In 2009, SAP decided to implement Lean and Agile Software Engineering practices within its global development organization. Lean management and agile practices like Scrum helped SAP to become more efficient and predictable in delivering its software. However, Scrum starts with a product vision – where does that come from? Design Thinking helped, but did not yet solve the “Innovator’s Dilemma” which almost any big company faces after many years of success. Hence, we had to explore new ways and approaches to come up with innovative product ideas and business models for the ever faster changing and evolving enterprise software market. Combining Agile and DT with Business Model Innovation (BMI) practices and providing adequate project coaches finally did the trick for SAP: while lean thinking and agile project management improved many feasibility aspects, BMI practices tackle commercial success and viability, especially in the new cloud-based environment...

1. Dr. Tobias Schimmer, Chief Expert, Design Thinking & Business Model Innovation, Products & Innovation, SAP SE
How Business Model Innovation intertwines with
Design Thinking and Agile Development practices
– Driving viability, desirability and feasibility in parallel…

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SAP’s Innovation Journey

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2017

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2009

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2000

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1998

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1978

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1972

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11. © SAP 2016 | 11 ALMOST 40 YEARS OF WATERFALL…
Source: SAP

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“Back to the Roots”
Where do we want to go?

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Challenge: Customer-Centered Innovation on an Enterprise Scale
Approach:
Customer-
Centered
Goal: Innovation

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Rethinking Requirements Engineering and Project Management
fixed
estimated
Requirements
Requirements
Resources Release Date
Resources Release Date
Plan-driven (traditional) Value-driven (agile)

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Conduct regular
Retrospectives
Split organization
into teams
Split work
Split time
Deliver more
frequently
Deliver more
reliably and
predictably
Large-Scale Lean & Agile Development
Risk
Risk

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However, Lean & Agile Development starts with a Product Vision …
?

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… and we’re developing standard software for enterprise users

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‘‘A developer needs to be curious
and develop empathy for end users”

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Step 2: Intertwining Agile Development and Design Thinking

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Impressions from an Innovation Workshop at SAP

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Results from an Innovation Workshop at SAP

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SAP’s Design Thinking Approach in Detail

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Lean, Agile, and Design Thinking Share a Common Set of Values

24. Project Example:
Co-Innovating in 'New Fashion Solution'

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We had our Customers Present the User Story Maps

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Tweaking Desirability: Design Thinking for Innovation Topics
Sprint-Size StoriesCoarse User Stories
e.g. Storyboards
User Story Maps
…and other sources Solution Backlog
NFS backlog

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NFS – a Role Model for Multi-Customer Co-Innovation?
§ User Story Mapping started and
improved overall communication
about end user requirements
§ Solution backlog management
process map ensured
transparency on progress-to-plan
with customers and enabled
program steering across teams
§ Design Thinking ensured
balancing of desirability,
feasibility and viability concerns
in solution definition and setup
phases…
End Users
NFS Customers SAP Development
SAP Solution Mgt.

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Finally, how do we Convert Product Ideas into Money?

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Why Worry about Business Models?

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Often, it‘s not about the product, but the business model

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Why worry about Business Models?
Same product, but #1 business model Attract many users, then leverage user data
Commercialize overcapacity à Web Services Disrupt an established market with new GTM

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Why should SAP Development worry about Business Models?
Industry Clouds
Business Networks Platform-as-a-Service
Internet of Things

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Product Design and Business Model Design happen in parallel

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What is a Business Model for us?

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Describe your Business Model Baseline
Network & Enterprise View

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SAP’s Classic Business Model – On Premise Business Suite

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SAP’s Classic Business Model – On Premise Business Suite

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How does Business Model
Innovation work at SAP?

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Business Model Innovations at SAP – Some Recent Examples
Organizational Setup Requires Business Model
Innovations to be Managed Across Board Areas

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Business Model Innovation Lifecycle
“Business Model Library”

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Business Model Development & Innovation (BMDI™) Approach
Baseline Appropriate
Business Model
Version n Version n+1

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Analyze &
Improve
Challenge
& Change
Test & Verify
with MVPs
Evaluate
& Decide
w/ Business Case
Enterprise View = Business Model Canvas
Business Model Network View
Iterative Business Model Design with BMDI™

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How do Business Model Design & Design Thinking come together?
Bottom-up
Innovation
Top-down
Innovation

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Project Example: SAP Sports One

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Project Example: SAP Sports One
„Die Mannschaft“ (only parts of the overall team)

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How does DT & BMI make the difference (example Sports One)?
Design Thinking
Second level
Ÿ Third level
Ÿ …
Ÿ ...
Ÿ ...
We started with DesignThinking...

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„Die Vision“

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Involving Management from the Start

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Typical
Worshop
Agenda

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Business Network View

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Business Model Canvas

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Involving the entire Team regularly...

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How does DT & BMI make the difference (example Sports One)?
Design Thinking
Second level
Ÿ Third level
Ÿ …
Ÿ ...
Ÿ ...
Product Launch, Sports One, July 2015

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Summary of genuine Quotes on BMI & DT from SportsOne Team
“Overall, the BMI project
was key to keep
development, product
and solution management
in sync”
“…The BMI project helped to
shape and commercialize
an appropriate business
model for Sports One…”
“DT always inspired me! DT set a
fantastic structured environment
to create and develop ideas and to
find together as a team."
“…Iterative but fast
feedback loops possible as
teams were all on the same
“level” of understanding…”

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Conclusion

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Learned how to Change the Organization & Scale new Approaches
Improve ratio of
planning and
execution
Build quality into
products from
the inside out.
Incorporate
feedback
early and
regularly
Develop Coaches
within the
organization

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Status Quo – Today’s “Innovation Culture Mix” at SAP
Framework: William E. Schneider

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What we learned today - and what you might want to remember…
§ Lean, Agile, Design Thinking AND
Business Model Innovation practices
share a common set of values
§ In many cases DT starts with a focus on
desirability and software design
§ To make DT projects practicable,
feasibility and viability also need to be
taken in to account
§ Lean and Agile development philosophy
fits well with Design Thinking
§ Business Model Innovation forces big
corporations to act like startups again

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Thank you – Questions?
tobias.schimmer@sap.com