SAP Provides Startups with Mentorship, Integration with S/4HANA, and Access to Enterprise Clients via SAP.iO

SAP announced in March 2020 that its early-stage venture arm, SAP.iO, has established SAP.iO Foundries in Singapore, Tokyo, and Berlin. The foundries are an engagement model whereby SAP helps startups develop their businesses and SAP customers educate themselves on new innovative solutions; selected startup companies receive mentorship, support in developing technologies for SAP’s S/4HANA platform, opportunities to collaborate with SAP customers, and exposure at premier SAP customer events.

The SAP.iO Fund makes direct investments into early stage enterprise software startups in areas strategic to SAP. If entrepreneurs’ ideas are not yet fully formed, the SAP.iO Venture Studio provides funding to help entrepreneurial teams develop their ideas into profitable businesses. In addition, SAP.iO looks to help underrepresented entrepreneurs in the business software industry. Other foundry locations include New York and San Francisco as well as Munich, Paris, and Tel Aviv.

SAP.iO Fund & Foundries supported 92 startups during 2019 and has the goal to help 200 startups within the next five years. SAP.iO highlights several trends and issues in the technology market. Even large firms such as SAP don’t have expertise across all vertical markets and so create an ecosystem enabling others to integrate with their platforms. Engaging with startups enables SAP to keep abreast of innovative and potentially disruptive solutions as well as potential acquisitions.

For the startups SAP.iO provides not only a potential source of funding but also commercial and technical expertise they wouldn’t ordinarily have access to. Furthermore, the initiative provides startups with a route in with enterprise when often these types of firms are shut out because their solution is unproven or their business is deemed too small to handle the requirements of enterprise customers. Engaging with a firm such as SAP provides validation plus the support of a Tier 1 software company.

The initiative will accelerate SAP’s ambitions to augment the S/4HANA platform with solutions pertaining to Industry 4.0. Five companies have been selected to participate in the Singapore Foundry and six at the Tokyo and Berlin foundries.

Companies with solutions of interest to manufacturing and logistics firms at the SAP.iO Foundry Berlin include a firm that utilizes satellite data in order to monitor large-scale infrastructure grids (LiveEO), a firm that connects shippers to the hubs of local carriers (Fretlink), a firm that supports the implementation of Augmented Reality (AR) in industrial environments (3DQR), and a robotics firm (Wandelbots).

SAP.iO Foundry Singapore includes a firm developing Autonomous Mobile Robots (AMR) solutions (Botsync); another providing drone services to aid commercial condition monitoring, security, and safety (H3 Dynamics); another utilizing Artificial Intelligence (AI) to develop smart visual learning and recognition systems (Memorence); another specializing in route optimization and electronic proof-of-delivery (VersaFleet); and another automating the process of transferring visual inspection of industrial facilities into digital twin models (HyBird). The Tokyo Foundry includes Innovia Corporation, which is a Human Resources (HR) software firm targeting the manufacturing industry.

Success for SAP will be having the capability to offer customers cutting edge solutions that can be integrated to the S/4HANA platform. The program can, in theory, enable SAP to add new logos in the manufacturing vertical. However, many manufacturers rely on System Integrators (SIs) when considering introducing new technologies on the factory floor. The foundries need to involve SIs in their events, too.

There needs to be transparency, with regular dialogue between SAP and the startup. In theory, the SAP.iO Fund & Foundries are good news for the startups. On the one hand they have the opportunity to be mentored by a venerable software firm and promote themselves to enterprise clients. However, on the other hand, the initiative could be a path to losing control. The startups need to be conscious of retaining their Intellectual Property (IP), control of their product road map, and their business overall.

The current choice of locations makes sense, with two in SAP’s home market of Germany and others in tech innovation hubs (San Francisco, New York, Tel Aviv) and cities of global renown (Paris, Singapore, Tokyo). However, the company doesn’t yet have foundries in Sweden (a hub for creating digital platforms such as Spotify), London (a vibrant fintech ecosystem and support for Industry 4.0 technologies from the Department for Digital, Culture, Media and Sport), or the manufacturing and innovation hub of China.

So far, events at SAP.iO Foundries have attracted more than 300 SAP customers. SAP, like many others, has had to tweak its engagement models in a world of less business travel and face-to-face meetings. All eight SAP.iO Foundries now operate in a “virtual” mode, with startups continuing to be mentored by internal and external experts and offered support and resources for how to integrate with SAP platforms and meet and collaborate with SAP customers virtually.