SAP CEO Christian Klein made the case for Business AI as a transformation engine. But first, SAP needs more enterprises to move to S/4HANA.

The company posted earnings of €0.62 on revenue of €7.55 billion. SAP also narrowed its outlook with €14 billion to €14.2 billion for 2023, down from €14 billion to €14.4 billion. SAP's cloud revenue was up 19% in the second quarter.

Speaking on SAP's second quarter earnings conference call, Klein cited Barcardi, Bayer AG, Versuni and Tech Mahindra as customers that recently went live via RISE with SAP. Versuni went live in 18 months and Tech Mahindra accomplished the transition in 3.5 months.

Klein said:

"The success of RISE with SAP is clear. This is SAP's signature offering, which helps customers move to the cloud and transform their business processes at the same time. It's also very important to emphasize that SAP's newest innovations and capabilities will only be delivered in SAP public cloud and SAP private cloud using RISE with SAP as the enabler. This is how we will deliver these innovations with speed, agility, quality and efficiency. Our new innovations will not be available for on-premise or hosted on-premise ERP customers on hyperscalers."

SAP's plan is to migrate its customers to the cloud and S4/HANA so it can roll out new AI capabilities as well as generative AI. To migrate mid-market customers, SAP launched GROW with SAP.

Constellation Research analyst Holger Mueller said SAP still has convincing to do.

"SAP keeps struggling to convince its customer base to upgrade to S/4HANA as management thought it would--no matter whatever initiatives SAP throws at customers, which is not a surprise. The surprise is that SAP management was surprised by it as well."

The bet is that SAP's Business AI can double its total addressable market and boost sales.

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Klein laid out the SAP ambition.

"Imagine one trusted data layer across your entire company that enables AI to pull together the wide data in seconds. This will bring us significant opportunities for market expansion through new AI-based solutions and new premium offerings."

"Based on unique business data and business process context, we can deliver the most reliable business AI. Reliable AI hinges on applying the wide data to the wide model. By using SAP DataSphere to leverage substantial contact switch industry-specific data, business AI system can drastically improve accuracy, generate more relevant content and minimize AI hallucinations."

According to Klein, SAP will announce more AI capabilities in the fall to follow up on its investments in Aleph Alpha, Anthropic, and Cohere.

Generative AI will also expand SAP's reach, said Klein.

"With generative AI, and I think we really sit on a data of over 400,000 customers and the material flows, the financial flows, employee customer data. And now we are taking this data, not only with Signavio to benchmark and give business process recommendations. I mean we see it in the first prototypes that we are going to be able to not only that the system can self-learn on this data on how to improve all these workflows."

But first SAP needs customers to move to the cloud faster.

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