When multinational corporations work with small startups, it’s always a two-way process, believes Andrej Bievetski, managing director of SAP Labs in the CIS, the local R&D arm of the German software giant. Bievetski, who has been working for SAP for 17 years, took over the running of SAP Labs in March, and a major part of his job now is fostering collaboration with innovative companies. In a recent interview with Sk.ru, he explained what both sides have to gain from cooperation.
Andrej Bievetski says big corporations and startups can help each other. Photo: Press service of SAP Labs CIS.
What’s in it for such a big company to cooperate with small startups?
The processes taking place in the global economy are leading us into a situation similar to that in which the dinosaurs died out: those who know the quickest way to change with the market, those who run with clients and leave their competitors behind, will survive and win. Companies and industries have to undergo a digital transformation.
And it is small companies – startups – who can show us how to react fastest to market trends, how to jump into new technologies faster. Now we’re learning from startups to understand market requirements, to analyse what products our clients need, while not getting caught up in what technology and platforms to use to do something. The first thing to understand is what business model is best and which services are needed by our clients and their customers.
The second point is that on the high-tech market, it’s not enough to watch what others are doing and keep up with them. It’s important to truly understand which startup projects are moving in the same direction as us in terms of the use of technology. At SAP, we focus primarily on projects that could turn out to be breakthrough – not only on the Russian market, but also globally.
Working with startups is always a two-way process of give and take. You can learn a lot from startups with brilliant ideas who are not held back by the internal politics and procedures that might hinder big companies from changing fast. On the other hand, they don’t have enough expertise in how to package their products for sale, and how to launch them on foreign markets. After all, the interesting startups are not those with the potential to fill a small niche in Russia: in our field – IT – the Russian market represents only 1.5 percent of the global market. Serious startups that want to attract venture capital should be aiming for the global market. And here we can help with our expertise.
Is your experience relevant for small companies?
Forty-five years ago, we were also a startup that came out of a garage. First there was a brilliant idea, then the first product, then the move to other technology, and SAP grew from a first mover to a global company. We offer startups a technology platform from which they can realize their business ideas, and we give them the opportunity to do it without the need for large upfront investment into IT infrastructure.
Startups often have problems bringing their finished product to the market. I have seen a lot of interesting companies that make a product but don’t know how to organize their business. We help such companies with mentoring and marketing services. But most importantly, SAP has 310,000 corporate clients around the world: companies that know SAP, use our products and trust us as their technology partners.
SAP Labs in Moscow has an Integration and Certification Centre where we help developers to test their product for compatibility with our products and platforms. With SAP certification they can enter completely different markets, including abroad, and truly benefit from our enormous client base.
This also works within Russia, because on the local market, a small startup that no one has heard of is highly unlikely to become a contractor for major corporations: just try getting to Rosneft, Gazprom, Sberbank or VTB. But when a startup is certified by our centre and we are prepared to recommend it, it gains access to the biggest client-companies in Russia and the CIS.
In addition, we provide access to our servers and cloud platforms where developers can programme. We offer access to the SAP HANA Cloud Platform to help startups creating solutions for the Internet of Things. Finally, we mentor companies in monetizing their products. Developers who meet certain conditions and take part in co-innovation programmes with SAP Labs receive comprehensive support throughout their entire lifecycle, from the idea to its realization, monetization and product certification.
Is working with startups in Russia any different to SAP’s global programmes?
We have a whole range of different programmes and formats in which we work with both startups and other independent software vendors. The global part of the SAP PartnerEdge programme works the same way in every country, while the local part of course varies.
We have global experience and understanding of what to do and how, which can be applied in any country in cooperation with a strong local partner. In this respect, the example of working with Skolkovo in Russia is very successful. Skolkovo is our key partner here, though we also talk to the Foundation for the Development of Internet Initiatives and to Russian Venture Company. Today I can say that we are closely involved in the development of Russia’s startup ecosystem.
In terms of our global experience, SAP owns Sapphire Ventures, a venture capital fund that has operations all over the world but is focused on Silicon Valley, where SAP has a whole army of developers and labs employing more than 1,000 people. Sapphire Ventures works directly with many startups, and also cooperates with accelerators and venture funds.
The main difference in the U.S. is that in Silicon Valley, about 80 percent of startups are founded by people from different countries. It’s a land of international and, experience has shown, quite successful business. If you look at Russia’s experience, both founders and employees of startups tend to be Russian. Silicon Valley companies are not as interested in getting concrete help, since they have a huge choice – if it doesn’t work out with SAP, for example, they can just walk 20 metres to the offices of another global company and start working with them. In Russia, the ecosystem is not as developed, but it is far better than my colleagues and I imagined from Germany.
Overall, the differences are that there is less access to capital and more need for acceleration. Mono-cultural startups are actually a bonus for us, because we can really give a lot to the company in terms of helping it enter other markets.
Which technology do you plan to focus on in the next three to five years?
The main area of interest for us right now is Internet of Things. It’s the key topic for us as the industrial partner of the Startup Village [an annual large-scale two-day startup conference organised by the Skolkovo Foundation]. I would even narrow this down further: we work exclusively on industrial Internet of Things, solutions for businesses and not for end-consumers. IoT for use at home isn’t among our priorities.
Industrial Internet of Things is the most promising area for business in the next three to five years. SAP has a great deal of interest in this area, primarily in the promotion of our SAP HANA Cloud Platform and IoT scenarios for digital transformation.
The second area is machine learning, using industrial Internet of Things and associated technologies that make it possible to make swift yet considered business decisions. There is a trend of moving over from big data to smart data on the basis of which conclusions can be made and better decisions taken by computers. In addition, the processing of unstructured information, such as visual and voice recognition, for purposes that were never imagined before or couldn’t be realized, has evolved into an area that we simply cannot ignore today.
A longer version of this interview was first published in Russian at Sk.ru.