The news
SAP just held its annual Sapphire event in Orlando, FL. It is totally under the theme of uncertainty and how technology, in particular SAP’s technology, can help businesses steer through poorly charted waters, to use a nautical metaphor. Uncertainty is caused by evolving regulatory situations, tariffs and shipping delays with their impact on the supply chain, waning consumer confidence in the light of all of this, and of course, the big gorilla in the room: AI. SAP’s response to this is the “SAP Flywheel”, which consists of three components
- Applications, of which SAP commands the broadest portfolio amongst all business applications vendors
- Data, which all these applications create, which in turn gives SAP extensive access to semantically rich business data
- AI, which analyses all this data, makes it actionable and, in turn feeds it back to the applications, closing the loop to establish the flywheel.
SAP demonstrated how this works in a scenario that showed how a C-suite consisting of a CFO, CRO, COO and CHRO use the integrated SAP suite with embedded AI to rapidly respond to new tariffs, managing compliance, assessing financial impact, developing strategies, adjusting supply chain plans, and aligning people strategy, all based on unified data.
Key announcements are based on the concept that AI is changing how businesses, and therefore its business applications, operate. Supporting this, is the purpose of SAP’s business AI, which has its foundation in SAP’s Business Technology Platform, BTP. A centerpiece of this change in how businesses – and users – operate is Joule, which is embedded (or will be soon) in all SAP applications and being expanded into non-SAP applications with the help of SAP’s recent WalkMe acquisition to support tasks. On a process level, SAP announced the availability of and the fast delivery of a big number of new Joule Agents. To support businesses and users, all this is underpinned by the AI Agent Hub which is powered by LeanIX to control and govern the deployment of agents.
On the partnership side, SAP announced cooperations with
- Palantir to develop new real-time analytics use cases,
- Adobe, which builds an intelligent application to combine SAP ERP Data with Adobe Experience Cloud data to enable more accurate financial planning and marketing activities
- Not Diamond, to eliminate prompt engineering by automating it (NB: gen AI is eating its own children already)
- And most notably, Neurobotics and Nvidia to connect Joule Agents to the physical world by combining it with (humanoid) robots.
Functionally, SAP committed to aggressive innovation in all application domains, including Finance, Spend, Supply Chain, HCM, and Customer Experience, aiming to be best in class, “second to none”, as Muhammad Alam put it.
The bigger picture
AI, in particular agentic AI is in every vendor’s messaging, these days. This is an inevitable consequence of the hype that we are still in. AI-based technology may or may not help businesses navigate the treacherous waters that the current economic uncertainties are, but then all business action creates data, and AI is able to speed up the process of making sense out of this data and to come to informed decisions. This is the most visible reason why many vendors now change the narrative to also include a “data cloud” and/or a “data fabric” as a fundamental part of their software stack.
The other big topic, connected to the first one, is the “death of SaaS” and the degradation of ERP systems to mere data repositories with the business logic being overseen, orchestrated and executed by interacting AI agents. This is essentially the narrative of businesses that are strong on agentic and/or workflow but weak on ERP and it will be interesting how this narrative pans out in the next months.
My point of view and analysis
Let’s start with the keynote itself. I always have a challenge with artificial handovers between speakers or repeating the term “amazing” in a kind of unimpressed tone of voice, and frankly, we have seen more than our share of both in the approximately 2 hours that the keynote lasted – which in itself is pretty much on the long side. Don’t believe me? Watch the slightly edited version on YouTube for yourself (btw, why is there a need to edit it at all? This only reduces authenticity). From a delivery side, I think that Dr. Philipp Herzig performed best, showing mostly credible excitement. And delivery is a thing. Look at other keynotes of enterprise software vendors, like Salesforce or ServiceNow. I agree with Paul Greenberg and Brent Leary, when they say that the keynote is the one opportunity that a company has to excite the attendees. The other thing that struck me is the nearly total absence of topics like sustainability (mentioned in brief as part of the product name Sustainability Tower) or other non-monetary values that have been expressed by SAP in earlier years. While this is understandable to an extent, it raises the question whether these values have been merely lip service. To be sure, SAP is in good company with this – which doesn’t make it better.
Functionally, nearly everything revolved around AI and AI agents in one shape or another. Like most vendors, SAP positions the AI as a helper to employees, developers and consultants, that drives their productivity. SAP’s objective is thirty percent, which I consider low for some SAP user groups – like developers and consultants. Still, I caution about positioning of a tool as a helper and how it is going to be used by buyer organizations. This is something that is beyond any vendor’s control.
Still, I think that SAP has what it takes to help businesses become far more efficient. The innovation behind all that SAP showed during Sapphire is nothing short of mindblowing. And, it is credible, too, as it all relies on business data, which are abundantly available via the whole, often SAP driven, enterprise value chain. The data platform, given by the SAP Business Data Cloud and SAP Graph, can bring the unified data that is necessary for effective agent deployments to life.
More interestingly, SAP launched a full-fledged counterattack on the “SaaS is dead” and “the ERP is only a data repository” narratives of some vendors by demonstrating the ubiquitousness of its own agent, Joule and emphasizing on application logic being just that – logic – combined with already built-in privacy, security, integrations, compliance etc., that are on top of the data and give the necessary business context. Emphasizing on this while showing the ability to orchestrate Joule agents across platforms is quite a powerful message. Yes, orchestration is necessary in a process automation world that is increasingly dominated by agents (whether this is useful or not). With SAP demonstrating this capabilities, other vendors need to have very good arguments if they want to sell an agentic automation platform that has the same already built in.
SAP’s ambition to be best in class in all application domains is probably already achieved in many areas. One of them where it is not, is CX, although SAP put a huge investment into its new Sales- and Service Clouds, which technologically probably are the most modern apps around. And then, there is commerce, where SAP seemingly has lost its edge and marketing that was notably absent during the keynote – apart from the partnership with Adobe. Summing it up from a CX perspective – SAP has a long way to go before being recognized as a key CX player, let alone being “second to none”. And this recognition starts with C-level executives speaking more about it, which is another chance that SAP missed out on during this keynote. The CRO persona in one demo was about analytics and how management can be supported, which is not what CRM/CX is – or at least should be – about. And everything else was about finance, HR and supply chain.
Having said this, SAP’s CX solutions probably are amongst the best – but what is that worth if SAP doesn’t proudly position them? In addition, not doing this weakens the – else incredibly strong – end-to-end story that SAP justifiably tells. So, the easiest way to bolster this story is to leave the impression that CX is SAP’s Cinderella behind by incorporating more of it in the messaging.
All in all, SAP delivered quite a strong positioning a suite vendor. The moat around its ERP solution got far stronger, also considering commitments around becoming easier to deal with. The remaining piece seems to be to prove how SAP is or becomes “second to none” in the CX market or a subset of it
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