Small beginnings can lead to large impact. The first location of SAP Innovation Center Network was founded in October 2011 as a technology trend radar for the Walldorf-based company and has since given rise to a significant number of SAP’s most innovative products and solutions.

“Invisible spheres making funny noises,” Marcus Krug says when asked about the first thing he remembers from the early days of SAP Innovation Center Potsdam. “We were located right underneath the Hasso Plattner Institute’s D-School and would always hear the HPI students playing funny ice-breaker games to get their creativity going on the lawn outside our windows.” Now the head of SAP Innovation Center Potsdam, Krug first joined when it was five months old and had just over 20 employees.

SAP Innovation Center Potsdam was founded by the Executive Board of SAP SE and with the encouragement of Professor Hasso Plattner, chairman of the Supervisory Board of SAP SE. Today it serves as the nucleus of what has become SAP Innovation Center Network, which eventually gave rise to the New Ventures and Technologies department with close to 400 innovators within the SAP Technology and Innovation Board area.

“The idea was to have a dedicated SAP unit looking into new technologies and what could be done with them,” Krug says. “We didn’t want to risk missing out on both technical and business opportunities.”

Matthias Uflacker, the first SAP Innovation Center Potsdam employee at the time, explains why Potsdam was chosen as the first location: “The collaboration with the Hasso Plattner Institute helped us identify and try out new things outside of standard SAP product development. SAP Innovation Center Potsdam fostered research, providing a platform for the cooperation between SAP and scientists, with SAP not only funding but also bringing in relevant questions to solve. And, with its proximity to HPI and the academic hub that is Berlin, it was able to attract a lot of amazing, international talent over the years.”

Technology Vanguard for SAP

“The original mission was to transform cutting-edge research into innovation, so obviously from the beginning we’ve had the ambition to explore and use the latest technology in order to find out how it could benefit our customers and SAP,” Krug says.

Working closely with academia was an obvious way to get access to cutting-edge research. The birth of SAP HANA, for example, was the result of a strong relationship between SAP and HPI. Experts from both sides were eager to continue working together, with further projects revolving around the application side of SAP HANA.

“Part of our mission was to explore novel SAP HANA use cases to see how far we could push what was possible with this new, paradigm-shifting in-memory technology,” Krug says. “To do so, we were looking at new applications leveraging data science and machine learning on Big Data sets in a broad range of industries, including healthcare, life sciences, and even gaming. Many of these projects were small and it was a lot of fun to work on them with highly talented colleagues coming from all over the world.”

“HPI student projects had already been an important contribution to the development of SAP HANA,” Dr. Michael Perscheid, chair representative of Prof. Hasso Plattner at HPI, says. After founding SAP Innovation Center Potsdam, these types of projects were continued with a strong focus on the application side. “Gifted students from HPI got to work on a specialized business problem together with SAP and an industry partner,” he adds. Some of these projects were so successful that they were featured in Plattner’s SAPPHIRE NOW keynotes.

Strategic Approach to Innovation

SAP Innovation Center Potsdam moved to a building of its own in September 2013, located in an idyllic spot north of Potsdam, near Lake Jungfernsee. Designed for transparency with its open spaces and large glass fronts, the new location in Potsdam is meant to foster communication, exchange of ideas, collaboration, and contemplation of new possibilities. Due to massive hiring, an additional building was opened in May 2016.

In 2013, the leadership of SAP Innovation Center Potsdam changed to Juergen Mueller, formerly head of Plattner’s chair at HPI and today member of the Executive Board of SAP SE and chief technology officer, who was to give SAP an actual innovation strategy.

“SAP Innovation Center Network, among other things rose from that strategy,” Krug says. “Juergen brought in the necessary structure and focus for the location to take on increasingly bigger responsibilities within the SAP family and to get ready to grow the team significantly over the next few years.”

Startup Agility Combined with Corporate Expertise

Inspired by his work with startups and venture capitalists in the Berlin ecosystem, Krug developed the idea of creating an entrepreneurial space within SAP, allowing employees to develop new ventures following the same principles and governance as their non-SAP counterparts. The resulting blueprint for SAP’s intrapreneurship program made it into Mueller’s innovation strategy in 2014 and laid the foundation for yet another big step in the evolution of SAP’s innovation ambitions.

After reaching more than 1,000 employees who submitted more than 400 venture ideas, it was clear that the program struck a chord. Venture capitalists who had been invited to help structure the program by providing outside-in perspective were impressed with the quality of the submissions and the proposal was met with a lot of interest by the executive board. In retrospect, Krug is certain: “Coming up with this idea, developing it, actually getting the mandate and the freedom to build the program the way we did – this could only have happened at SAP Innovation Center Potsdam.”

Working closely with startups also spurred a certain SAP Innovation Center Potsdam-specific mindset about the development of new ideas. “Think big, start small. Fail often, fail early, as a startup would,” Krug sums up. “This isn’t typically possible when you’re part of a large corporation.”

Using a lean startup approach, design thinking, and first-principles thinking, SAP Innovation Center Potsdam experts first focus on a business problem when working with SAP customers. While most big problems have already been addressed one way or another in the market, new technologies often allow for completely rethinking how to approach a problem. Machine learning and blockchain are two prominent examples of technologies that SAP has been able to adopt to build fundamentally new capabilities after exploring them in SAP Innovation Center Network.

The setup for SAP Innovation Center Potsdam’s innovation projects with customers closely resembles the work of a startup. It starts with a small team and works to demonstrate in an agile way how it will benefit customers. Since SAP Innovation Center Potsdam typically works in close alignment with SAP’s lines of business, there is always a realistic chance that a successful solution might eventually become an SAP standard product.

Outlook into the Future

SAP Innovation Center Potsdam’s mission, however, still feels fresh and vibrant after 10 years. Now part of the bigger New Ventures and Technologies family, the team continues to tackle big customer problems using the latest technologies, including neurosymbolic artificial intelligence (AI), semantic technologies, and blockchain.

Some of the team’s biggest bets are on decentralized technologies to build the business network of the future, enabling customers to seamlessly share scope-3 carbon emissions, embedding financial technology into business processes using smart contracts and decentralized finance, as well as new AI-powered simulation and decision-making tools to contextualize business events and augment SAP S4/HANA Finance users.

“We don’t own a fail-proof crystal ball,” Krug says. “But I’m sure we will hear and see a lot more on the topics of AI-enabled contextualization, human augmentation, smart contracts, tokenization, and tokenomics. Our goal is to drive the change these new capabilities will enable to create a better world and help our customers address their biggest needs.”