Corporate Innovation/Analysis/

“Safe but very uncomfortable” — a deep dive into SAP’s intrapreneurship programme

SAP revamped its intrapreneurship programme in 2015 and so far it has produced 3 large businesses. This is how it works.

By Maija Palmer

Intrapreneurship programmes often get criticised for being unstructured and ineffective.

Innovation consultant Alberto Onetti recently wrote that the majority of intrapreneurship programmes he has seen fail to produce meaningful results [and suggests ways of doing them better].

Worse yet, in a piece about the “dark side” of intrapreneurship, Tim Heard, founder of the Circle of Entrepreneurs, told the stories of entrepreneurs left in limbo, with little support structure.

So when I got the chance to have an inside look at SAP’s entrepreneurship programme recently, speaking with Vishal Shah, one of the entrepreneurs who has come through the programme and with Alexandra Begue, head of growth at the programme, I was curious to see how this one measures up.

The programme was revamped in 2015 and since then has assessed something in the region of 3000 ideas and produced 3 businesses, one of which has gone on to become its own business unit.

How the intrapreneurship programme fits in with the rest of SAP

Like many large organisations, SAP has a large number of innovation initiatives, for both “internal” startups that had been incubated within SAP and “external” startups that might want to work with SAP .

On the external side, SAP.iO Foundries is a network of equity-free accelerators for startups and SAP.iO Rising Stars is a program that helps promising startups scale up their partnerships with SAP.

On the internal side, the SAP intrapreneurship programme is a company-wide, internal scouting programme and SAP Venture Studio is a venture building unit in which takes the most promising of those scouted projects and turns them into commercial businesses.

These internally-built ventures most often become part of one of SAP’s existing business units. SAP Supplier Financing, for example, was a successful venture built by Vishal Shah, founder and general manager, in the venture studio. It was eventually merged with SAP’s Ariba Network, the ecommerce network.

How the intrapreneurship programme works

There is a call-out for ideas every spring between April and May, which will typically result in around 500 ideas submitted to the innovation team. Submitting an idea involves recording a short video, explaining the project and answering 6 key questions around whether the project can achieve mass scale, whether it can be efficiently tested and if SAP can leverage any particular advantage in pursuing the idea.

The innovation team will cull the initial 500 ideas down to 100 which will go through to a fast-track validation phase that takes around 3 months. The fast track teams receive mentoring and help in developing their idea.

Some 25 of the most promising of the ideas will go through to an 3-week accelerator programme, where they get an even more intense crash course in entrepreneurship and venture-building.

At the end of the accelerator programme, the teams pitch to an investment committee and around a handful go on to join the SAP.io venture studio.

Investment is the low single-digit millions, enough for 2-4 people to spend around 12-18 months on the project.

Investment in the ideas is in the low single-digit millions of euros, enough for 2-4 people to spend around 12-18 months bringing the idea to commercial launch. The projects can internally fundraise again if they need further funding, but will need to go back to the investment committee for this. Many ventures will end up being wound up rather than exiting the studio — failure rates are lower than the 90% or so seen in the external startup world, but it is still fair to say that the majority don’t work out.

There is no set time that projects will spend in the venture builder, but 3-4 years is typical, says Shah. Spotlight, a business process automation tool, spent just 2 years in the studio before “graduating”, but this was unusually fast, says Shah, and Spotlight is considered one of the unit’s star success stories.

How does SAP measure success?

Often intrapreneurship programmes go nowhere because the targets aren’t clear enough and there is no real way of judging when something is a success or not.

SAP tries to provide more structure by defining key success metrics, and making sure that the project share their progress against these with a committee each month.

SAP is looking for business ideas that could generate 1% of group revenues in five to 10 years.

These KPIs aren’t necessarily financial, though, says Shah. Although SAP is ultimately looking for business ideas that could generate 1% of group revenues in five to 10 years, SAP is willing to play the long game by investing patient capital.

“The most important success metric is adoption. Adoption means you are definitely solving a customer need,” says Shah. “If you have to give it away free for the first 2 years, SAP is willing to make that bet.”

Do successful intrapreneurs get to share the rewards?

Yes, says Shah. There is a “founder’s reward” programme in which the founders of the idea get a share of the business and are eventually able to cash out if it proves successful. It’s maybe not quite the life-changing payday that a founder of a successful external venture might see. Shah says that the rewards are “more intrinsic than extrinsic”.

Rewards are “more intrinsic than extrinsic”.

There is a lot of respect and visibility that successful intrapreneurs can get with management — and a little money. [Alex Schuh argues that intrapreneurs need more upside than just kudos in his article about the intrapreneurship trap. But at SAP this seems to be working ok.]

Does it achieve results for SAP?

Spotlight is the big star of the programme so far. The business process intelligence tool started as a 2-person team in 2018, when it entered the SAP incubator programme, and when it exited the venture studio in 2021, it was turned into an independent business unit. SAP Supplier Financing, a financial tool,  and SAP Ruum, a no-code platform that allows non-technical “citizen developer” to build automations on top of SAP software, are two other recent graduates of the venture builder.

It is hard to put a number on what they are contributing to the company — SAP does not break this out.

Currently in the venture studio are Brilliant Hire, a candidate screening tool; GreenToken, an ethical supply chain solution; OwnID, an identity and authentication tool and Paid Pronto, a collaboration tool for streamlining invoice collections.

Intrapreneurship programmes are also about making a cultural change — encouraging employees to be more entrepreneurial and to think outside the box.

Again, it is hard to measure whether there has been an overall impact of the project for SAP’s 100,000+ employees. But the staff who have been through the programme appear to be energised rather than scarred by it, even if their ideas didn’t end up going through to investment.

The programme has a target for 40% of teams in the accelerator programme to be female or minority-led.

Alexandra Begue, head of growth at the intrapreneurship programme, took part in the 2018 cohort with a project to speed up clinical research into cancer. Her idea didn’t make it through to the venture builder, but Begue was so inspired by the process she ended up transferring to work for the innovation team, to coach other people on how to get their ideas through.

Benny Keane, a UK-based engineering manager who took part in last year’s programme, told an internal SAP event that she was already thinking about new ideas she could submit. She said she had learned so much about how to validate an idea properly in the accelerator programme, that she was eager to put it into practice and “try to get a yes next time.”

One thing the intrapreneurship programme is trying hard to do is to encourage more women and minority intrapreneurs to come forward. The programme has a target of making sure that at least 40% of teams in the accelerator programme are female or minority-led.

What is it like for intrapreneurs?

“Safe but very uncomfortable,” is how Shah describes the programme. Having the corporate might around a project gives intrapreneurs an unfair advantage compared to external startups. They can leverage an already well-known brand and big customer base.

However, internal startups have their own challenges.

“I had no idea what I was getting into. It is such a lonely job.”

“There is the corporate cholesterol we have to fight. A big organisation will put so many guardrails in place it can really slow down the speed of innovation,” says Shah.

All those who have gone through the programme talk about being well supported by the rest of the business, with plenty of advice and feedback even from the senior management.

But there is no getting around the fact that even at SAP, intrapreneurs can end up feeling out on a limb.

“When I first stepped into this job I had no idea what I was getting into,” says Shah. “It is such a lonely job.” [More on this in Tim Heard’s piece on the “dark side” of intrapreneurship]

Still, he says, it was worth it. “In my circumstances, I would not have gone out and done this on my own. But to build a big business like this was a very rewarding experience.”

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