As the generative GenAI Revolution reshapes the business world and certainly the tech industry, SAP CEO Christian Klein is pumping $1.1 billion into SAP’s Business AI efforts and shifting 8,000 jobs to be AI-focused to support his promise to become the world’s #1 apps and AI vendor.
Coming off an outstanding Q4 and full-year 2023, SAP has considerable momentum in the marketplace but fully recognizes that every company in the Cloud Wars Top 10 is also gunning to capitalize on the stupendous growth opportunity GenAI has triggered.
Klein’s unconditional commitment to the success of his company’s Business AI portfolio comes as SAP’s 20,000-plus on-premises customers are beginning to move aggressively into the cloud (for the full story on that, please see “SAP’s Magic Moment: As Cloud ERP Migrations Take Off, Backlog Hits $49 Billion“). Klein is betting that as that massive cohort of customers begins to embark on those strategically interlocked business and technology transformations, they will be open to weaving SAP’s Business AI vision and capabilities into the sweeping changes they’re undertaking.
A new component in that strategy: key enhancements to SAP’s hugely successful “RISE with SAP” program that allow customers to tailor their cloud journey while also receiving some significant financial incentives from SAP for making the full commitment.
Within that comprehensive set of offerings, I believe, customers will feel not just comfortable with committing to SAP’s Business AI portfolio but bullish on doing so.
On SAP’s recent earnings call, Klein — the Cloud Wars CEO of the Year for 2023 — called GenAI “the greatest opportunity since the rise of the cloud” and explained how SAP will go end-to-end with the revolutionary new technology both in the products and services SAP offers to customers and in the way SAP runs its internal operations.
“With significant business momentum including in Q4, SAP is stronger and more relevant than ever as we enter the era of Business AI,” Klein said in his opening remarks on the earnings call.
“At the same time, the tech industry is moving very fast, and we need to keep leading the way as a top enterprise application company and further advance to become the number one Business AI company as well. This is why out of a very strong position we are now accelerating the development of the company with the clear goal to grasp the opportunities of GenAI.”
That ambitious commitment involves the investment of $1.1 billion in GenAI development over the next two years as well as a redeployment of up to 8,000 people whose current positions are being eliminated because those positions no longer align with customers’ priorities and opportunities.
Under the new plan, Klein said, SAP’s goal is to “intensify the shift of investments to strategic growth areas — above all, Business AI — and to drive new efficiencies powered by AI across the business.”
That shift to AI-powered business covers everything SAP does, Klein says.
“SAP will completely embed AI in all of our solutions, we will make it fully available for end users, and we will connect it directly with our business processes. This will tremendously boost the capabilities of our solutions, and also fundamentally change how users interact with our systems.”
SAP executive Scott Russell, who leads global engagements with customers ranging from sales to customer success, said SAP’s strong growth in Q4 is a clear sign that customers are buying into the company’s vision across not only the need to migrate to the cloud but also the essential nature of Business AI.
“Customers around the world are very clear that to be able to navigate the uncertainty of the macroeconomic and other environments, they need operationally efficient processes, they need to access their data, and then they need to be able to find ways to monetize and learn from that data using Business AI,” Russell said.
“And the only answer for all that is using the cloud with SAP.” To support that contention, Russell pointed to the company’s excellent performance with both its current and total cloud backlog, with the former jumping 39% to almost $49 billion.
With the Cloud Wars Top 10 companies throwing every bit of their combined $7-trillion-plus market cap behind their GenAI initiatives, this is not the time for tentative approaches, mushy commitments, or piecemeal efforts.
So I think Klein and SAP are being appropriately bullish in saying they plan to be #1 in not only Business AI but also in enterprise apps, a leadership that Salesforce wrested away from SAP about 18 months ago.
And as we always say, when the world’s top cloud and AI vendors do everything in their power to win the hearts, minds, and wallets of business leaders across the globe, the biggest winners in the Cloud Wars are the customers who get to tap into the spectacular results of all that innovation and competition.
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