SAP R&D Spend, Frugality, & Innovation

I don’t have the stats handy, but SAP has sunk a lot into R&D over the last five years.  I think we’re up to about 20 percent of revenue (2 billion EUR +) from about 15 percent in the early 2000s.

This sustained investment makes some of the recent headlines decrying reduced innovation a bit ludicrous, frankly.  Dennis Howlett is more on the right track calling it a culture change (here).  Larry Dignan post (here) on Leo’s meeting with the Enterprise Irregulars gang has the money quotes from Leo:

We’ve announced a price point [$149/user] and now we’re working backwards….  What we did discover in the last five or six months is that while we made progress on our TCO model we’re not where we wanted to be (a 10 times TCO reduction).

It seems like the SAP solution portfolio will be subject to the same rigor as our sales pipeline — if we can’t make money on the product, we aren’t going to release it and declare victory.

Also, isn’t Jeff Bezos — from his Business Week interview here — right that a little hunger is needed for true innovation?

Q: The company has a reputation for frugality. Does that apply to the way you innovate?
A: I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.

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One Response

  1. […] more on this, my own comments when we announced the new R&D targets are here, along with some from Dennis Howlett (here) and Larry Dignan […]

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