Old technology giant SAP is getting a newer, younger look.
Known for “enterprise resource planning” solutions and other boring software for business processing, SAP’s banking and insurance business has almost 20,000 customers (out of more than 350,000 total) across 150 countries that include 14,100 banks and 5,600 insurers. Its banking customers manage more than $70 trillion in assets and service more than 140 million active banking accounts globally.
About a month ago it moved 400 sales and marketing employees (of its global 84,000 total) into the top five floors of a shiny new 52-story commercial office tower on Manhattan’s far west side to show customers it’s not stuck in its old ways, it’s ready to fast forward into the future. There is also a small number of existing corporate functions, like investor relations and IT support. SAP has added 60 jobs this year and plans to add headcount throughout 2018.
Executive offices still reside in Times Square. The Hudson Yards offices are more of a show for customers, who are brought to the 52nd floor.
“We’re showing the outside world things you wouldn’t think first of us as a company, it shows where we stand today,” Toni Tomic, vp of insurance and global head of industry business development, said of the new facilities. “You can feel it, touch it, smell it. If we come here with customers they’ll recognize we’re a different animal than they thought.”
But down on the 48th floor is the SAP Next Gen Lab, where the 45-year-old SAP wants to act as a “matchmaker” for those customers and new New York talent — students, startups, academics, researchers, accelerators, venture firms and other potential innovation partners. The space boasts floor-to-ceiling windows with panoramic views of the city with lounge areas and a Brooklyn Roastery cafe. There are designated work areas for designers, technology builders, entrepreneurs and researchers. It plans to foster a vibrant Meetup scene and host technology bootcamps for bankers.
SAP is sort of rebranding itself an international player that can foster an international ecosystem, instead of being merely a technology vendors to some big companies. For the last few years the story of fintech has been about the old versus the new, the banks versus the startups. (Incidentally, it’s not just the major corporations that use SAP’s technology. SAP has identified more than 5,000 startups, 850 of which have developed products using its technology, Tomic said. About 250 of them are active today, 60 are applicable to SAP’s customers and about 20 are “hardcore fintechs.”) Now SAP has made a real estate investment it hopes will foster innovation by creating a more cohesive environment for it, according to Falk Rieker, global head of industry business unit banking.
“Banks have really been brought to accelerate their innovation efforts… change the way they interact with the customer,” he said. “In the world I grew up in, the banker waited in the bank until the customer came in. The banker would tell you what’s best for you. In the new world, the bank needs to come to the customer, the customer determines what the product looks like.”
That’s true whether the customer is a consumer or a business.
“Banks need to consider not just their own product, but giving their customers choice,” Rieker added. Hence, a new space for co-creation. “If banks get their act together, they have a bright future.”
The company is running with various emerging themes that technology has brought to financial services: it understands it can’t not innovate and stay relevant, and it can’t innovate alone. And it’s not longer about big companies eating up small startups, it’s about fast companies beating out slow companies no matter the size or reputation.
“We don’t innovate just in a silo, we have to work and collaborate with the minds of startups, academia and young people,” said Ann Rosenberg, global head of SAP Next-Gen, nodding to the energy of New York City and its contrast to Silicon Valley.
The tower is one of several planned for the $20 billion, 27-acre Hudson Yards redevelopment project, the city’s largest private real estate development since Rockefeller Center and the largest in U.S. history. SAP did not share how much money it’s investing, but asking rents for Hudson Yards office space average $90 per square foot, according to the commercial real estate agency Cogent Realty Advisors, which puts annual rent at about $13 million for the 144,000 square feet SAP now occupies.
“Don’t ask me about ROI,” Rieker joked, when asked what exactly SAP plans to get out of this multi-million dollar investment. “Three things: expertise — we have the skills of the financial services industry right here in the city; its excitement — the city of New York is fully committed to financial engineering and software; and the energy level — everyone speaks about Silicon Valley, I’m really pumped up about the energy in New York.”