The Supply Chain Matters blog provides highlights and perspectives regarding SAP SE’s 2024 annual Sapphire and North America ASUG customer conference held this week both as an in-person and live streamed event.

This year’s event included upwards of 12,000 in-person attendees along with 15,000 that were live streaming online.

 

Overall Impressions

In our published commentaries related to the last two prior annual Sapphire events, we focused upon the progress of company strategy, overall customer messaging and product go-to-market strategies coming together in a more cohesive fashion.

The company’s mainly on-premise customer base is seeking more compelling business related reasons, incentives and advocacy support programs from SAP relative to upgrading to both Cloud-based applications along with the SAP Business Technology Platform. This includes various supply chain management needs focused on business processes and decision-making.

We sensed a different messaging strategy related to this week’s event, one that likely favors SAP revenue and profitability momentum needs in the coming years.

Coming into the event, the open question remained as to whether SAP had internalized the feedback from the provider’s multi-industry customer base regarding their business and technology transformation and enablement needs. A further challenge was helping CIO’s in stating the business case for Cloud based adoption among various stakeholder buying personas. That includes not only the company CIO or IT director, but also C-Suite, various line-of-business, operational and customer support focused executives.

The question going in was whether SAP leadership made some progress in helping businesses with these needs. Our observation is that this year’s Sapphire ran astray in that it placed more emphasis on all-in Business AI strategy enablement messaging.

From our lens, SAP may have squandered  an opportunity for more succintly reinforcing the business case for Cloud level transformation of business applications, infrastructure and broader data management integration capabilities. The elements of such strategies were included in the sessions, but the emphasis was clearly SAP business strategy focused, which appears to be all-in for generative AI support.

The above stated, we again advise SAP customers to pay close attention to the implications of an evolving all-in business AI adoption strategy, which we will point out in this and future commentary and research advisories.

Following are highlights, observations and summary thoughts involving the three different 2024 Sapphire keynotes.

 

Messaging Themes and Implications- All-In for Generative AI

The conference kickoff included SAP CEO Christian Klein’s keynote which typically sets the stage for strategy in the coming year.

Klein stated that this year’s conference theme was “celebrating joint successes.” On-stage videos further emphasized the theme that “Our work is rooted in your needs.”

He characterized this year’s event as rather special, essentially launching the company into a new phase of Business AI support.

What followed was a host of announcements and some bold statements. They were mainly anchored specifically around SAP Joule, the company’s Generative AI assistant offering, which was described as “ready for prime time.”

Klien communicated that Joule will become the new user front-end for many of the company’s applications. What followed was an even bolder statement, namely that by the end of this year, 80 percent of SAP’s most used tasks will be managed by Joule. That supposedly includes applications such as order management, cash collection, strategic supply chain management and procurement related decision-making.

This literally equates by some estimates to upwards of 300 million users if or when it were to come to pass. That seems rather aspirational. Further stated was that use of this technology would result in companies being 20 percent more productive.

With such statements, one can readily sense that SAP’s goal is to establish a first-mover advantage for business utilization of generative AI and large language model usage across global-wide business software applications.

The obvious contrast is whether with this broad scope and condensed timing, businesses are prepared to take advantage of the technology, given their current data, operational business and supply chain process complexity dimensions. With many customers still utilizing legacy on-premise SAP ERP applications, generative AI adds an even steeper technology leap without a well defined business case and business transformation objectives.

A further factor is that Joule itself is still being deployed across SAP applications with SAP Ariba and SAP Analytics Cloud expansion currently scheduled for year-end implementation.

Our reaction is that this is a bridge too far for such an aggressive timing window. Especially when businesses consider that generative AI technology models are still work-in-progress, especially with inquiry error rates and needs for added large language model learning. One could speculate whether SAP may be loose in the differentiating of machine learning based, narrow AI, and more advanced generative AI. That remains to be assessed.

SAP’s prime challenge remains in motivating and assisting customers to initiate their upgrade journey’s in order to be able to take advantage of the array of new technology and to be better able to digitally transform business and supply chain processes and  decision-making. Thus remains the critical importance for influencing on-premise legacy customers in utilizing and leveraging the RISE with SAP upgrade program.

Most Important Announcement

The most important conference announcement relates specifically to what Klein described as the next evolution of the RISE with SAP program.

That announcement is that an Enterprise Architect will be assigned to all RISE implementations to ensure that customers have access to an SAP technical specialist to assist in overcoming obstacles, utilization of helpful tools and addressing any customer concerns related to timing and implementation of upgrade. This is an especially important announcement for SAP customers, one that will likely be applauded.

SAP had already provided financial incentives for customers related to applications pricing with adoption of RISE. The good news is that this provider now finally realizes that it must initiate more direct governance and scope control for customer upgrade paths in order to springboard efforts, adoption pathways and time-to-value benefits.

The added challenge for SAP and its implementation partners is the ability to train and scale the number of enterprise architects required, along with the support and communication mechanisms needed to control and manage simultaneous RISE efforts.

Instilling enterprise architect oversight has the potential to add needed governance, manage scope creep, and indeed improve time to value, especially involving implementation partners. SAP senior executives acknowledge this challenge.

Important Terminology

Attendees might have realized the many multiple mentions of “clean core” made by SAP senior executives among all three of this year’s Sapphire keynotes.

This term equates to no customizations included in the upgrade to Cloud based ERP applications such as S/4 HANA.  Clean core is critical for SAP and its associated community of global wide implementation partners in order to be able to manage the scope of upgrades that the company seeks. Further, SAP’s product strategy is to leverage the SAP Business Technology Platform as the prime enabler for B2B business collaboration and decision-making, needed business process modifications or integrating internal inside-out or external outside-in data flow and analytics based decision-making capabilities.

The above is rather important for businesses with existing SAP backbone ERP and associated supply chain management functional teams to understand because in many cases, the migration to Cloud and the requirements for integration of SAP and non-SAP information and analytics stems from SAP BTP. That needs to be considered in budgeting, user training and implementation scope.

Product Innovation Keynote

The afternoon of day one keynote was anchored jointly by Muhammad Alam, head of Product Engineering, and Juergen Mueller, SAP Chief Technology Officer. The session was generally a further reinforcement and added specifics of the company’s business enablement AI focus.

The newly recruited Alam indicated to the audience that end-to-end process innovation is where value is unlocked and requires that each part of a business is integrated with all other parts. He further addressed Business AI and its potential to fundamentally change how business is performed. A series of on-stage product demos were presented to demonstrate such concepts. Candidly, the depth and scope of these demos were narrow scoped.

In his segment, Juergen Mueller stressed that SAP Business Technology Platform capabilities are positioned to be key enablers of applications development, data integration, harmonization and advanced AI enablement.

SAP Datasphere

In last year’s North America Sapphire event, SAP Datasphere was described as “the next generation of SAP Data Warehouse Cloud with a comprehensive data service that enables every data professional to deliver seamless and scalable access to mission-critical business data.” The principle behind this application is supporting the ability to run among different Cloud environments and have secure access to data wherever and whatever Cloud system on which it may reside. It was further described as allowing customers to leverage their on-premise investments, such as SAP Business Warehouse (BW), and provide a bridge or transition to the public Cloud for SAP BW/4HANA customers.

A series of on-stage demos to include one that profiled capabilities of SAP Spend Management Control Tower demonstrated the leveraging of the nowincremental  release cycles of SAP Datasphere.

 

Customer Keynote

The day two keynote’s was anchored by Scott Russell, Chief Revenue Officer and Customer Success executive for SAP, along with Thomas Saueressig, Customer Services & Delivery Executive.

This session was a reinforcement of the company’s ongoing customer support and RISE with SAP efforts along with a select profile of lighthouse customers and their different journeys to Cloud adoption.

From our lens, attendees might have garnered a better understanding of the value propositions for Cloud transformation if this keynote was slotted at the start of this year’s Sapphire.

Chief Revenue Officer Russell communicated that more than 6,000 customers have adopted the RISE program during the last 12 months. He further communicated that as a result, “they are outperforming their industry peers by 7 percent.” From our lens, it is rather important that SAP make this detailed analysis and conclusions more visible.

Saueressig, who previously led SAP’s internal IT operations leadership role, stressed that “there is no point in waiting anymore,” and that there is a new sense of urgency for businesses. He described an analogy of white water rafting, a thrilling journey but sometimes scary. Our SAP focused readers might relate to such an analogy.

CIO’s representing glycolic acid producer PureTech Scientific, juice and health food provider Tropicana Group, Hitachi IT, and global healthcare services conglomerate  Fresenius described each of their RISE journeys. The latter, which is the largest operators of private hospitals across Europe was especially eye-opening.  CIO Ingo Elfering described an effort that included four simultaneous major business transformations over a stated 18 month timeframe. He specifically indicated that the transformation touched everything that SAP offers including manufacturing and supply chain.

Added Thoughts

Among our stated takeaways from last year’s event included the following:

(Customer) partner has broad implications relative to collaboration, transparency and skin in the game. Increasingly important for any technology provider considering deployment of generative and deep learning AI technologies is the corporate social responsibility that is now mandatory in this still evolving and mis-understood technology. Such technology is rightfully providing a lot of concerning voices and all technology providers need to heed such concerns.

We often described the new normal of business and for supply chains after the past three plus years of events and disruptions. We submit a new normal for technology as well, that being the acknowledgement of the not just the benefits and promise of cutting-edge technology, but the added responsibilities and safeguards necessary for the protection of data, information and populations.  Tech providers can no longer hide from just being cool, but rather responsible.

By the notion of this year’s Sapphire messaging, SAP has initiated an intent to have first-mover advantage in enabling advanced AI in business applications and decision making. In casting that direction, this provider takes on the added responsibilities that we outlined above.

At the same time, the ongoing effort remains in assisting existing legacy on-premise customers in determining their likely pathways, specific benefits and likely timetables and resources needed toward transforming to modern digital based processes enabled by Cloud based infrastructure and applications.

The question remains whether these two paths turn out to be complimentary and timely.

Once again, we will be providing added perspectives regarding SAP’s ongoing business strategies. In meantime, if you have added questions, observations or needs, please contact us directly.

Readers who were not able to attend or view this year’s event, can access SAP’s designated Sapphire session replay website.

Bob Ferrari

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