Our take on SAP’s Sapphire 2023 announcements: looking beyond SAP S/4HANA

Sapphire in the USA is SAP's central customer trade fair. The company uses the event for new announcements. This year, the focus was on AI, industry platforms, and sustainability.

SAP has experienced something of a revival in recent months. The share price is recovering, and the SAP management, after years of being criticized for its erratic cloud policy, is now winning praise from investors for its success in the cloud business. Last but not least, Punit Renjen is the new chairman of the supervisory board. He replaced Hasso Plattner at the helm of the board, the last of the five SAP founders to step down. This is something of a turning point.

The SAP management used the Sapphire platform in Orlando for several announcements. The focus was on collaborations, new products, and improvements in the Artificial Intelligence, Industry Platforms, and Sustainability segments.

Artificial Intelligence – SAP has been speeding up the integration of AI capabilities into its own application landscape. The most significant announcement was a collaboration with Microsoft to integrate OpenAI services and Microsoft 365 Copilot into SAP's SuccessFactors HCM system. Microsoft Copilot 365 provides AI-based assistance to support onboarding. OpenAI services are designed to support SuccessFactors in analyzing data, for example in the targeted search for applicants.

The announcement of an AI collaboration with Microsoft came shortly after SAP reportedly agreed to invest in German AI start-up Aleph Alpha and work closely with IBM's Watson team. While the Microsoft collaboration aims to integrate AI solutions into SAP business applications, Aleph Alpha and IBM will help SAP further develop generative AI.

Industry Platforms – Vertical initiatives are in line with SAP's long-term strategy of becoming more deeply embedded in companies' core processes. SAP is focusing on a number of strategic industries, such as consumer products, hi-tech, manufacturing, and life science, for which SAP has announced pre-packaged use cases for the new SAP Business Network for Industry. In addition, there are some functional extensions: improvements include supplier insights, streamlined integration, marketplace catalogues, intelligent lead matching, and enhanced company profiles; plus, the working capital management tool Taulia has been integrated.

Sustainability – SAP already has a fairly extensive, data-based portfolio for sustainability. At Sapphire, the sustainability topic dominated many discussions and keynotes, but the innovations and improvements announced were rather incremental. For example, SAP announced a major update of SAP Sustainability Footprint Management. It allows companies to granularly manage their carbon flows at the process and product levels. Thanks to integration into SAP S/4HANA Cloud, organizations can calculate their carbon footprint directly from the details of individual ERP transactions at each stage of product manufacturing.

PAC’s comment: SAP wants to get back to a situation where the debate is focused on innovations, not deployment models. The fact that SAP is positioning the cloud as the preferred deployment model has been accepted by customers, although many customers still opt for a private cloud or on-prem solutions. At this year's Sapphire, SAP ushered in the post-SAP S/4HANA era, which will be defined by digital innovation and a stronger anchoring in core processes beyond the back office. SAP is still in the early stages but has at least made the first few steps.