SAP should balance AI talk with customer concerns at Sapphire
SAP will focus on Joule, agentic AI and Business Data Cloud at Sapphire; experts say it should also show how it can help customers deal with real-world issues.
SAP is gearing up for its annual user show, where it's expected to highlight its generative and agentic AI advancements. But analysts are hoping the ERP vendor tempers the AI talk with big-picture news and real-world answers to questions on topics like global business uncertainty.
Walking the line between advancing its AI story and highlighting its efforts in other areas will be tricky. The days of customers forgiving vendors as long as they have an AI strategy are over, and SAP will have to show progress on what it has done to make S/4HANA attractive across its product suite, including SAP Ariba, SAP SuccessFactors and Concur, according to Holger Mueller, an analyst at Constellation Research.
SAP is also likely to focus on its data integration strategy, centered on SAP Business Data Cloud (BDC), which debuted in February, Mueller said.
Still, SAP has a good innovation story to tell around its generative AI agent, Joule, and agentic AI, said Jon Reed, co-founder of Diginomica, an enterprise software industry analysis firm, but he added that he also hopes the vendor will temper that talk.
"A lot of vendors are falling into this trap of spending so much time articulating their next-generation AI future and agentic AI future, and are losing some big opportunities by overemphasizing that," Reed said.
This is part of the balance that SAP needs to strike, however, as it must counter ServiceNow, which is aggressively pushing a message that SAP and other enterprise vendors are on the way to becoming mere data repositories for its AI platform agent interface, he said.
Reed doesn't agree with the way that message has been articulated, but SAP needs to better explain its vision for AI and data innovation and how it helps customers.
SAP can help customers deal with business uncertainty
One opportunity SAP should capitalize on is its ability to provide agile enterprise software systems that help customers cope with global economic instability, including the uncertainty around tariffs, Reed said.
Let's see if they can combine the message of why they're relevant going forward in the AI context, with how they can help customers today, for example as they work to reconfigure their supply chain.
Jon ReedCo-founder, Diginomica
"Let's see if they can combine the message of why they're relevant going forward in the AI context, with how they can help customers today -- for example, as they work to reconfigure their supply chain," Reed said.
The current climate of business uncertainty should be a focus of SAP's messaging at Sapphire, said Joshua Greenbaum, principal at Enterprise Applications Consulting.
This is a particular area where SAP's traditional ERP and non-generative AI do a good job in vital business functions such as transportation planning, supply chain management, logistics and warehouse management, Greenbaum said.
"SAP has always done a really good job at these and is increasingly doing a better job at them," he said. "Those areas are super important now in the global economy, and SAP can really deliver value across these very traditional domains, with existing technology that's not out of a copilot/Joule kind of application."
SAP will also need to provide more details on its data strategy with BDC, Greenbaum said. One underemphasized aspect of the BDC launch is that, under the covers, SAP is opening the data model and making it easier for customers who have non-SAP systems to integrate that data.
"That's a risky move for SAP, but it's one that has a huge upside potential, because a company like ServiceNow wants to own the end-to-end process and push SAP down into the commodity layer," he said. "SAP with BDC is saying, 'We're going to do this, we're going to do this better and in a more comprehensive way, and, importantly, will allow you to innovate ERP as well.'"
It's almost a given that SAP will cover what Ben McGrail, managing director at Xmateria, a London-based SAP partner that specializes in data migration, called the "big three" topics: AI and Joule advancements; the issues around data and BDC; and cloud migrations and the developments around Grow with SAP and Rise with SAP.
McGrail, a frequent Sapphire attendee, noted that there's often a gap between the forward-thinking aspirational topics discussed in the keynotes and the more practical concerns of customers.
"In some ways, this is right, as you would expect SAP to be driving forward with new products and new innovation," he said. "That's one of the reasons why a lot of customers go -- they want to know what's coming up and what they should be thinking about when they've got some headroom."
However, SAP shouldn't minimize the real issues that are on customers' minds, McGrail said.
"In talking to customers this year, when we talk about budgets and long-term planning, we're not hearing a lot about AI or BDC," he said. "We are hearing that the economy and global uncertainty is definitely having an impact on their thinking and where they spend their money, and on their willingness to invest long term."
The continuing challenge of S/4HANA migrations is likely an issue that will be very much on customers' minds, McGrail said.
"Some customers are going through it at the moment, some of them are just starting, some are struggling to build business cases," he said. "It's definitely a topic that we talk about a lot."
Describing a Grow with SAP journey
Phoenix Global, a metals and mining services company based in Radnor, Pa., is one of the customers that will provide practical information on its S/4HANA implementation at Sapphire.
In 2023, the company selected Grow with SAP and S/4HANA public cloud edition as the centerpiece of its digital transformation that replaced an aging Sage ERP system and manual processes, according to Jeff Suellentrop, chief information and technology officer at Phoenix Global.
Working with systems integrator Syntax, Phoenix Global implemented S/4HANA at its first plant in August 2024 and plans to roll out the implementation across seven more locations around the world by the end of 2025, he said.
Suellentrop will speak about the company's experiences at a Sapphire keynote and will also participate in a panel with other customers on the digital transformation and Grow with SAP, he said.
"I like to spend time with my peers and other customers, learning what they're doing and getting the latest and greatest from what's coming from SAP because there's been a bit of a blend of Rise with SAP and Grow with SAP, and how the go-to-market with that has changed a bit."
Suellentrop would like to hear SAP focus on the quantitative value of AI in core products for processes such as cash management and supply chain optimization, as well as the overall support model and training of AI from SAP and its partners.
"I see AI paying huge dividends there from things like natural language models asking, 'What's wrong with this purchase order?' without having to go to help desk or having to read a user manual," he said. "I see some encouraging things on the progression of the natural language model on the product support side of things and am hoping to learn a lot more about that."
Jim O'Donnell is a news director for Informa TechTarget who covers ERP and other enterprise applications.
