These days, having some kind of innovation incubator isn’t exactly a secret weapon for large enterprises anymore.

“Pretty much everyone has one now,” Jan Schaffner, the new head of the SAP Innovation Center Network, put it, after returning from an innovation workshop with other big companies in Berlin.

“It was kind of deflating to see all these big corporations with their innovation centers and digital labs driving almost the same focus areas that we do,” he admits. “Machine learning, blockchain, IoT, and smart cities have become classics by now. And everyone has a process for idea development in place, starting small, checkpointing what goes well, and funneling back into the products.”

Jan Schaffner heads the SAP Innovation Center Network, with a global team that explores and develops meaningful new technologies to fuel transformative growth at SAP.

On second glance, though, there are important differences. “Most corporate innovation units are actually facilitation teams using a methodology like we use design thinking to help their business units become more innovative in areas they occupy already,” says Schaffner. “The SAP Innovation Center Network is unique when it comes to dedicated development capacity.”

SAP Innovation Center Network has more than 200 developers in 11 locations around the globe, giving the unit the capability to develop a product or a new technology platform from scratch and see it through the process end to end. As a result, SAP Innovation Center Network is facilitating the adoption of technologies and also creating revenue for SAP.

“Not at a level which you would yet consider as major impact compared to SAP’s overall figures,” Schaffner hurries to add, “but products on the pricelist such as SAP Customer Retention and SAP Product Lifecycle Costing originated within SAP Innovation Center Network. ”

“SAP Innovation Center Network is the place where we want to create the SAP beyond tomorrow,” is how Schaffner sums up the vision of the unit he’s headed since January 2018. “There are other groups within SAP that are focusing on the future of the company, but they have a shorter time span to focus on, or they concentrate on the business side of things. SAP Innovation Center Network is technology-focused.”

How to Mainstream Transformative Innovation

Last year, SAP Innovation Center Network conducted a strategic portfolio assessment to categorize its projects with regards to the type of innovation they represent. It turned out that not all of projects at the SAP Innovation Center Network fulfilled the criteria of being centered on long-term transformative technology innovation.

The Different Types of Innovation

Not all innovations are the same. In fact, there are three different types of innovation, each with its own particular challenges:

  • Continuous innovation, or “Now,” involves incremental improvements to existing products.
  • Adjacent innovation, or “Next,” means applying existing knowledge and technologies to new (related) markets and gaining new customers.
  • Transformative innovation, or “New,” is the development of completely new trends, technologies, and business models giving rise to revolutionary products and markets.
Innovation in full swing: At the SAP Innovation Center Network location in Potsdam, Schaffner shared why he believes innovation doesn’t only need a specific strategic approach, but also a unique mindset.

Schaffner explains the different types of innovation using the example of machine learning: “Machine learning used to be an emerging technology that we are now mainstreaming and extending across the standard portfolio to make all SAP solutions intelligent.” That’s one of the reasons why machine learning is no longer part of SAP Innovation Center Network. “We are now scouting new emerging technologies to determine how they can complement SAP’s strengths and fuel future growth for our company.”

The plans for blockchain, which is an umbrella for about 30 activities at SAP evolving toward productization, are similar. The topic still belongs to SAP Innovation Center Network, even though there are more than 50 customers engaged in SAP’s blockchain co-innovation program, driven by several teams across SAP.

Further, SAP Innovation Center Network plans to provide general availability of the SAP Cloud Platform Blockchain this year, a cloud-based blockchain-as-a-service offering that empowers customers, partners, and developers to access ready-to-use blockchain services, build their own blockchain solutions, and integrate them into existing SAP systems.

True innovation doesn’t grow on trees. We see every stopped project as a learning for future challenges.

– Jan Schaffner

Topics are usually ready to “graduate” SAP Innovation Center Network when the adoption is rapidly accelerating or there are several customers using the product and paying money for it. Blockchain is a perfect model for how SAP Innovation Center Network is doing this.

“The market need must have been validated,” Schaffner explains. “Our blockchain team has a profound technological and conceptual knowledge of the technology. To create business value, they cooperate closely with many business units at SAP to identify use cases and solve our customers’ real-world challenges.”

In that regard, SAP Innovation Center Network embraces a symbiosis with the core business that also helps them find future topic and product owners inside the company.

Why Failing is Inevitable

Isn’t this an unrewarding job – creating businesses from zero, then handing them over as soon as they become profitable?

“We don’t think that way at SAP Innovation Center Network,” Schaffner makes clear. “There are those who want to explore a problem and develop an idea from scratch, and once the product gets on the pricelist, hand it over to other SAP units without regrets so they can tackle the next one. Others are emotionally attached to what they built so when the topic leaves SAP Innovation Center Network, they want to accompany and further drive it.”

Trend Report 2018 – Emerging Technology Trends

The SAP Innovation Center Network has just published the new Trend Report 2018, providing insights into technologies that already have or will have a significant impact on SAP and our customers over the next five to 10 years. It covers technologies SAP will deploy at large scale, like machine learning, blockchain, and conversational systems, as well as trends further out on the timescale, such as quantum computing or neuromorphic hardware.

Download the report

Part and parcel with this cycle is the need for SAP Innovation Center Network to reinvent itself time and again.

“We are currently amplifying our technology focus,” says Schaffner. “For that purpose, we have a small virtual team looking into future trends while we are also asking all SAP Innovation Center Network colleagues to contribute with their ideas for exploration. ” This grassroots innovation approach is then complemented with a structured portfolio framework and specific requirements at different gateways.

According to Schaffner, it is commonplace that projects get stopped sooner rather than later: “Hardly one out of 10 projects we tackle will eventually become a product – and this is on purpose. True innovation doesn’t grow on trees. Thus, we live up to a culture where we see every stopped project as a learning for future challenges.”

The newly published Trend Report 2018 offers a preview of these future challenges and topics. Here are some of the projects that SAP Innovation Center Network is currently exploring besides blockchain:

  • What will software development look like five years from now? While SAP is still somewhat reactively adopting interesting programming paradigms, the company produces lots of code and many partners in its ecosystem that do. Therefore, SAP has a natural interest in this topic. Facebook is a forerunner here and SAP Innovation Center Network is in exchange with their experts to have its finger on the pulse of a topic that might affect the software industry as a whole.
  • Circular economy is also in the running. SAP is supporting the United Nations’ Sustainable Development Goals and therefore needs to consider how its software can help make customers‘ products more sustainable. This is a topic for all business units at SAP. “None of us could tackle this problem on our own,” Schaffner stresses. “We’re not fostering a separate, self-centered culture, but approaching potential future owners inside SAP as early as possible with our projects. We are offering to help solve their and their customers’ problems.”
  • While quantum computing is a classic hardware problem, there are a couple of use cases that may affect the software industry as well, such as the multiple knapsack problem. “We don’t expect this to get actionable within the next five years, but we consider it important to work with the leading experts in the field in order to evaluate how quantum computing might impact SAP’s and also our customers’ future,” says Schaffner. “As an enterprise vendor, we need to find out whether we can utilize the technology to create significant value for our customers before the first general-purpose quantum computer even exists.”

Besides having a dedicated team researching new trends in technology, SAP Innovation Center Network relies on its employees for a well-stocked exploration pipeline, with ideas collected via a homegrown innovation management tool.

“In the end,“ Schaffner says, “the differentiator between SAP Innovation Center Network and other innovation hubs is not just how we approach these topics but the results we bring in for SAP and our customers.“