Today, SAP is one of the largest software companies in the world, but when it began in 1972, it was a little, five-person startup.
For many companies, the larger they become, the further they move away from the entrepreneurial, innovative roots that helped them grow. SAP, however, has always striven to remain true to the innovative spirit of a startup, while leveraging its resources as an industry leader.
One result of this push for continuous innovation is the development of the SAP HANA platform. Not only is SAP HANA a great example of SAP’s ingenuity, it also gave SAP an excellent chance to work with other startup companies through a new initiative called the SAP Startup Focus program. The goal of this program is to give startup companies the tools they need to develop creative new SAP HANA-based solutions.
To find out more about the drivers of the program and how SAP is investing in these startups, SAPinsider spoke with Kaustav Mitra, Vice President and Global Program Lead of the SAP Startup Focus, and Anders Ranum, Venture Partner at SAP Ventures.
Q: Could you give us some background information about why and how the SAP Startup Focus program was started?
Mitra: It starts with SAP HANA, which really changed the game for SAP. For the first time, in addition to being a business application provider, SAP has become a platform provider as well. And when you have a platform like SAP HANA, it just begs you to go out and make it available to as many people as possible to see what they can do with it.
We realized that, with offices in places like Silicon Valley, we were literally surrounded by other very innovative companies, many of which were startups. We wanted to find out what we could learn from the way these startups work in today’s market, and we wanted to see what kinds of use cases they could come up with for SAP HANA.
With that in mind, we held our first, relatively informal Startup Forum where we were able to converse with these startups. We found that a lot of these companies had very compelling stories around how they would use SAP HANA inside their own solutions. We identified 10 companies that seemed to be doing things with a particularly deep relevance to SAP HANA, and we gave them access to the resources they needed. We were quite impressed with the results. That’s basically how the SAP Startup Focus program was born.
Q: How has the SAP Startup Focus program evolved since its inception?
Mitra: With the great results from the first Startup Forum, the program quickly won endorsement from the highest levels within SAP, with people like Hasso Plattner and Vishal Sikka embracing the idea and giving it their support. I think the idea resonated with them especially, given their own prior experiences founding startups. In fact, chances are that this initiative would have stalled at inception had it not been for Vishal’s active encouragement and advocacy.
The program is just about a year old and already we’ve reached out to startups all over the world. To date, more than 300 startups from 19 countries have attended our Startup Forums, and there are already dozens of SAP HANA-based solutions that are now available because of this program.
We also brought SAP Ventures into the program. While SAP focuses on recruiting and enabling these startups, at the end of the day, finding capital to fund their projects is obviously crucial as well. And that’s where SAP Ventures comes into play.
Q: Anders, could you tell us more about SAP Ventures and its involvement in this program?
Ranum: SAP Ventures was founded back in 1996 as the corporate investment group of SAP. In 2011, we officially spun off as an independent manager affiliated with SAP. We seek innovative, disruptive, proven companies and help fuel their growth by adding our expertise, relationships, geographic reach, and capital. Over the last 15 years, we have supported more than 100 companies on five continents. We are currently investing out of a 2011 vintage US$353 million direct growth venture capital fund.
When SAP approached us in mid-2012 and asked if we would team up with them in the SAP Startup Focus program to help inspire and support these startups, we certainly wanted to participate. We saw it as a chance to combine the power of SAP HANA with entrepreneurial creativity.
Q: What kind of support do the companies in the SAP Startup Focus program receive?
Mitra: One of the key things we provide is the technology enablement aspect. Startups in the program get access to SAP HANA, support documentation, licenses, and development landscapes. We also provide the kind of infrastructure resources that most startups typically don’t have in place. For example, we provide them with our marketing resources to help support and grow their own go-to-market strategies.
Ranum: From the SAP Ventures side, participants in the SAP Startup Focus program have the chance to secure funding for their endeavors. We have established the US$155 million SAP HANA Real-Time Fund to invest both in venture capital firms that are supporting early-stage startups and directly in startups that are leveraging SAP HANA to create market-leading, disruptive applications.
Q: What has been the reaction from startups involved in this program?
Mitra: You have to realize that, while our organization is very good at working with large partners, this was the first time we had engaged with partners at the opposite end of the spectrum. Talk about a learning curve for us! At first, most startups were actually a bit confused when we approached them about the program. Some hadn’t heard of SAP HANA and many didn’t really know much about SAP beyond the fact that we “did something in the enterprise.”
Once they heard our pitch and got their hands on SAP HANA, though, these startups have been blown away. And that’s been a typical reaction. Startups don’t see a company like SAP as having relevance to them. But with the support and resources that we’re willing to put into this program, I think we’re really changing that perception.
Ranum: To Kaustav’s point, SAP is definitely putting its money where its mouth is with the SAP Startup Focus program. While some startups might not think of SAP as a traditional platform provider, we’re basically telling them that we believe in this so much that we’re willing to put money in their hands.
Q: How does the SAP Startup Focus program benefit SAP customers?
Mitra: For SAP HANA to make sense within the customer’s landscape, they have to see how that technology can drive their own bottom line. They have to answer questions like: Does it help me connect with my own customers? Does it help me be more efficient? Does it help me save on costs in some way? Does it let me do things I have never been able to do before? So, a technology platform without a large portfolio of applications on top of it is just not as meaningful to customers.
The SAP Startup Focus program allows us to scale our own application offerings, and instead of being able to deliver 10 or 20 SAP HANA applications in a year, we’re in a position to deliver hundreds across a much wider set of use cases. This means we’re now offering new, innovative use cases that we might never have come up with on our own.
And somewhere in that mix are applications to help each individual customer in one way or another. In fact, our startups now represent solutions in 22 different industries — including transportation, finance, retail, and manufacturing. With SAP HANA, SAP is no longer just building applications that work on the customer’s back end — our platform is launching technology that will help them shop better, bank better, and do a lot of things they might not associate SAP with.
Q: What has SAP learned from running this program?
Mitra: There are definitely a couple of key things we’re taking away from our engagements with startups. One is the importance and value of operating at a startup pace. Startups work under very tight timelines and have resource constraints that force the best ones to execute very quickly and with laser focus. Working closely with these startups keeps reminding us of the value of being able to execute at that pace.
The second takeaway is about the necessity of taking risk. Sometimes, even large companies like SAP need to be willing to push out in directions that might not be the expected path so we can change our own markets and the technology in them before someone else does. To be truly innovative, you have to be willing to take risks.
Vice President and Global Program Lead
SAP Startup Focus