This interview explores the nuances of SAP’s Corporate Incubation strategy in great depth.
Sramana Mitra: Tell us about what SAP’s thinking is in the domain of corporate innovation. What are your goals, activities, strategies and structure? Let’s dig into the programs.
Max Wessel: Let me start off with the high level description of what SAP is for those who are not familiar with the organization. SAP is Europe’s largest software company. We also happen to be the largest enterprise applications business in the world with one of the most robust or most commercially successful database and analytics businesses as well. Over the last 20 years, we pursued a string of innovation that drove us into new markets.
Most recently, we’re pursuing an incredible amount of growth in cloud application development and cloud application businesses. We’re constantly thinking about how we take our position in some of the most complex back office systems in the world and turn them into new opportunities for every organization. Like every technology company, we think of ourselves across our organization of 87,000 colleagues as innovators. Up and down, it has always been a top priority.
Defining that has been, fundamentally, a challenge because innovation is so many different things. Innovation is incremental improvements. The way in which we invest to build and improve our business must always include that. We can’t have a release of product and fail to continually improve it and generate that type of sustaining innovation over time for the customers who have bought in and committed to our technology ecosystem.
We also need to push ourselves in the new markets. We need to experiment with fundamentally newer discontinuous platforms. When we think of how we organize our company and how we make commitments to new styles of product development, we regularly try to match the activities that we engage in – how we deploy capital, how we deploy resources – to the types of things that we’re trying to achieve.
We have different organizations around the company. I’m the General Manager of SAP.io, which is effectively an internal venture fund. We actually invest externally. We invest internally in teams that have developed novel technologies or business models to attack new markets. That’s a wonderful vehicle for certain types of products to come out of the organization, but we also have a vibrant R&D function and long-term technology group that are doing all sorts of platform and fundamental technology research elsewhere in the organization.
It’s hard to answer that comprehensively with one strategy. As an organization, we have many different strategies for many different types of innovation.
Sramana Mitra: Let me start separating out those different strategies and pursue each of them separately. Let’s talk about internal innovation and intrapreneruship. You said your venture fund both invests internally and externally. You have other kinds of internal innovation programs. We’d like to learn more about that. In particular, what do you do to nurture grassroots intrapreneurship in your 87,000 colleagues within the organization.
Max Wessel: We have a $30 million fund that’s dedicated towards external investments. The capital that we bring to invest internally would effectively be a virtual fund that’s twice that size. We make very large commitments on a regular basis to teams all across the organization. We find those teams in a couple of different ways.