Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
This episode is sponsored by Acceleration Economy’s “Cloud Wars Top 10 Course,” which explains how Bob Evans builds and updates the Cloud Wars Top 10 ranking, as well as how C-suite executives use the list to inform strategic cloud purchase decisions. The course is available today.
In today’s Cloud Wars Minute, I examine SAP’s rationale for higher prices for offerings with generative artificial intelligence (GenAI) capabilities.
00:27 — Is a price war breaking out? SAP CEO Christian Klein is making the case for a 30% premium, but SAP also offers other possibilities such as consumption pricing. ServiceNow said it will charge up to 60%. SAP has a 30% model for its RISE program. Salesforce said it’s going to raise prices 7%.
01:29 — Oracle has said it’s going to charge absolutely zero for the new AI capabilities. At this point, the vendors are proposing what they think will work. Ultimately the marketplace, in the form of customers, are going to decide.
03:04 — Klein said that SAP has developed 100 different use cases; it has a foundational data model that it’s created within its neural network; it’s got authorization policies; and it’s offering advanced capabilities in sustainability and financial.
03:50 — He said, we’re giving customers a choice: They can go with either our premium model that carries the 30% tag, or they can go just on consumption-based pricing.
04:41 — SAP’s got this deep industry expertise, it’s been working with some of its big customers for 30, 40 years. The relationships run very deep, and I don’t think Klein would have proposed this 30% premium if he felt the customers might say, “Hold on here, I’m going to jump somewhere else.”
05:02 — There’s a lot of room for a lot of possibilities here, but, again, the customers hold all the power in this game.