Share to Facebook Share to Twitter Share to Linkedin CEO Christian Klein sets the stage at SAP Sapphire 2024 with the company’s “Bring out your best” … [+]
tagline. Robert Kramer
At its flagship Sapphire conference held in Orlando in the first week of June, SAP presented its vision of the future of the ERP market to 12,000 customers and partners who attended in person, plus thousands more online. Throughout the event, the focus returned to the infusion of AI into SAP’s products, the importance of ERP modernization and cloud migration and the innovations arising from SAP’s partnerships. In many ways, it was a vibrant show, and SAP is making important moves in the right direction, as reflected by 9% growth (in constant currency) in its annual top-line revenue and favorable performance of its stock price over the past year. Cloud revenue is less than half of the company’s top line—albeit still more than we would expect at this juncture—but SAP’s cloud businesses have seen sustained growth. At SAP Sapphire, the company showed how it is embedding SAP Business AI throughout its solutions to improve enterprise functions including human resources management, supply chain management, finance, procurement, service, sales, marketing and commerce. SAP also announced strategic partnerships with Microsoft, AWS, Google, Meta, Nvidia and Accenture. These collaborations aim to enhance SAP’s functionalities—especially those driven by AI—to improve efficiency and innovation in business processes.
The State Of SAP In Mid-2024
The good news for SAP is that its moves in the cloud, AI and partnerships have translated into strong financial results for Q1 2024. This was primarily driven by an increase in cloud revenue, particularly from SAP’s Cloud ERP Suite, which has grown rapidly for nine straight quarters. SAP’s focused investments in cloud and AI over the past few years are clearly paying off in terms of its financial performance. At the event, SAP also discussed key initiatives for its Business Technology Platform and its RISE with SAP and GROW with SAP offerings, which facilitate digital transformation and cloud adoption. All three leverage AI for enhanced functionality: BTP uses AI to automate processes, RISE with SAP integrates AI to improve workflows and productivity and GROW with SAP includes new AI features in SAP Sales Cloud and SAP Build. The company also helps customers build out value-based scenarios across its portfolio, for example with AI estimator tools that give visibility into AI consumption for different use cases.
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There’s no question that SAP is going out of its way to ease processes and provide benefits for customers in many different ways. It needs to, because some of its customers may never shift their ERP to the cloud, and others will make that transition slowly. To a significant degree, this is unavoidable for any traditional ERP vendor. Because they touch so many parts of a company’s hour-to-hour operations, ERP and SCM systems are the highest-risk applications for any company to transform and are, naturally, the last to change. For many companies, if SAP ever has a hiccup, business stops. Yet achieving true digital transformation—or simply moving ERP to the cloud—comes with its own challenges of complexity, cost and the need for specialized skills from developers (and in some cases users). This ties to one of the overarching challenges that SAP is working to address, which is that customer organizations need careful planning and management to fully leverage the potential of its offerings. SAP Business AI and the Joule AI assistant are embedded across the portfolio.
SAP Embedding AI Across The SAP Portfolio
At Sapphire, SAP showcased several generative AI capabilities that add intelligent automation to its business applications. For example, in the forthcoming SAP Advanced Financial Closing app, AI is being used to automate the financial close process. And in SAP Billing, an AI-driven chatbot helps improve customer service. These and other AI-driven features aim to automate error detection and analysis, provide personalized insights and predict potential issues for users from financial controllers to collections specialists. SAP’s AI copilot, Joule, will also integrate with SAP S/4HANA Cloud, SAP Build and SAP Integration Suite. Joule offers real-time recommendations in ERP areas ranging from supply chain management to cash collection to analytics. By the end of 2024, it will also be part of SAP Ariba, the company’s procurement suite, where it will help select suppliers, automate contract and purchase order management and predict demand and risks. Also by the end of the year, SAP says, Joule may be able to influence as much as 80% of common user tasks, potentially increasing productivity by 20%. While the application of AI to problems in finance or supply chain management
