SAP Promises Disruptive Generative AI Innovation

The news came during SAP’s Q1 2023 earnings call

CRMLatest News

Published: April 25, 2023

James Stephen

SAP announced it will soon be introducing disruptive generative AI at the company’s Q1 2023 earnings call.

The business and customer relations software specialist has had strong quarterly results with cloud revenue growing 22 percent year-over-year and total Q1 revenue growth of nine percent.

SAP sold its stake in Qualtrics to Silver Lake and CPP Investments for $12.5 billion in March this year. The sale is currently pending customary regulatory clearances, according to SAP’s new CFO, Dominik Asam.

Christian Klein, CEO of SAP, said: “Our AI is built for business, with AI capabilities built-in to deliver strong business outcomes for our customers’ most critical business functions, and, with Datasphere, we laid the strongest data foundation in business.

“We are in the advanced stages to apply generative AI across our portfolio, and we are working as an early-release partner of OpenAI.

Together with other vendors, we are planning to announce new disruptive AI use cases. Stay tuned for Sapphire.

Q1 2023 Earnings Results

Other headline financial results for SAP include its cloud backlog, which is valued at more than €11 billion, reflecting a 25 percent increase this quarter.

For the enterprise resource planning software, SAP S/4HANA, cloud revenue grew 75 percent, and the cloud backlog increased 79 percent.

Non-IFRS operating profit grew by 12%, which Klein believes is evidence of its previous quarter, Q4 2022, being the “tipping point” of its transformation.

Now, the CEO sees the company in a new growth phase, with S/4HANA and BDP at the center.

This quarter, the company launched new offerings and innovations to generate new value from IT investments, including Grow with SAP, SAP Datasphere, and AI integrations across the portfolio.

Grow with SAP provides a native ERP solution that can quickly scale to enable customers to design and automate business processes without needing to write code.

SAP Datasphere collects business data from an entire customer landscape, taking data from both SAP and non-SAP sources, to help manage and guide businesses end-to-end.

SAP’s AI capabilities are the third arm of innovation this quarter with new “disruptive” AI use cases to be announced soon.

In closing, Klein said: “We see significant opportunities for continued growth based on our own transformation into a leading cloud company.

“First, the strength of our current cloud backlog provides the foundation to grow and scale through increased upsell and cross-sell to our existing customer base.

“Second, we expect that our new offerings will power our growth in new markets and with those customers new to SAP, for example, with mid-market customers.

“We have a leaner and more agile operating structure. And our game-changing solutions are creating sustainably end-to-end business processes across industries.

We are off to a good start in 2023 and remain optimistic about the unique value we offer our customers.”

SAP Sells Qualtrics Stake

Asam said at the earnings call that the company’s quarterly results excluded contributions from Qualtrics since its sale in March.

The deal includes SAP’s 71 percent stake in Qualtrics, an amount that it has slowly pulled back since acquiring the company in 2018.

In spite of going to IPO just two years later and accruing an impressive customer base of around 18,000, the post-pandemic downturn in the tech market resulted in SAP announcing its intention to sell its entire stake in Qualtrics.

The sale of Qualtrics is part of a new direction, according to Klein, who said agreeing to sell its stake in the company will enable SAP to focus more on its portfolio, and increase core cloud growth and profitability.



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