I dare say that everybody in the SAP Community has noticed the culture change that has been turning SAP inside out in recent years. It began with Shai Agassi, it continued with the acquisition of BOBJ and BOBJ’s executives such as Hervé Couturier and Marge Breya being placed in key positions at SAP, and it went off like a rocket when Hasso Plattner installed Jim Snabe, Bill McDermott and, most importantly, CTO Vishal Sikka.
SAP has effectively transformed into a company you can hardly identify with the grey-concrete type of company it was in the nineties, when I got started in the SAP industry. Let me give you some examples that, taken together, characterize the “new SAP”:
- It has created a vibrant community of passionate SAP experts, the SAP EcoSystem consisting of customers and partners.
- It has adopted Open Source software and standards and continues to contribute to them actively.
- It has established the Mentor program, in which key members of the community are given a voice both towards the community and the executives. (Being a member of that program myself, I can assure you that the members of the board listen to the SAP Mentors and open doors for us that were previously closed for years whenever necessary.)
- It has started the Customer Engagement Initiatives, in which non-SAP employees can feed their ideas and early feedback into SAP and exert influence on upcoming products.
- It created Idea Place, an open channel for ideas on how to improve products, services, and processes. It is really open – one year ago someone even posted the idea to make me give the keynote speech at SAP’s internal DKOM event and even got a few votes. :-) What is really new here is that everybody in the community can see which ideas are brought forward and how much support they get from the community. Discussions that were previously held through private back-channels are brought into the open. This is just one example of SAP deliberately giving up some control over a process in exchange for benefiting from the creativity of the community.
- With SAP StreamWork, it has created a social enterprise application in the cloud, combining two innovative concepts, and opened it up for the curious very early, integrating a third modern concept.
- It has established the SCRUM methodology, an agile way of doing software development that relies on an iterative approach to development and specification and honest and frequent feedback from users. (By the way, StreamWork used to be called 12sprints after the number of SCRUM sprints originally planned.)
- It has created an atmosphere where innovation is fostered and employees who were previously forced to pursue highly innovative projects in their spare time are now snatched away right from DemoJam and given the budget and time to work on what fuels their passion.
- It has made groundbreaking progresses in cloud computing and displayed an amazing resourcefulness at developing new integration concepts, the concrete frameworks that implement them as well as generally a new software foundation layer.
- Many of the innovations originally made for cloud computing are flowing back into the Business Suite, effectively leading to something which to call a renovation would be an understatement. If you look at the innovation that is happening in such areas as Web Dynpro ABAP and Floorplan Manager, the BOL/GenIL business objects layer and the plentitude of frameworks springing up around them, the Switch and Enhancement Framework, Forward Error Handling, and BRFplus, we might as well call it a renaissance of the ABAP stack thanks to ByDesign as a driver for innovation.
- Gateway: It is typical that one of SAP’s recent key projects, Gateway, is about opening up the ABAP system and making it easily accessible for new types of consumers such as mobile devices directly, middleware for mobile devices such as Sybase SUP, web pages and portals, and generally anyone who can integrate via REST services.
- HANA is also a good example of how the new SAP started. What is especially remarkable here is how fast they went from idea to product. (I don’t mean the individual ideas, which have been around longer, but the idea of putting them all together in the particular combination that became HANA.) As far as I know, it was less than two years in a project that spanned several organizations from research institutes to platform development. Looking at how SAP drives HANA, I find it amazing how they manage to unlock their best people from previous duties and channel much of their manpower into this project. This is not a company that moves like a slow supertanker. The resources going into HANA demonstrate that they can maneuver like a speedboat when it has to be.
- HPAs: Looking at HANA, you will notice that SAP is not just releasing a fast database to the world but working hard on redefining the concept of the enterprise application with High-Performance Analytical Applications (HPAs). They blend analytics and operational functions and combine that with social layers such as feeds and streams similar to those in twitter and facebook. Their architects seek early feedback from customers and partners and try to be as open as possible to new ideas in order to invent the next generation of enterprise software.
- SAP’s Oliver Bussmann is being noted as one of the most innovative CIOs for consequently driving the adoption of mobile technology at SAP and, by giving an example that will be followed by others, beyond. (It could probably be said that SAP’s CIO Oliver Bussmann is to mobility what the Postbank’s CIO is to SOA.)
- InnoJam: With the series of InnoJam events SAP organizes around the world, originally coupled with SAP TechEd but now also with other events and as a stand-alone event, SAP gives developers early access to tools, technologies, and experts, and creates a stage for fun and competitive 36-hours development marathons.
The list could go on and on. Each of the items could be discussed at length. We could identify that particular ideas have been around for a long time, that others have executed them earlier or better, that execution or market adoption are not as good as they could be. We could also add new items that aren’t success stories.
Old Thinking vs. New Thinking
In fact, in my SAP Mentor role I have many conversations in which innovators tell me how hard it is to bring an innovative application forward against the concerns of the legal department and how many great ideas fail several times because of legal concerns (until eventually, years later, it is suddenly miraculously possible and the product becomes a success). Some of the successes from the above list were thwarted by old thinking several times over many years until they were allowed to be fully executed. The creativity and resourcefulness have been around in SAP’s workforce and community for a long time, but it took the new thinking to stop suppressing that and begin to channel it into innovation that drives the company forward.
Of course there is still plenty of old thinking in SAP. It is the perception of many people that the more conservative forces are very strong and might even be strong enough to put the project of shaping a new, innovative, speedboat SAP at risk. Somebody said: The future is already there – it is just unevenly distributed. That is something you can observe very clearly by speaking with employees in the different areas at SAP.
Establishing the New Thinking Top-Down
Generally, it can be observed that the installation of the new thinking is driven top-down, with Hasso Plattner positioning Jim Snabe, Bill McDermott, and Vishal Sikka (who is in more than one way the successor of a previous attempt by Hasso Plattner to reinvent the company top-down made with Shai Agassi). Looking at the executives they install (or uninstall) and by looking at the rising stars and how they earn top management attention, it is evident that top management makes it a point to install representatives of the new thinking. As I mentioned before, there is plenty of resistance. Frequent answers to new suggestion are: “That’s against the process. That’s not how we can do it. It’s impossible. Legal has concerns. We would need to streamline this with 300 other projects. It can’t be done.” It is relatively easy to fire an executive because he or she doesn’t get the new thinking and stands in the way of innovation. It is practically impossible to fire 5,000 employees who display the same “can’t do” attitude. It is also very difficult to turn such a person around and change her into someone who is actually happy to do something new.
What can you do? Create islands of creativity, tweak the motivation systems, massage the old structures (rather than breaking them up, which would harm SAP’s ability to maintain and evolve the Business Suite) by creating the right incentives, lead by example, inspire, and even clear the path with micro-decisions where absolutely necessary, be persistent, be a force of nature. This is the leadership that I observe at SAP.
What is the New Thinking?
It is hard to characterize a culture with few words, but I will try. Cultures can be described either in terms of lore and traditions, or in terms of their core values. The New Thinking is clearly a culture that draws its power from core values. Here we go: Innovation. Invention. Open Thinking. Community. Learning. Quest. Courage. And, perhaps most importantly, Passion. (Open Thinking is notable because it is a slogan coined by SAP Mentor Oliver Kohl that even became the motto of SAP TechEd 2009.)
Making the startup spirit scale in a mature company
Looking at company's lifecycles, you can frequently observe that they start as very open and innovative spaces where every employee makes a huge difference. The company is flexible enough to allow everyone to be themselves and contribute all they can. Every single person in the company feels they are making as crucial contribution to every major successful step. They feel it's their company. The boss is perceived as a leader and supporter, with no mindless or evil suppression machinery between them and the employees. As companies grow, they tend to loose the spirit of the founding days. The entrepreneurial spirit, room for innovation, initiative, and passion of the early days are lost. Great role models move on and are replaced by uninspired corporate drones. Early-days employees feel like in the movie "Bodysnatchers", where step by step all the humans are replaced by soulless replicas as the initial boring corporate drones hire more people who are like them.
When dissecting such events, it is frequently acknowledged that "early years" types of corporate culture work very well in small companies but don't scale: When you have a few hundred employees, you need to have more strict regulations and administration-focused management. Energy has to be spent on scanning employees' PCs and introducing plenty of form-based processes, the internal implementation of the product lifecycle becomes so complicated that every process in the company has to become formalized and standardized, and initiative and passions suffer from that naturally and necessarily. Big companies can't be as innovative and passionate as startups. (That's what many people think.)
Conversely, SAP's current culture change seems to be an attempt to bring some of the "early years" innovation spirit back to the companies. The challenge here is to make it scale. If they succeed, it will be a truly remarkable success that will give SAP a competitive edge for many years to come. In the software industry, culture is mission-critical. (I guess it cost Léo Apotheker his last job that he didn't understand that.)
In my next blog, I will talk about a concept from psychology in which a system of character types and their interactions are described. I will try to map that to the culture change outlined in this blog and derive some new ideas from that.
(Disclaimer: I wish I had come up with the phrase "Not your grandfather's SAP", but I haven't. I don't even know who it was, but I'd like to thank them because it captures SAP's transformation so perfectly that there was no way I couldn't use it as a title for this blog.)