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Author's profile photo Sven Denecken

Co-innovation leads to co-validation (Part1) – the relevance of co-innvation

The Relevance of Co-Innovation

The arrival of the subscription economy and cloud delivery model has led to a paradigm shift. Today we can significantly decrease the distance between the engineer and the end user. The subscription economy is all about usage and consumption, there is no shelf-ware any more. The expected agility and innovation cycles create an unprecedented pace of change. Customers today are looking for ways how to transform their business to cater to our digitized, networked, yet complex world. The prerequisite is to consume services rather than products, and if you want to digitally transform then everything needs to happen fast. So innovation with speed and running simple is Key.

This makes complexity the biggest burden of our decade – but to tackle it we first need to find complexity. Scattered information, data duplication and batch orientation make it difficult for enterprises to react to changing markets and adopt best practices fast, thus radical simplification must be achieved to meet today’s challenges.

As an example: simple user experience needs to be built the way business users work, with role-based and consistent user experiences that leverages the new paradigms of transactional and analytical functionality in one system. Only simplified data models help to work with real-time insights across a digital connected network to deliver on the needs of the networked economy – you need a “pusristic” data model to be ultimately flexible – no pre-thought aggregates, no cumbersome reports looking into the back mirror..

All this does not happen in the basement of engineers only, it requires the collective genius of the subject matter experts. At SAP, it all starts with the voice of the customer. Co-Innovation does not only allow to prioritize features, but also to influence the roadmap and ultimately the solution strategy. And it results in reduced project risks, early insights and best practices that customers and partners can leverage well ahead of competitors.

The definition of co-innovation in this context is important: “Co-Innovation is a state of mind, not a single group or a single program…”nevertheless it requires a solid program to drive it seamless between customer, partner and SAP.

Innovation happens when creative ideas are transformed into new products, services or processes – and are adopted by the market. SAP’s Co-Innovation process has evolved into a highly effective, comprehensive innovation cycle that encompasses everything required for the product development and consumption to be successful. This means, that customers and partners have the opportunity to influence the SAP S/4HANA product strategy and roadmap. This will ensure better services and desirable products, validated by the collective genius. SAP will be able to bring innovations to the market more quickly. By developing meticulously with the end user, the final product will be simpler and focusing first and foremost on what the customer really wants and needs. Thus, customer´s adoption will be significantly improved.

Customers and partners have the opportunity to engage on three different levels, adequate to their bandwidth and priorities.

3 levels co-inn.png

3 levels of Engagement

Level 1: as advisor, you will have frequent meetings (with whom?) for up to half a day to discuss on
future releases, market trends and visions for mature products. You will gain access to early insights too.

Level 2: review customers and partners will have in-depth insights into the solution and
deployment models. Scheduled cadence calls and workshops will further help discussions on features, and review of concepts and designs.


Level 3: customers and partners are directly involved in prototyping, reviews and testing of beta
versions. These are detailed interactions or tests: from proof of concept, to deployment of new and potentially co-innovated, breakthrough solutions.

Disruptive markets and disruptive technologies require thinking out of the box

We see organizations investing in huge multi-year programs to domesticate the digital transformation dragon. It’s a must-have in 2015 for companies to stay connected to the market and customers. If companies don’t disrupt themselves then they’ll be disrupted by entirely new competition. We have much more details on this in our Digital Transformation series here. So far, Innovation in the IT space and digital transformation is often pigeonholed as an IT topic, but because of the impact on the entire company, the strategy needs to be directed from the top. Also, people will have varied abilities to adapt to digital transformation and the innovation that comes along with it. Even when the right technologies are at hand – big data, cloud, social networks, mobile, – somebody still needs to make the first move and break the ground.

Business outcome driven co-innovation

The key is to understand and to make use of innovations in the right way. Disruptive technologies, for example, first start small and often appear as “just a new technical solution”. Usage might only improve IT’s life (e.g. higher availability or fast release cycle), but does not have direct impact on business performance.

Co-Innovation is all about inspiration from business experts and the end users. Traditional R&D processes often result in vendors showing a solution to customers very late in the process. However, Co-Innovation best practice is to involve customers and end-users in a collaborative, iterative solution development process from the very beginning and with a clear focus on business outcome. We build, test, iterate and evolve solutions together with subject matter experts. This helps ensure that the solution meets customer needs far better and in a way that you will find it easy to adopt.


Business Experts and Line of Business (LoB) executives being involved in co-innovation typically focus on “Innovating their department”. For them it is important to have fast innovation cycles and understand the top line benefit of a solution.

To facilitate methodologies like design thinking, SAP has incorporated it into co-innovation projects, mostly in the early phases. This means we start the development process with the user as the real expert, to get better insights into his or her behaviors, needs, and preferences to achieve a person-centric design of our solutions. To capture this input, we collect feedback and knowledge from customers and external experts. The next step would be to change existing processes or even replace them.

Thinking outside the box helps to find new ways and solutions and significantly increase the Business Outcome. But thinking outside the box is not a walk in the park. It requires approaching situations in new, innovative ways – conceptualizing challenges differently – and understanding your position in relation to any particular situation in a way you’d never thought of before. But how exactly do we do that? How do we cultivate the ability to look at things differently from the way we typically look at it?

You need an interdisciplinary team focused on agility and rethinking your industry differentiation to successfully drive a business outcome oriented co-innovation. We leverage methodologies like Design Thinking backed by a suite of tools that gives a powerful new way to solve problems and unlock potential. It complements the existing approaches by focusing on understanding the human side of things — what technology is and what that technology means to you and to your customers.

Summary And Outlook

Co-Innovation requires a continuous cycle of exploring and intertwining. Every important area has to be analyzed, understood and pushed to the front for maximized impact. Brainstorming what the expectations of future users and emerging markets will be, and which processes will need to be supported and prioritized. The customer-centered inspiration step offers significant benefits for both SAP and our customers participating in the process.

Complexity built up over decades limits the ability to innovate. Companies have identified complexity as the biggest burden of our decade. Radical simplification is needed to unlock companies´ potential. Customers are looking for ways to transform their businesses and cater to our digitized, networked, and complex world. The Co-Innovation for SAP S/4HANA is design to meet these challenges. To truly innovate and think out of the box we invite you to shape the future with us. Stay tuned for our next blog in this series about the Value Lever of SAP S/4HANA.

To learn more, please visit  and follow us via @BeSchulze and @SDenecken

Want to engage right away? Looking forward to your co-innovation engagement @ MAILTO:

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