S/4 potential for disappointment

SAP has been successful in recent years with a me-too strategy. Early on, ex-SAP CEO Bill McDermott focused on cloud computing and made acquisitions until SAP's coffers were empty, but the then SAP CFO Luka Mucic managed the finances with foresight: the financial catastrophe did not materialize.

However, McDermott's successor Christian Klein had his hands full consolidating and orchestrating the numerous cloud acquisitions from a technical perspective. In the meantime, CEO Klein had bad news and the SAP share price fell to 80 euros. After a few weeks of turbulence and tariff discussions, the SAP share has the potential to reach the 300 euro mark again. The German-language Handelsblatt (handelsblatt.com) reported: "'SAP's valuation is very high compared to the competition and its own history - the market is pricing in the long-term growth potential,' says Markus Golinski, fund manager at Union Investment. To justify the price, the software manufacturer will have to significantly increase profitability and deliver higher profits in the coming years."

Where is there potential for disappointment? It is still unclear which products and services will be used to shape the coming decade and which strategy will come into play in the areas of cloud and AI.

SAP CEO Christian Klein has made a commitment to S/4 Hana and promised existing customers that S/4 will be in regular maintenance by 2040. However, the poor and lacking success of S/4 makes this statement worthless. A product that nobody wants does not need to be artificially kept alive until 2040. After ten years of S/4 release changes, SAP has recognized this dilemma and, after "Cloud First", has issued the slogan "Suite First" - the new SAP Business Suite!

In his remarkable introductory speech at the SAP Annual General Meeting 2025, CEO Christian Klein did not mention "Hana" or "S/4" with a single syllable. He continuously spoke of Cloud First, Suite First and AI First as well as the two platforms BTP and BDC. The ERP product roadmap thus appears to be set, which is tantamount to an indirect discontinuation of S/4. If the new SAP Business Suite (naturally with the S/4 code at its core, see "Clean Core" concept) is a success, then no one will be asking for S/4 Hana in 2040.

The potential for disappointment is naturally high with me-too (cloud computing) and relaunch (Business Suite), because innovations that represent a unique selling point are largely absent. SAP is successful with cloud computing. However, the global ERP market leader is only a smaller copy of the hyperscalers or a copycat of many cloud-only companies in this area. SAP's IT strategy also currently has a high potential for disappointment, as it is only relying on partnerships in the important AI sector and is only pushing ahead with in-house development to a limited extent. The German-language Handelsblatt newspaper also reported on how a competitor is approaching the topic of artificial intelligence: "The technology group Siemens wants to take a leading role in AI in industry. 'Siemens wants to provide the major language model for industry,' said Chief Technology and Strategy Officer Peter Körte in his first major interview with Handelsblatt. The company wants to invest hundreds of millions in AI every year, the majority of which will be invested in the language model. "It will also minimize hallucinations, which we don't need in the factories." 

SAP is still refusing to invest the necessary resources in AI development. But a language model based on decades of ERP experience could become a unique selling point. Whether SAP is ready to leverage this AI ERP potential after the S/4 Hana disaster remains to be seen.