Can SAP Labs’ AI plan accelerate cloud migration?

Top notch R&D centre shows it is more than just a bunch of boffins with electric cars and robots as it opens doors to AI-curious SAP partners and customers.

Marc Ambasna-Jones

Published: 02 May 2024 11:47

Nestled in the sun-kissed hills of Provence, just north of Cannes and Antibes, is Sophia Antipolis, a renowned technology and science hub that is home to SAP subsidiary SAP Labs France. There are worse places to work. Surrounded by Aleppo pines and the odd palm, this modern building has been chosen to host the company’s first ever dedicated artificial intelligence (AI) customer experience centre. According to SAP, this is to enable customers to “discover and experiment with AI”, but it has to be so much more than that.

In many respects, generative AI (GenAI) has delivered an opportunity to all enterprise software suppliers. It’s a momentary levelling of the playing field, and this is where SAP believes it can use the labs to grow its position, both with existing customers and into new markets through its partners. What this means in terms of accelerating migration to S/4Hana remains to be seen, but there is certainly an expectation at SAP that its push to embed AI within its portfolio will prove a boon for the business.

Getting customers to migrate to the cloud is key to SAP’s strategy because business AI is at the centre of its product roadmap, at least according to Jesper Schleimann, who was recently promoted to head of SAP business artificial intelligence for EMEA. No cloud, no AI. And that’s as big a carrot as SAP can dangle for any wavering on-premise users wondering whether they should migrate to the cloud.

A major part of this plan is the partners. SAP Labs France will host partner events to introduce the AI centre and encourage partners to use it for their own purposes, but also their customers. From SAP’s perspective, this is about laying out the business case for its product roadmap. In that sense, it feels more like a glorified showroom, but you can see SAP’s point. It wants to use its current AI status to drive future AI development and even inspire partners to generate new ideas and applications. It is ultimately about tightening its ecosystem, while simultaneously positioning itself as being at the forefront of enterprise AI development.

It’s not without its challenges. Filip Decostere from SAP partner Delaware said it still has “a lot of customers on the old platform”, and while he accepts that the advantages of AI could be a trigger to move towards the cloud, there is still a lot of work to do to make that happen. Some of this is internal within Delaware. “Before we go to the customers, we need to understand this first,” he said, adding that he gets a feeling that customers are hoping SAP’s AI focus will bear fruit for their businesses and repay years of loyalty in the products.

SAP is good at showing people the vision, the art of the possible, and then we work on that more human side and bring it back down to a more scalable, adoptable solution

Dan Barton, Bluestonex

Anyone who has gone through multiple upgrade cycles will no doubt agree with that. Dan Barton, partner and co-founder of Bluestonex, talks about “some nervousness among customers”, but concedes this is not necessarily an SAP thing, but a wider view of how to manage IT spend. To that end, Barton believes the AI experience centre is a good idea, “to spark new ideas and use cases”, but also because it can help educate customers on how AI can really help their businesses, especially those that get carried away with AI hype.

“It’s almost our job to calm customers down, bring them back down – almost like a reality check,” said Barton. “SAP is good at showing people the vision, the art of the possible, and then we work on that more human side and bring it back down to a more scalable, adoptable solution.”

Joule in the crown

For SAP’s Schleimann, this is prime territory, at least now with an AI centre in his armoury. While Schleimann recognises the challenges of migration, he is also optimistic about SAP’s embedding of AI in enterprise technologies. While he believes that “generative AI accelerates cloud migration for HR and business processes”, he is also well aware that many customers are yet to make the shift to the cloud.

“To some extent, there’s good reason for that,” he said. “But it’s not a linear path, because you need to do the right preparation in order to get to what we would call a clean core, where you kind of clean out all the things you’ve adjusted. We’ve known this for some time. And we are aware that this is where customers want to go – a clean core in the cloud because it’s more agile.”

It’s also the gateway to SAP’s increasing AI capabilities, not least its AI assistant, Joule, which was unveiled in November 2023. Seeing a demo of an app being built in around 10 minutes – although very rudimentary – by pasting business aims and instructions into a free text window was impressive. The partners liked it too. But Joule is not just for software developers – it’s being embedded in multiple SAP applications, notably its Business Technology Platform (BTP), but also in everything from HR to finance, supply chain, procurement and customer experience tools, pretrained with SAP business data and processes.

One of the biggest challenges for SAP is getting this across to its customers. Education, at least according to Bluestonex’s Barton, is fundamental to getting the most out of the technology. Barton said his firm is “constantly upskilling and certifying”, not just in technology but around the ethics of AI.

“We’re even looking at different skillsets to meet AI. For example, I think it was Martin [Wezowski, SAP’s chief futurist] who was talking about critical thinking, so neurodivergent people are just better problem solvers in some areas. So we’re even looking at the way we recruit and how we mix our skills for certain things that we need to develop.”

It’s an interesting point and one that certainly resonates with SAP Labs. Wezowski is an intriguing thinker and perhaps characterises SAP’s own shift towards a new future with AI. The lab presents a big opportunity for SAP – not just in selling software products, but in shaping how so many organisations structure their work and people in the near future, and AI is a key component of this strategy.

SAP is using AI to help customers empower their workforce, not decimate it. “It is augmentation, enablement and amplification of what you know,” said Wezowski. “The cloud is an enormous way forward because it gives everybody a freedom, to adopt and be quick. If our customers can be quick, we can be quick and vice versa. It’s a lovely symbiosis.”

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