All-in on AI

Ultimately, it must be assumed that in the current situation, SAP CEO Christian Klein has not understood the phenomenon of „AI“. He treats AI no differently to in-memory computing, predictive analysis and cloud computing. These are technical experimentation and IT playing fields that are intended to add value to ERP and give SAP a head start.

Even the in-memory computer technology SAP Hana was of dubious value. Hana was and is a masterpiece of computer science, forged by Professor Hasso Plattner and Professor Alexander Zeier at the University of Potsdam (Germany) at the HPI (Hasso Plattner Institute). Technically outstanding, but with limited added value for business management and organization. Hana has remained a singular database for SoH (Suite on Hana) and SAP S/4 to this day. The idea of former SAP Chief Technology Officer Vishal Sikka to turn Hana into an open source product was never realized.

SAP PAL (Predictive Analysis Library) became Hana PAL, but this IT concept did not become a new ERP innovation. PAL was and is an interesting ERP add-on, just as the Graph and Vector engines are on the Hana platform. In recent years, SAP has been very good at making innovative IT tools available to its own existing customers. However, the ERP group SAP was no longer able to offer its existing customers its own way with business and organizational value and sustainability.

Under CEO Christian Klein, SAP celebrated great economic success with cloud computing technology. The SAP share price reached an all-time high. The technology works, but SAP meanders between „cloud first“ and „cloud only“. For many years, SAP has been unable to find a sensible business and organizational path for ERP in the cloud. IT concepts such as BTP, BDC, Joule and RPT-1 are presented, but the „purpose“ of a new ERP has never been defined - now SAP's motto is: All-in on AI.

The move towards the cloud was only right for SAP to a certain extent, because almost all traditional software providers were looking to break free with cloud computing. SAP CEO Christian Klein is wrong about AI. AI is a paradigm shift. AI is not an add-on for ERP, but AI wants to revolutionize traditional IT - just like many other things!

After consolidation, harmonization, orchestration and virtualization came cloud computing. A logical step for many aspects of ERP. SAP, under the leadership of Christian Klein, made the leap to the cloud shortly before twelve and investors, financial analysts and the stock market paid tribute to the SAP CEO with an all-time high in the SAP share price.

Repeating this hussar ride with AI seems naive. AI is not an evolutionary development of any old IT system. SAP CEO Christian Klein would have to reinvent ERP from the perspective of AI and not put more and more AI into old ERP technology. The challenge for SAP is not AI, but ERP. Perhaps a composable ERP based on a business AI system such as SAP RPT-1, supplemented by Agentic AI.

Every technology has its time: my first ERP system was SAP R/3 on an IBM RS/6000 server with AIX as the operating system and Oracle as the database. I was a newcomer to the scene and was amazed that IBM was barely making ends meet with software licenses and SAP was getting richer and richer with R/3 licenses! There were exactly two user licenses on the IBM RS/6000 server: an administrator and SAP R/3. Every SAP user naturally needed an R/3 license, but not an AIX operating system license. It was a question of the IT system architecture from which SAP benefited.

This IT ERP scenario will continue to develop and repeat itself with AI agents: „AI software is eating the world“, AI experts predict. Why not replace hundreds of S/4 licenses with a single AI assistant that works around the clock and is supervised, monitored and controlled by hundreds of former SAP users? A fully-fledged S/4 Hana system could be controlled by five AI ERP assistants and their AI agents (Agentic AI): CRM, HCM, SCM, PLM and MII.

The AI agent Joule and the platforms BTP and BDC would be left empty-handed with „All-in on AI“, because specialized AI agents from Salesforce, Workday and ServiceNow and general AI agents from OpenAI, Anthropic or Mistral would come.

„All-in on AI“ cannot be an exit strategy for SAP CEO Christian Klein because AI threatens traditional ERP such as S/4 Hana in every area and every dimension. After the AI paradigm shift, SAP needs a new ERP model and not AI add-ons.

Christian Klein will not guarantee SAP's survival with AI as an ERP add-on, but AI can become the starting point for a new SAP - just as the five SAP founders revolutionized IT when hardware was still the big revenue driver.