SAP: How To Build Eco-Systems For Open Innovation

I did some research on SAP and their open innovation-like initiatives. It was quite impressive and in particular I like their focus on building an eco-system through their collaborative websites.

In 2008, John Hagel and John Seely Brown wrote a great article on this. I have inserted some highlights from the article below, but you should read it in full and learn: How SAP Seeds Innovation.

Impressive Participation
Consider some of the stats (2008, red.). More than 9,000 companies participate in SAP’s various partner networks globally, and 1.2 million individuals participate in SAP’s online communities. Roughly 25,000 new participants sign up for the latter each month, and from 2006 to 2007, its number of page views doubled, to more than 150 million. Participants contribute some 6,000 online posts per day and create better than 60,000 wikis to handle ongoing discussions, while at least 1,200 bloggers comment regularly on community topics. More than 3.5 million posts have accumulated in these forums, and the pace of activity is accelerating. It took three years to reach the first million forum posts, nine months to reach the second million, and only six months to reach the third million. In total, 100,000 members have contributed posts to the online forums.

Advantage of One Boss
Unlike most technology companies, SAP has assembled all of its ecosystem components under one senior executive. Zia Yusuf is the executive vice-president of SAP’s Global Ecosystem & Partner Group. Yusuf believes that this organizational approach is critical to success. In a presentation, he observed that “when individual functions or business groups have responsibility for segments of the ecosystem, these segments tend to become silos and reflect the interests of the groups sponsoring them, rather than serving the needs of customers. By bringing all of the elements together in one place, we can more effectively focus on the customer and mobilize all of the resources relevant to the customer. We seek to improve the economics of our customers materially by accelerating value creation while at the same time helping them reduce costs.

This is what other companies can learn on eco-systems from the SAP case according to Hagel and Seely Brown:

• Effective ecosystems generate differentiation and specialization
• Ecosystems evolve over time, but the orchestrator plays a key role in seeding and feeding participant initiatives
• Robust ecosystems are helpful to individuals, not just institutions
• Robust ecosystems require mobilizing large numbers of specialized third parties, not just the vendor and its customers
• Ecosystems at the edge bleed into the core of the enterprise
• Ecosystems are not just about connecting to existing resources—they help provide platforms for distributed innovation and learning

You should also check out these articles on SAP and their alliance with and investment in InnoCentive:

Warren Wilson, Research Director from Ovum, comments SAP’s alliance with and investment in InnoCentive. Among other things, Wilson argues that SAP primarily gets visibility and thought leadership in return on their investment. This is quite good as it helps them become the preferred partner of choice within their industry.

Lane Dignan, Editor In Chief of ZDNet on the SAP and InnoCentive partnership.  The article also touches on how companies and InnoCentive handle intellectual property rights issues.