her employees.

For things that are material, we have to consider if paying for performance is something we want to do. But people are not only motivated by money. In a knowledge-driven industry like software, purpose is also a big driver. Knowing that more than 60 percent of all business transactions touch an SAP system in some shape or form, we realize that we have an opportunity beyond making business better, but also to make the world better. 

From stories about the shea nut producers in Ghana to what we do in Haiti with construction companies, those are stories that capture people's imagination from a technical perspective and, equally importantly, capture people emotionally. It ties employees to their community and a purpose and the future and how they can contribute. …

Next page: Employee engagement and new opportunities