On a recent morning, parking lots at SAP’s Silicon Valley campus were jammed. Parked cars lined much of the driveway from its main hillside complex and onto a feeder street in Palo Alto, California.
The reason for the congestion at the business software giant? Nearly 200 people from 40 different companies had arrived to participate in the company’s 2007 Tech Tour, a program designed to swap ideas about SAP’s approach to information technology systems.
The presence of the techie guests symbolized a broader trend under way at the Germany-based company. Collaboration and networking are in the air and in the code at SAP these days, making themselves felt in the firm’s attitude toward partners and customers, its experimental projects and even its management style.
SAP touted the concept of co-innovation and the importance of business network transformation at its user conference this year in Atlanta. Such ideas have been gaining currency in the business world during the past several years, and it would have been easy for SAP simply to talk the teamwork talk. But a day at the company’s 1,700-employee complex in Palo Alto revealed that SAP’s cooperation campaign is more than rhetoric.
Workers in ‘Harmony’
While Tech Tour participants gathered in the company’s recently opened Co-Innovation Lab, SAP gave reporters a demonstration of Harmony—SAP’s internal social networking tool. Started in April and available to North American employees, about 1,700 SAP workers use Harmony. Someday, it may morph into a product for customers. But for now, the project leaders behind Harmony are simply observing what SAP’s own employees are doing with this MySpace-like technology.
For one thing, they’re selling stuff to one another. Among the most popular sites within Harmony is Mike’s List, which amounts to an internal trading post akin to Craigslist. Other Harmony sites focus on kite surfing and photo sharing.
Why is SAP dabbling in such unstructured, un-businesslike activity?
SAP senior vice president Denis Browne says the company is following its customers into the "Web 2.0" world, referring to a more interactive version of the Internet in which users generate much of the content. SAP clients are interested in tools like MySpace not only to increase informal learning and knowledge transfers among employees, but to weave a stronger social fabric among workers.
Employees today often feel little loyalty to corporations and find it hard to connect to workers from other generations, Browne says. He says firms are asking, "What’s the glue that’s going to hold my company together?"
Browne also oversees an effort to create "widgets"—applications that present high-level snapshots of corporate data. Browne’s team is designing these for the standard personal computer desktop, as well as Internet browsers and mobile devices.
His group is dubbed "Imagineering," a title that echoes the name of a creative group within the Walt Disney Co. In keeping with the innovation theme, Browne and crew are experimenting with linking SAP applications with the popular virtual reality world Second Life and Nintendo’s red-hot Wii video game system.
Much of the work boils down to a quest to help companies accommodate Generation Y employees, who are used to sending an instant message to four friends while simultaneously adding photos to a Facebook page and playing a multi-user video game on the Internet. Even e-mail feels stodgy to them, Browne says.
"If I put them in front of traditional enterprise software, they’re going to rebel and run out the door," he says.
On the surface, it seems strange that SAP is on the cutting edge of collaboration and informal interactivity. After all, this is the company famous for its highly regimented software, not to mention a reputation in the past for arrogance. What’s more, its German heritage conjures up images of rigid hierarchy rather than flexible flatness.
But that portrait of the company is way off, says Doug Merritt, SAP executive vice president for business user development and the highest-ranking officer at the Palo Alto compound. Merritt came to SAP in 2005 after serving at both Oracle and—before it was acquired by Larry Ellison’s company—PeopleSoft. He says he also misread SAP at first.
"I thought it was this dictatorial, authoritarian, command-and-control company," Merritt says. Instead, he adds, "It’s a honeycomb. It’s one of the most employee-empowered corporations I’ve seen."
A stint in Germany helped explain the corporate culture, he says. SAP is part of a broader European tendency to make decisions collectively, and it also has roots in Germany’s centuries-old history as a land with thousands of small fiefdoms.
"There’s a castle every five miles," he says.
Even Merritt’s office conveys a certain egalitarianism. It has a commanding view of the San Francisco Bay, but the office itself is small. There’s barely enough room for Merritt’s desk and a little round table. And his door is made of clear glass—a tangible sign of internal transparency.
American software companies are the ones that are more likely to have strict chains of authority, Merritt says. All told, SAP is particularly well-suited to push business software beyond the realm of repetitive, orderly tasks, he says.
Besides the focus on unstructured employee collaboration seen in the Harmony project, Merritt points to SAP’s release of software designed to help companies manage governance, risk and compliance. Traditional business applications, such as finance and supply-chain management software, primarily track orderly data.
But SAP’s risk management tool, introduced in May, is designed to help firms make higher-level judgment calls by pulling together information about business opportunities and balancing it against possible downsides such as legal trouble.
In Merritt’s view, SAP’s chief rival, Oracle, has all but given up on developing fundamentally new software products and is too busy trying to tie together its various acquisitions.
"I think they are playing a last-generation game," Merritt says.
Rival on similar path?
Oracle declined to comment on Merritt’s claim. But there’s evidence Oracle too is embracing the trend of bottom-up collaboration. In August, Oracle introduced its own internal social networking tool. Within a span of just three business days, 10,000 Oracle employees—more than one-seventh of the company—became users.
The software came out of an Oracle group that appears to parallel SAP’s Imagineering unit. Dubbed AppsLab, it has a blog in which it calls itself "a small group dedicated to living and breathing Web 2.0."
Jason Corsello, vice president at consulting firm Knowledge Infusion, portrays the AppsLab social networking software as a new direction for Oracle, which traditionally has had a hierarchical culture. "It is very much a shift for Oracle," Corsello says.
SAP has probably made more noise about its foray into the Web 2.0 arena than Oracle. But even SAP hasn’t totally corrected the impression that it is all about buttoned-down business software. In Merritt’s view, the firm just hasn’t gotten out the message that collaboration rules in its corridors and its software code.
"We’ve done a terrible job of communicating our flexibility," he says.
But maybe SAP—and Oracle—need not worry about stereotypes in the market. In the long run, walking the teamwork talk likely will be more important than talking it.