Christian Klein<\/p>\n
Wall Street ended the week on a happier note as SAP\u2019s quarterly numbers and AI market assessment calmed investors and didn\u2019t result in the usual meltdown over forward growth projections.<\/p>\n
Total revenue rose nine percent year-on-year to \u20ac9.88 billion with cloud revenue delivering a strong increase of 22% to hit \u20ac6.28 billion, while software licence revenue fell 32% to \u20ac131 million. Net income came in at \u20ac2.21 billion.<\/p>\n
AI and SAP Business Data Cloud were embedded in more than 90% of the quarter\u2019s 50 largest deals, while cloud backlog improved, noted CEO Christian Klein:<\/p>\n
Current cloud backlog (CCB) grew 26%, an acceleration compared to Q1. And after two quarters where our CCB was lagging behind cloud revenue growth, it was a welcome trend reversal in this important forward-looking indicator, a great result, especially given the volatile environment.<\/p>\n
Klein picked out a number of customer use cases to illustrate enterprise adoption of AI in practice:\u00a0<\/p>\n
Amadeus, a platform for global travel, developed an AI agent that autonomously reconciles unstructured payment data already clearing around 40,000 incorrect transactions. One example from our Business AI platform – to prepare for business AI, Norsk Hydro transitioned from a legacy BW to an end-to-end data platform with BTP. This delivered significant agility, cutting BI solution build time by around 75% and accelerating report creation time by 50%. Moving on to industry AI, with NTT DATA, Denmark’s largest wholesaler for steel and technical equipment, Lemvigh-Muller deployed custom AI agents to verify purchasing orders. The solution achieved over 90% touchless processing and 98% matching accuracy.\u00a0<\/p>\n
He added:<\/p>\n
Key [AI] wins included PwC, one of the world’s largest professional services firms. They selected our AI to transform a complex billing process, cutting a 35-minute task to just five minutes while improving accuracy and end user satisfaction. Travel platforms Booking.com and GOL, as well as Oki Electric Industry selected many of our LOB (line of business) and industry AI offerings in addition to PC. Our Software and Cloud offerings also gained significant momentum with key wins, including companies like Airbus. Successful go-lives included Fonterra, Dohler and Natura Cosmeticos.<\/p>\n
Tokenomics<\/p>\n
The firm picked up on the current tokenomics debate vibe as Klein cited the quarter\u2019s introduction of the Autonomous Enterprise:<\/p>\n
It resonated strongly because it gets to the root of why enterprise AI is so hard and what that means for our customers. The reality for many enterprises today is that LLMs (Large Language Models) don’t understand business data, processes and governance. AI token spend doesn’t mirror outcomes. Log-in to single frontier vendors is a growing concern and AI sovereignty is becoming more important.<\/p>\n
SAP CFO Dominik\u00a0 Asam added:\u00a0<\/p>\n
The recent debate about exploding token costs at most enterprises supports our strategy of leveraging a unique combination of both deterministic, highly scalable and low-cost mission-critical enterprise applications on the one hand and probabilistic agentic AI-powered solutions on the other. We’re highly assured deterministic solutions are not yet attainable and heavy human intervention is the baseline, AI can very effectively compete with labor.<\/p>\n
This ambi-dexterity at unrivaled levels of functional breadth, reliability, semantical richness, industry-specific process know-how, cost competitiveness and last but not least, enterprise-grade governance makes us the partner of choice for those enterprises who do not see AI as a destination, but a means to reach better efficiency. All this without enterprise grade assurance requirements at risk. We are more convinced than ever that our strategy not to be locked into any generic large language frontier model, but to flexibly benefit from the vibrant competition amongst them in terms of both performance but also cost, is the right one.<\/p>\n
That means, he went on:<\/p>\n
We are frankly optimizing massively now on how we spend tokens by virtue of a very tight controlling. We can now, on a very granular basis, see who’s using what tool and what is output driven here, and we will funnel the tokens in a way that gives us a better bang for the buck. And there are also measures on cost containment to really make sure that we focus our resources where it really matters.\u00a0<\/p>\n
Tokenomics is also shaping hiring strategies, observed Klein:<\/p>\n
In the last 12 months, indeed, we still invested into new job profiles in R&D, data scientists, data engineers, we invested into full stack developers for industry AI. But we will now continuously heavily slow down the hiring for the other profiles because now that the AI productivity is kicking in and the highest token consumption is in R&D, we see productivity gains of an average of 30%. So there is no need anymore now to hire additional people.<\/p>\n
You also see that the costs are more up than the headcount. That is actually the token effect, because we charge the tokens, of course, to the functions who are using it…You can expect now in the next 12 months, not a further increase of headcount. It’s just about getting a few experts in and then, of course, driving the productivity of R&D up in line with the token consumption.<\/p>\n
Klein concluded:<\/p>\n
In the age of agentic AI, SAP is leading the way. The autonomous enterprise is anchored in AI agents that can run end-to-end business processes accurately, compliantly and cost-effectively and always with the human in the loop. SAP successfully completed our transformation to the cloud, and we will once again successfully transform in the AI era to deliver accelerated growth and profitability.<\/p>\n
My take<\/p>\n
We are balancing AI to consumption and own headcount in the right way.<\/p>\n
A good solid quarter, nicely done, nothing to scare the horses with here – and no sign of the bleedin’ ‘SaaSpocalypse’!\u00a0<\/p>\n
Onwards!<\/p>\n","protected":false},"excerpt":{"rendered":"Christian Klein Wall Street ended the week on a happier note as SAP\u2019s quarterly numbers and AI market…\n","protected":false},"author":2,"featured_media":60371,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21036],"tags":[9693,5040,3511,31836,31835,9695],"class_list":["post-60370","post","type-post","status-publish","format-standard","has-post-thumbnail","category-sap","tag-agentic-ai","tag-audio","tag-automation","tag-cloud-erp-financials-and-supply-chain","tag-generative-ai-and-llms","tag-sap"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts\/60370","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/comments?post=60370"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts\/60370\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/media\/60371"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/media?parent=60370"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/categories?post=60370"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/tags?post=60370"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}