The name Xerox conjures so many images of jumbo photocopiers and retro printers that it can be easy to forget it was once a hub of innovation. In the 1970s the massive company’s tiny Palo Alto Research Center (PARC) developed a graphical user interface, a basic desktop, publishing technology, and Ethernet connections, and assembled those features into the first modern PC. Xerox, of course, approached Apple to help it market the computer and agreed to share its secrets in exchange for a stake in Steve Jobs’s company. Xerox benefited greatly from PARC’s other big invention, the laser printer, but its PC business never took off.
SAP, the German business-software stalwart that’s been struggling to catch up in cloud services, is trying to follow the PARC model. SAP traditionally sold its customers software outright, but for the past few years it’s been pitching them software subscriptions that can be updated automatically through the cloud. The cloud model is cheaper for customers in the short term but much pricier in the long run. Microsoft and Adobe Systems last year successfully persuaded customers to adopt the subscription model after a few rough quarters; SAP hasn’t quite made the transition. On Jan. 20 the German company cut its profit targets through the 2017 fiscal year, which it says will yield €6.3 billion ($7.1 billion) to €7 billion in operating profit, down from €7.7 billion.
Over the past year, SAP has also recruited about 20 polymathic technologists and designers from the fringes of Silicon Valley and academia. The company is funding its new hires’ pet projects and leaving them alone to experiment, says head recruiter Alan Kay, a computer scientist who pioneered Xerox PARC’s graphical interface technology in the 1970s. Although it’s unclear how products from the Communications Design Group will mesh with SAP’s portfolio of office software, Kay says that’s kind of the point. “We’re relying on people who are essentially artists,” he says. “The central idea that was powerful at Xerox PARC was about having a loose vision more than a plan, and to only get the best people. That formula led to many trillions of dollars’ worth of inventions.”
Most of Kay’s SAP recruits, who are working in labs in San Francisco, Los Angeles, and Cambridge, Mass., have esoteric interests. Bret Victor, a former Apple designer, has spent much of the past five years developing software that lets scientists simulate the shifts and changes of complex systems using interactive graphics instead of equations. Vi Hart, a self-styled “recreational mathemusician,” is working with artist-programmer Andrea Hawksley on an SAP-backed virtual-reality startup, EleVR. Mathematician and coder Toby Schachman is building a program called Shadershop that lets people structure software by drawing it instead of writing out the code.
SAP is wagering that valuable inventions will emerge from the mélange of new projects Kay’s new hires are pursuing. “He’s really good at anticipating where technology will go and what will be interesting to do with it when it becomes fast and cheap, even if it’s slow and expensive now,” says David Liddle, a former colleague of Kay’s at PARC, which is now a Xerox subsidiary. “And he’s an exceptional judge of talent.” Although much of Kay’s team is just getting started, SAP’s product chief, Tanja Rueckert, says the company is already discussing incorporating some of its ideas into commercial software.
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