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SAP CEO: Generative AI comes with a "30% premium" - could customise your on-prem deployments

"We sit on data of over 400,000 customers and their material flows, financial flows, employee customer data. We are taking this data… to benchmark and give business process recommendations"

SAP CEO Christian Klein believes that generative AI comes with a “30% premium” for the ERP firm, which made strategic investments in three AI companies – Aleph Alpha, Anthropic, and Cohere – in July alone.

“We see a huge opportunity with innovation in AI and believe SAP is uniquely poised to help customers take advantage of this watershed moment,” Klein said on July 20. SAP will reveal new AI products in Q3.

Taking questions on an earnings call, he spelled out examples across emissions reduction, skills management and inventory optimisation among others; even suggesting that in future customers running heavily customised on-premises SAP implementations will be able to tell them to “generate code” to automatically build differentiating capabilities.

SAP CEO on AI opportunities

Pressed on an earnings call for examples of AI generating business value, he said: “Take Lidl and Kaufland [a major German supermarket chain], they have over 400 input levels going into demand forecast. We are taking petabytes of data and analysing it to predict better demand. They have optimised their inventory and their supply chain costs by over 10%.”

“With generative AI… we sit on data of over 400,000 customers and the material flows, the financial flows, employee customer data.

“We are taking this data… to benchmark and give business process recommendations. We see in the first prototypes that… the system can self-learn on this data how to improve all these workflows; the systems itself [sic] will also drive further automation of workflows going forward.”

SAP CEO AI comes with a 30% premium

He spoke as SAP reported quarterly revenue of €7.5 billion ($7.5 billion), up 5% year-on-year. Cloud revenue was up 19% to €3.32 billion.

SAP  S/4HANA cloud revenue was up 74 % to €823 million. On-premises software licences revenue decreased by 26 % to €316 million.

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The company reiterated plans to reach net zero emissions across its value chain by 2030: “To get there, we're establishing a multiphase supply chain engagement program with our suppliers to significantly reduce our upstream greenhouse gas emissions. As a first step, we are working with our top 100 suppliers to ensure they report emissions at product level and follow a net zero plan, leveraging our own technology to do so,” he said.

Warming to the AI theme, the SAP CEO added: “Imagine your ERP system using embedded ESG data and business data to decarbonize the supply chain by 5%, simply by asking for it. There will be a step change in uncovering new insights that lead to better business decisions. Based on external forecasts and our own calculations, we see a potential doubling of our addressable market to $1 trillion by 2028 with AI a key contributor.”

Shares fell as SAP trimmed the higher end of its cloud revenue outlook to €14.2 billion; from €14.4 billion. That’s up from 2022’s €11.43 billion.

See also: Software spending plummets as CFOs batten down the hatches; SaaS firms hike prices