As Axel Uhl wrapped up a meeting at SAP headquarters in Germany, he had reason to feel happy: After two years, the vision to create a special thought-leadership network to support SAP customers, consultants and partners had finally become reality. But he also felt the real work had only just begun. Would all parties give the backing necessary to make the network a success, given that the new unit represented another expertise area besides SAP’s core business in software development and engineering?

Certainly, SAP had already evolved from its small, regional beginnings in 1972 as Systems Applications and Products in Data Processing. The ’80s saw tremendous international expansion, and by 1992, SAP’s business outside Germany accounted for more than half of its total sales. It adopted new Web technologies and e-commerce solutions as quickly as they arose. By 2010, SAP was the world’s leading provider of business software solutions, with annual revenues topping 10 billion euros and some 92,000 clients in 120 countries.

Around the year 2000, the company recognized that its customer needs were changing. They weren’t so much interested in technology per se as they were in adding business value. It was no longer good enough for SAP consultants simply to explain the specific features of their software products; they realized they needed to start offering complete solutions that addressed their clients’ business processes.

Initially, some managers doubted whether SAP should go down the road of business consulting. But others countered that the input they were already giving to clients was, in effect, strategy consulting. In 2001, SAP hired a number of former McKinsey employees to offer boutique consulting in the North American market, but that endeavor fizzled after a year.

A Watershed Moment
In 2007, SAP decided to take another stab at consulting in the North American market, but under a new name, so as to avoid association with the earlier failure. But, as often happens during times of organizational change, what started out as one thing led to a deeper debate about SAP’s core competencies and overall vision. The leaders latched on to “business transformation” as a key pillar.

A new unit was born. In doing so, SAP aimed to occupy a unique space between traditional consulting, like that of McKinsey, and solution-and-system integration providers, like Accenture.

But the venture soon encountered obstacles. First was convincing clients of an unknown service offering. As one manager put it, “It’s like the baker telling you he has started selling sausages.”

More to the point, SAP realized that it did not have the right mix of talent to offer this new service: External hires did not understand SAP, and internal employees lacked the understanding to bridge business and IT. SAP needed a new category of talent able to do both.

To address this gap, SAP decided to set up the Business Transformation Academy, a network to train and share knowledge via a global, interdisciplinary community of experts linked through conferences and a platform integrating the wisdom of all stakeholders: SAP customers, executives and academic institutions. The academy would create case studies of past transformation projects, compile a handbook of best practice and develop educational programs on business transformation, such as the Master Certification of Global Business Transformation Managers.

As head of this new academy, Axel Uhl had high hopes that such a network would serve SAP’s requirements, both transforming the skills of internal staff while leveraging the expertise of outside partners and clients. The kickoff meeting in February 2010 assembled SAP executives, academic institutions and key customers such as Daimler, Shell and Hilti.

New questions were raised: In trying to integrate diverse stakeholders into SAP’s own transformation, what was the win-win-win proposition for the practitioners, the universities and internally for SAP? What would the incentives look like to secure their buy-in – especially from SAP’s management team, which wanted deliverables within limited resources?

Furthermore, this case raises larger questions about whether transformation can be outsourced to a specific business unit, in order to avoid having to transform the entire organization all at once. Was the whole academy concept being driven by what the leadership team felt comfortable with, given that it had gotten burned once before? Above all, how could SAP succeed in shifting the power balance with regard to its competitors, who are also acting and reacting within an overlapping opportunity space?