The current economic crisis is pushing businesses toward cloud-based software and services that are light on resources, cost-effective, and easy to deploy. SAP is in a unique position to offer these solutions.

The company’s New Ventures and Technologies group, led by Max Wessel, is an exploratory unit set up to produce cutting-edge, future-focused technology quickly. In addition to heading up the group, Wessel is chief innovation officer for SAP and managing director of SAP Bay Area. Here, Wessel talks about his approach to fostering innovation.

Fostering Innovation in the Intelligent Enterprise

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Fostering Innovation in the Intelligent Enterprise

Q: What constitutes innovation at SAP?

A: Innovation is a big word, and we do a lot of it at SAP. It’s in every incremental change we bring to a product, in every iteration of our business model and approach to engaging customers. And we should be proud of all of it. When customers ask us about innovation, it’s often about where we embrace truly new technologies and business models. SAP has been making great progress in the past few years by targeting game changers alongside our core business. For example, the Voice AI team from Newport Beach is using natural language processing to analyze SAP Concur call center data to determine how effective an engagement has been. Instead of spending hundreds of hours manually checking call logs, artificial intelligence (AI) takes over. That’s a great example of taking a net-new technology to solve an age-old problem.How does SAP create organic innovation?

Across the company we introduce new features, new products, and new services on what seems like a daily basis. That innovation has allowed us to create strong footholds in our customer environments. However, to deliver transformative growth, we also need a big vision. We have to look 10 years into the future, identify the big problems that are worth solving, and then attack them in ways that deliver value to our customers.

Coupled with that vision, SAP has to empower its innovators to explore new technologies, work with customers on proofs of concept (POCs), and share great ideas with colleagues across the globe. It’s that exchange that lets us identify the big ideas together. Last year, more than 20,000 employees engaged with our intrapreneurship program, and at our development kickoff meeting in January we officially launched the SAP Technology Radar tool, a central, internal platform for knowledge exchange on new technologies. We want every employee to contribute to the process of pushing SAP forward. And our New Ventures and Technologies team supports that conversation.

What major trends are you are seeing?

There is still enormous potential for machine learning inside the enterprise. That’s why we are continuing to push AI capabilities in voice recognition and looking at synthetic data generation and new encryption methodologies. We believe they will play a role in bringing advanced AI capabilities to the enterprise.

But it’s not just about technologies. It’s also about simplifying software deployment and customization through “no code” software and business process automation. These advances will empower almost anyone to build a business app, without having to be an engineer.

The last trend is applying new business models to deliver software in fundamentally different ways. For example, we are now able to match small- and medium-sized businesses (SMBs) with lending partners in Ariba Network, using their invoices as a point of reference for credit. This has allowed us to open up credit to businesses that desperately need it during the current economic crisis at no cost to the businesses or to our SAP Ariba customers — all because we’ve been experimenting with this new business model for the past two years.

How do you find those sweet spots in the SAP portfolio?

SAP shines when we understand the customer problem, have deep domain expertise in a given line of business, and infuse new technologies to solve the problem. The SMB lending product that I just mentioned, Apparent Financing by SAP, came from the Ariba Network team based on conversations they had with their customers. They had a deep understanding of the customer problem, but they needed a technology partner and found that in our organization.

Part of our role is to start a conversation with all of SAP about the future. Every year we run a variety of innovation campaigns at SAP. Because of these efforts, a lot of the projects we start come directly from the experts across our company. I encourage my team to embrace a beginner’s mind by stepping back to listen to all of the ideas from the product experts and understand where new opportunities might lie.

How do we prevent the cannibalizing of our classical solutions? 

I’d rather we cannibalize our classical solutions than have a competitor do it. Here is where we need to be creative and have conviction. If we are convinced that the world will change in 10 years, then we should embrace a cannibalization of existing streams. The shift to the cloud over the past decade is something SAP should be immensely proud of. But the cloud is more than a new delivery mechanism, and it has required us to re-architect many of our products. And we did that boldly with a belief that the cloud would be the preferred delivery mechanism for many of our customers in many situations.

How can we incentivize employees to be more innovative? 

I object to the premise that employees aren’t innovative enough. I get more ideas that are more creative with more depth of understanding of an industry problem from our colleagues than you can imagine. Instead of incentivizing people to be more innovative, we need to empower them. One of the initiatives that I am proudest of at SAP is our intrapreneurship program. When I took over the organization, fewer than 3,000 people were engaging in our scouting and acceleration group on an annual basis. We now have more than 20,000, and the goal this year is to engage 25,000.

The reason we run the intrapreneurship program isn’t because we think that it’ll generate better ideas—the ideas are already out there. It’s to give people a means to build on those ideas, to test them out, and then to take them to market. And the more we do to create easier paths to innovation, the easier it will become for people to innovate.

What do we need to do to enable better throughput of innovation?

I believe we need three ingredients: patient capital, creative structure, and executive mandate. Attacking big problems takes time, and this is why we need to plan in terms of 10-year time horizons. We need to put small teams on those problems that only SAP can solve and give them the patience and structure that allows them to deliver value to the market. If they’re tackling big enough problems, if they’re given that mandate, if they’re allowed to take a non-linear path, they will do amazing things.

As managing director of SAP Bay Area, what advantages are there to being part of the 20 worldwide locations that make up SAP Lab Network?  

At the beginning of the COVID-19 pandemic, we were able to get all of the labs directors on the phone to gain an understanding of  regulatory best practices and digital communications in different cultural environments. This is a perfect example of the way we’re able to harness the best of a global development force to drive improvement. But we also combine ideas and forces when it comes to things like activating the employee base to drive innovation, creating hackathons, empowering employees to come up with new business ideas, or scaling our reach into the ecosystem so we identify local partners who can take our products and services to market.

What is your personal recipe for future-proofing SAP?

Everything we do from an innovation perspective has to tie into making enterprise software more personal, more flexible, and more open. It’s becoming easier than ever to connect systems together, which means the more open your systems and ecosystem are, the wider variety of innovations you can deliver. We have 100,000 employees at SAP, but there are 7.5 billion people on the planet with an incentive to help us help the world run better. We would be remiss if we didn’t open ourselves up to outside ideas around how to evolve enterprise software.

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