SAP Wants To Future-Proof Businesses With AI

By Patrick Moorhead - June 14, 2023

At the recent SAP Sapphire conference in Orlando, SAP made several announcements showcasing its responsible AI, sustainability and “empowering customers to navigate complex challenges and transformations” in the cloud era.

In this article, I examine how SAP says it wants to help customers transform business models in the cloud, achieve greater visibility around sustainability and bolster supply chain resilience.

While AI algorithms have been around since the 1960s, it took decades to make the training and inference of these models affordable for everyone except national security agencies. Today, AI and machine learning permeates many of the applications we use today.

Foundational models offer new applications for text, programming, numbers, images and videos that results more what everybody thought of when we thought of ”AI.” With tech company fortunes ebbing and flowing on how investors and customers see vendors applying AI, SAP wanted, understandable, to lean into AI more than it naturally would.

AI in the core of business systems is quite different that consumer AI- it’s not poems or planning the best week in Paris, it’s how company’s best deploy and manage human capital and durable assets. It’s corporate reputation, the lifeblood of a business, not playtime. Therefore, when the stakes are high, there’s little room for error. I think SAP knows this and demonstrated this at Sapphire.

Integration of AI capabilities across ERP

The SAP S/4HANA cloud will now include SAP’s AI capabilities. The new features include SAP AI Business Services, which will assist finance teams in controlling costs and reducing risk by quickly identifying and responding to changes in customer sentiment. Sales teams could benefit from the automation of sales order functions, streamlining order processing by eliminating manual data entry.

Spend management software and the SAP Business Network will now leverage AI to better help procurement professionals navigate market dynamics, engage with suppliers and enforce compliance. Features such as intelligent invoice conversion and AI-powered guided buying in SAP Ariba Buying will simplify procurement processes.

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The Customer Experience software portfolio will receive an AI-powered companion application to improve conversion rates and operational efficiency for sales, commerce and services teams. SAP S/4HANA Cloud will introduce built-in support for reporting and addressing problems within the software. Users can access tailored and proactive support content in real time and receive alerts for critical product issues.

SAP will embed AI into industry-specific solutions as well. For instance, SAP Predictive Replenishment will use AI to optimize inventory management by automatically calculating and ordering products. Sales teams can also utilize SAP Intelligent Product Recommendations, which suggests optimal product configurations based on AI-driven sales data analysis.

AI will also enhance SAP’s Human Experience Management software portfolio by streamlining human resources management. SAP SuccessFactors will leverage AI to understand the workforce’s skills, allowing HR teams to provide continuous development opportunities and align employees to support the company better. The SAP SuccessFactors talent intelligence hub will offer employees a foundation to build and maintain a skills portfolio, with AI assisting them in showcasing skills and providing personalized recommendations for career paths, training projects and mentors.

Additionally, HR teams will gain access to AI-powered workforce management tools that consolidate workforce information, including the skills, cost and availability of employees and contract workers. This capability will enhance resource managers’ visibility into available resources for various projects.

An expanded partnership with Microsoft

SAP has expanded its partnership with Microsoft to enhance human productivity and development in the workplace through generative AI. Integrating SAP SuccessFactors solutions with Microsoft 365 Copilot and Copilot in Microsoft Viva Learning aims to address skills gaps and improve recruitment, retention and upskilling of the workforce. (For more on Copilot and its role in Microsoft products, check out our analysis here.) Meanwhile, Microsoft’s Azure OpenAI Service provides advanced language models that analyze and generate natural language. This integration aims to revolutionize how organizations attract, retain and develop the workforce, offering new and improved experiences for talent management.

SAP SuccessFactors has over 248 million users, and combined with Microsoft’s one billion Microsoft Office users and 280 million daily active Microsoft Teams users, this initiative certainly has the reach to transform business at scale.

The collaboration between SAP and Microsoft introduces three key innovations. First, generative AI capabilities will enhance recruiting and learning processes, providing hyper-personalized experiences within the flow of work. The second innovation is a talent intelligence hub that leverages AI to build and maintain a skills portfolio for each employee, enabling personalized recommendations for learning, mentors and internal jobs. Lastly, enhanced total workforce management functionality brings together SAP SuccessFactors, SAP Fieldglass and SAP S/4HANA Cloud to increase visibility across the organization.

An expanded partnership with Google

SAP has also expanded its partnership with Google to provide customers an open-data offering, enabling data integration across the enterprise landscape using SAP Datasphere and Google’s Cloud.

By combining SAP with Google Cloud’s data and analytics technology, customers can create an end-to-end data cloud that provides real-time visibility into entire data estates, empowering organizations to maximize the value of investments in Google Cloud and SAP software, streamlining data integration and accelerating the development of AI models and analytics engines.

Ledger-based accounting for carbon tracking

There is a growing need to track, measure, monitor, and report on carbon emissions. SAP is extending its ERP software’s definition of resources to include carbon, thus introducing the green ledger initiative. This initiative allows companies to manage carbon emissions with the same transparency and reliability as financial data. SAP is also updating its Sustainability Footprint Management solution and introducing the Sustainability Data Exchangeapplication to facilitate the exchange of standardized sustainability data with partners and suppliers.

Industry-specific networks to enhance supply chain resilience

SAP also announced the SAP Business Network for Industry, which enables customers in specific industries to improve and extend key business processes with trading partners.

SAP Business Network for Industry targets common supply chain collaboration use cases in specific industries. These industry-specific use cases are paired with industry best practices and are all prepackaged for quick implementation and ready use. Today’s focus sectors are consumer products, high-tech, industrial manufacturing and life sciences—with more to come.

Wrapping up

Considering the booming interest in AI and particularly generative AI applications, SAP’s announcements could not be timelier. SAP customers should sleep well knowing that SAP is planning to leverage generative AI across the ERP suite in ways that are relevant to business needs, designed responsibly and aligned with ethical standards.

Finally, SAP has also increased its commitment to recruiting professional developers and announced new programs to meet the growing demand for SAP experts across the ecosystem. That can only be good news for customers embroiled in ongoing business transformations to the cloud.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.