I just returned from SAP Sapphire 2025 in Orlando, and while SAP painted a compelling vision of an AI-powered future, I couldn’t help but think about the gap between their shiny new announcements and where most SAP customers actually are today. Let me cut through the marketing hype and give you the analyst perspective on what really matters.
The Cloud Migration Elephant in the Room
SAP’s biggest challenge isn’t building cool AI features – it’s that the vast majority of their customer base is still running on-premise ERP systems. While SAP was busy showcasing their AI Foundation and enhanced Joule capabilities, I kept thinking about the thousands of companies still on SAP ECC 6.0 or older versions, some of which haven’t been updated in years.
Here’s the reality check: nearly every exciting AI announcement at Sapphire requires SAP’s cloud solutions. The AI Foundation? Cloud-based. Enhanced Joule with proactive capabilities? Needs cloud infrastructure. The new Business Data Cloud intelligence offerings? You guessed it – cloud only.
For the average SAP shop running on-premise systems, these announcements might as well be science fiction. They’re dealing with basic integration challenges, struggling with outdated user interfaces, and fighting to get reliable reports out of their current systems. The idea of AI agents autonomously managing their supply chain seems laughably distant.
AI: Useful Tool, Not Magic Wand
Don’t get me wrong – the AI capabilities SAP demonstrated are genuinely impressive. The ability for Joule to anticipate user needs and provide contextual insights could indeed improve productivity. But let’s pump the brakes on SAP’s claim of “up to 30% productivity gains.”
I’ve been analyzing enterprise software implementations for years, and productivity gains of that magnitude typically come from process improvements and workflow optimization, not just from adding AI on top of existing inefficiencies. If your procurement process is broken, an AI agent won’t fix it – it’ll just automate the broken process faster.
The more realistic wins will come from:
- Reducing time spent searching for information across multiple systems
- Automating routine data analysis and report generation
- Providing better decision support through predictive analytics
- Streamlining repetitive tasks in finance, HR, and supply chain operations
These are valuable improvements, but they’re evolutionary, not revolutionary.
The Partnership Strategy: Hedging Their Bets
SAP’s partnerships tell an interesting story. The Accenture ADVANCE program acknowledges that many mid-market companies need significant hand-holding to modernize their SAP environments. The Palantir integration suggests SAP recognizes they can’t be everything to everyone in the data analytics space. The Perplexity collaboration admits that their AI needs external data sources to be truly useful.
These partnerships are smart business moves, but they also highlight SAP’s dependencies. If you’re planning an SAP transformation, you’re not just buying SAP – you’re buying into an ecosystem of partners and integrations that adds complexity and cost.
What This Means for Your SAP Strategy
If you’re currently running SAP on-premise, Sapphire 2025 should reinforce one key message: the innovation train is leaving the station, and it’s heading to the cloud. But before you panic about missing out on AI capabilities, consider these pragmatic steps:
For On-Premise SAP Customers:
- Audit your current state first. Most companies I work with aren’t maximizing their existing SAP capabilities, let alone ready for AI enhancements.
- Plan your cloud migration timeline. SAP’s 2030 end-of-support deadline for older systems isn’t going away. Use that as your forcing function.
- Focus on data quality. AI is only as good as the data it works with. If your master data is a mess, AI won’t help.
- Start small with cloud integration. Consider hybrid approaches that connect your on-premise core with cloud-based analytics and AI tools.
For Companies Already in SAP Cloud:
- Evaluate which AI features actually solve business problems you have today, not theoretical future use cases.
- Pilot before you scale. The productivity claims sound great, but test them in your environment with your data.
- Invest in change management. The biggest barrier to AI adoption isn’t technical – it’s getting people to change how they work.
The Bottom Line: Evolution, Not Revolution
SAP Sapphire 2025 showcased legitimate innovations that will improve how businesses operate, but let’s keep expectations realistic. The companies that will benefit most from these AI capabilities are those that have already modernized their SAP infrastructure and cleaned up their business processes.
For the majority of SAP customers still on legacy systems, the real question isn’t whether AI will transform their business – it’s whether they can execute a successful modernization program that positions them to eventually take advantage of these capabilities.
Your Next Steps
Here’s what I recommend you do this week:
- Assess where you stand on your SAP modernization journey. Are you cloud-ready, or do you have years of technical debt to address first?
- Map your business cases for the AI capabilities that caught your attention. Can you quantify the value they’d deliver in your specific environment?
- Build a realistic roadmap that acknowledges both the exciting possibilities and the practical constraints of your current SAP landscape.
- Start the conversation with your leadership about long-term SAP strategy. The decisions you make in the next two years will determine whether you’re positioned to benefit from the AI revolution or left behind with legacy systems.
The AI future SAP is promising will arrive eventually, but for most companies, the path there runs through cloud migration, data governance, and process optimization. Focus on building that foundation first, and the AI capabilities will follow when you’re actually ready to use them effectively.
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