The Innovator's SAP AI Dilemma

Optimize and revolutionize with SAP S/4 Hana

Information technology could enable a revolutionary new start for ERP. One result could be a composable ERP based on a business Large Language Model (LLM). Business processes would likely differ greatly from the past, necessitating a re-orchestration of organizational structures and processes.

From the perspective of an SAP ECC 6.0 or S/4 Hana user, an ERP LLM as a composite system (composable ERP) would represent a revolutionary change that could not be achieved through a traditional release update. Existing SAP ERP systems can be optimized with the SAP Hana Predictive Analysis Library (SAP Hana PAL). AI modules and functions can also be found here, but many evolutionary steps are required. Currently, SAP offers around 500 different AI enhancements and optimizations.

The dilemma of SAP and Apple

SAP is not the only company facing the innovator's dilemma; Apple is also being challenged by the current AI trend—and failing. Since the publication of The Innovator's Dilemma by Harvard professor Clayton Christensen (1952–2020), this question has been well-known yet unresolved: "If a company tries to develop a disruptive technology to the point where it meets the needs of customers in established markets—which most leading companies do—it is almost certain to fail."

Apple is struggling to gain meaningful access to AI and implement it in existing products. SAP wants to follow the AI trend and customize existing ERP systems with AI functionality. However, SAP must proceed cautiously to avoid overburdening customers or giving them the idea of building a completely new ERP system with AI. Apple and SAP are walking a tightrope when it comes to AI.

ERP Large Language Model

The AI dilemma for SAP itself and the entire community is as follows: Is the AI revolution merely postponed, or will there be a meaningful evolution of existing ERP systems? Using AI agents does not improve the situation because, ultimately, they could autonomously build their own ERP Large Language Model (LLM), and SAP customers would not recognize their own ERP system.