AI Is Not a Luxury

However, our AI steering committee has come to one key conclusion: a future without artificial intelligence is not possible! The digital transformation that began many years ago stalled at times due to a lack of IT tools. AI can solve this deadlock. This means AI should be assessed differently than cloud computing. While AI technology is a singular phenomenon and a crystallization point of a paradigm shift, cloud computing remains just another operating model among many IT architectures.

SAP has devoted all its energy and focus to the cloud. Due to the success of hyperscalers and growing competition from cloud-only companies, this step was necessary but not visionary. The challenges of the knowledge society and IT lie elsewhere. ERP certainly needs other operating models after virtualization. The cloud is an excellent infrastructure for many applications, and hyperscalers’ scaling effect can generate substantial revenue. However, SAP has not considered that the cloud is not a sustainable solution, an innovation, or a way out of deindustrialization. The cloud is an acceptable operating model for many ERP applications.

AI, on the other hand, is not a luxury but a promising future strategy. The location of the next ERP generation may be arbitrary—on-prem or in the cloud—but artificial intelligence will be the foundation. Large language models, reinforcement learning, and AI agents will pave the way. Based on our interns’ work in our in-house AI lab, a composable ERP is becoming increasingly likely. AI offers the potential for best-in-class ERP on a consolidated IT platform.

This future scenario has many implications. It encompasses not only the classic ERP challenges of business management, organization, technology, and licensing law but also comprehensive social evolution. AI agents on IT platforms with powerful LLMs will perform 80 percent of the work currently done by entry-level and junior consultants. According to an article from The Economist, many consultants sound like AI bots. AI will disrupt many IT consulting firms and SAP system houses. Demand for support and entry-level staff will fall dramatically. Only highly talented specialists will be needed.

My SAP colleagues immediately began a discussion about the social challenge of training the next generation. Without support and training for young professionals, apprentices, and trainees, there will likely be a shortage of skilled workers and specialists in the future. This raises the question of whether AI is a lux-ury from a completely new and surprising perspective. Is AI changing the labor market and blocking our social future?

We are equally preoccupied with how SAP is dealing with this. We see no signs of SAP abandoning its focus on cloud computing to put more energy into AI. Our ERP group boasts about its extensive use of AI technology, but SAP’s value creation and innovation potential are low. SAP allowed the internet train to pass it by; now, SAP is aware of the challenge but still has no answer to AI. SAP is speechless and unimaginative in the face of many AI innovations. This is a great danger for us customers because we will have to purchase LLMs, AI agents, and reinforcement learning from other IT groups in the future.

SAP shuns AI because it will corrupt SAP’s business model. With reinforcement learning, a perfect control system can be established. LLMs can control production and logistics. AI agents will orchestrate digital structures and processes. Composable ERP will thus become a reality, and SAP will have to fight for its place in the ERP landscape.