Where SAP Missed the Mark at Sapphire 2024

SAP Sapphire 2024, the vendor’s annual conference, concluded last week and, as we predicted, SAP spent the majority of their time polishing off the same buzz words and phrases. These included the phrases “optimize business processes” and “support scalability” you’ll hear during every earnings conference or product launch.

SAP focused primarily on the functional makeup for their future AI solutions and what value that will bring to organizations. However, they notably ignored the pressing matters we hear from our customers, including: how customers can purchase and leverage AI Units, how SAP plans to protect their customers data in Generative AI developments and how they have evolved the various RISE Commercial Constructs available to the market.

Christian Klein, SAP’s CEO, opened his keynote address stating “We are entering a new phase of AI with endless possibilities for all of us,” and while the next two days were full of the wonders & promises of all of the AI features SAP is bringing to the market, SAP offered little in the way of commercial or financial details that organizations are seeking answers for in order to assess the value of these solutions.

Here, we will outline the gaps in what was announced during SAP Sapphire 2024 as well as some key takeaways for customers’ evaluations to ensure you address these gaps at the negotiation table.

AI Overload

If you attended Sapphire and expected SAP to address the differences between their “Base” AI capabilities compared to their “Premium” and “Premium Plus” capabilities, you likely left disappointed. During the conference, SAP repeatedly shared that over 27,000 customers are using their AI features—but this metric seems inflated by embedded automation capabilities such as evaluating and classifying documents.

SAP represented a goal to have 80% of common tasks be covered by Joule by the end of 2024. While a commitment to enhancing products is always welcome, customers should seek increased details around when specific features will be made available and evaluate the relevancy. This will ensure that they are not making an investment in a tool that will not deliver the promised value for some time.

SAP touted their commitment to AI ethics, including their alignment with UNESCO’s regulations for ethical AI. However, they left many questions unanswered in terms of how SAP plans to actually protect customers’ data. For example, SAP conducted an AI breakout session in which they solicited audience feedback on their top concern related to AI. Polling revealed the overwhelming majority have concerns around “Privacy & Data Governance.”

Rather than even attempting to address their customers’ top concern and outlining what steps they are taking to mitigate risks, SAP simply decided to end the session without further comment. This inaction reflects poorly on SAP’s ability to be a leader in the AI space and is a sign that they are either not aligned or have not adequately planned their GenAI data security policies.

Either way, it is a significant concern that SAP did not address AI security provisions during their flagship event and is not surprising considering the lack of details SAP provides our customers when they are evaluating their AI solutions, capabilities, pricing and security provisions.

SAP also did not adequately address several other fundamental questions customers have related to their AI offerings, including:

1. How do customers purchase AI credits or AI packages and what are the financial implications?
2. How is SAP pulling existing customers’ data to train their LLMs and do they have an opportunity to “opt out” of this process?
3. What provisions are SAP implementing to minimize risks related to data exposure to third parties?
4. How will AI Credits be tracked and consumed and how flexible are the parameters around use rights to allow for customers’ unique needs with GenAI?
5. What do SAP’s latest releases mean for early adopters of RISE? Should they be expecting an aggressive sales process to incorporate change orders for their new innovations?

It’s evident that SAP’s AI Strategy is in the infancy stage and constantly evolving as they continue to make additional investments and restructure their business resources to execute their AI business objectives. Given the fluid nature of AI in general, impending federal regulations, and SAP’s refusal to address customers’ top concerns, there is significant risk to those considering investing into SAP’s AI solutions.

We predict it will be challenging to forecast what degree of ROI customers will receive from SAP’s AI solutions and how they can best leverage the capabilities in a predictable manner in both the short and long term. There’s also uncertainty surrounding what degree of flexibility customers will have to modify and right-size their SAP AI portfolio as both the industry and SAP’s solutions evolve.

This makes it imperative for organizations to conduct a thorough evaluation of SAP’s offerings, starting with a deep understanding of RISE and GROW that includes the various innovation packages they offer (i.e., Standard, Premium & Premium Plus). Customers also want to ensure their investment is aligned to your internal AI roadmap and innovation strategy.

RISE and GROW’s Evolution

At Sapphire 2024, SAP flaunted their success in securing over 6,000 RISE customers on top of increased momentum in securing GROW customers. Given the litany of technical, commercial and business differences customers must consider as they evaluate SAP’s core ERP platforms, we expected SAP would leverage Sapphire to review how they have morphed the commercial variations of RISE and GROW since their inception and what new value that brings their customers.

Similar to their pitch for AI, SAP touted increased flexibility and predictability that comes with using RISE and GROW, but failed to address what they have selectively marketed as “the most flexible” RISE construct for their customers, that being their Commit to Consume model.

In response to growing negative feedback provided by RISE Customers regarding the lack of commercial flexibility that RISE offers, SAP has recently transformed their commercial offerings with RISE to offer additional license flexibility. Over the last 6-12 months, UpperEdge has seen SAP increasingly position their Commit to Consume model as the preferred RISE model for their customers. This model is designed to offer customers the ability to start and stop Software, Infrastructure and CAS packages at their choosing, without executing Change Orders, and comes at a pre-defined discount for a list of eligible solutions.

Instead of SAP publicly spotlighting this model and referencing customers success stories, they instead announced further adjustments to their RISE service offerings after receiving a growing amount of pushback from customers unwilling to migrate to RISE. The biggest announcement centered around RISE now including LeanIX, SAP Signavio, SAP BTP, and Cloud ALM. Additionally, SAP will assign all RISE customers an SAP Enterprise Architect.

While SAP stated that the Enterprise Architect will assist customers by simplifying processes and speeding migration from their legacy platform, customers should keep in mind that these architects will also function as a backchannel to SAP. Their function on your project will include identifying potential sales, risk of competing solutions and any deviation from fully adopting SAP centric solutions. SAP was also quiet on how these new inclusions will impact pricing for both existing and new RISE customers, especially those who have already purchased LeanIX and Signavio.

SAP did briefly mention their newly announced RISE Migration and Modernization program, which is another reaction to growing frustrations customers have expressed towards the challenging RISE migration process. The key feedback SAP’s received included customers paying significantly more in migration costs than expected, a lack of efficiencies, and unwillingness from SAP to protect previous investments.

SAP stated that this program, which launched in 2024, has been designed to offer credits reducing Migration fees by 50% on average, introduce new methodologies to drive more predictable timelines as well as offer more transparency and milestone checks and offer additional flexibility for customers who require additional time to complete their migration. It is still unclear how SAP plans to credit their early adopters who ran into these migration challenges and did not have any access to the newly announced program.

Key Takeaways from SAP Sapphire 2024 for Customers’ Evaluations

As SAP continues their aggressive push to drive RISE and AI adoption after Sapphire 2024, while seemingly changing the functionality, constructs and packages on the fly, it’s more important than ever that customers be prepared for a multi-step evaluation process that considers the technical, commercial and business impacts of SAP’s offerings. This evaluation process should include participation across multiple layers of your IT organization and include technical questionnaires, use-case demos and customer reference calls, at minimum. Be sure you are addressing the following components:

1. Technical Evaluation

• Identify the impact on custom or third-party products
• Understand how these solutions could interfere with your IaaS strategy
• Request Cloud and AI product roadmaps—and access to upgrades/new functionality
• Understand the level of flexibility you have to test SAP’s AI & innovation packages

2. Commercial Evaluation

• Identify which RISE commercial model is best suited to your cloud strategy
• Review the non-software aspects of RISE (i.e. services and RACI)
• Incorporate key commercial flexibility, predictability, and value in agreements

3. Business Evaluation

• Identify impact of RISE & AI on executive relationship and support from SAP
• Understand degree of access to and influence on SAP’s Industry roadmap
• Pursue recourse for early adoption and recurring issues faced with SAP solutions

Our SAP Commercial Advisory experts can assist both your evaluation and negotiations of RISE or GROW and the various AI offerings SAP has to offer. If you’re looking to better understand what you learned at Sapphire 2024, explore our SAP Advisory Services to see how we can help.

This blog is co-authored by Jared Kennedy.