How To Drive Ultimate Value From AI By Embedding It In Core Business Applications

Key Concepts

• Enterprise Success and Adaptability: The overarching theme of the series, focusing on how businesses can thrive in a changing environment.
• Technical Expertise, Human-Centric Focus, Entrepreneurial Mindset: The three key elements identified by the guest for staying ahead.
• SAP Business Suite: SAP's integrated portfolio of applications, data, and AI capabilities.
• Flywheel of Apps, Data, and AI: The conceptual model for how SAP Business Suite components interact to create new energy and value.
• Best of Suite vs. Best of Breed: SAP's approach of offering an integrated suite of applications rather than relying on disparate best-of-breed solutions.
• Semantically Rich Data: Data that retains its meaning and context from the source application, crucial for AI.
• Embedded AI: AI capabilities integrated directly into core business applications.
• Agentic AI: AI agents capable of performing autonomous tasks and connecting different business processes.
• Joule: SAP's new UI/UX interface, acting as a "super orchestrator" for interacting with software.
• Cloud Migration: The necessity of moving core applications and data to the cloud to consume innovation at scale.
• Commoditization of the App Layer: The prediction that AI will lead to the commoditization of application layers, with value shifting to data and AI.

Summary

This discussion explores the future of enterprise success and adaptability, highlighting the critical role of technical expertise, a human-centric focus, and an entrepreneurial mindset. Stephan de Barse, President of Global Business Suite at SAP, shares his insights on how businesses can leverage technology, particularly AI, to drive tangible business value.

The Entrepreneurial Mindset in Enterprise

Stephan de Barse emphasizes the importance of applying a startup mindset within large organizations like SAP. He draws parallels between the customer obsession and problem-solving focus of startups and the need for established companies to adapt to the rapid pace of innovation. This involves deeply caring about customers, solving their challenges, and utilizing the latest technology to do so. He notes that while the scale differs, the core principles of driving success for customers remain consistent.

SAP Business Suite: A Flywheel of Innovation

The core of SAP's strategy is the SAP Business Suite, envisioned as a flywheel of apps, data, and AI. This model is explained as follows:

• Application Layer: SAP provides a broad portfolio of applications that run end-to-end business processes across various functions like finance, supply chain, procurement, customer experience, and HR. These applications generate valuable data.
• Data Layer (Business Data Cloud): This layer combines SAP and non-SAP data to create a reliable and trusted source for AI initiatives. A key challenge addressed is the loss of semantics when data is extracted from different systems. SAP focuses on semantically rich data to ensure data retains its context and meaning, reducing the effort required to prepare it for AI.
• AI Layer (Embedded AI and Agents): SAP's strategy is to embed AI directly into core applications, rather than treating it as a separate layer. This ensures that AI insights and actions are directly relevant to end-to-end business processes. Examples include AI for autonomous closing in finance, demand prediction in supply chain, and autonomous sourcing in procurement. The discussion also highlights the growing excitement around agentic AI, which can perform autonomous tasks and break down silos between business processes. Agents can orchestrate complex value chains, from sales deal prediction to ensuring manufacturing and supply chain capacity.

The flywheel concept is illustrated with an example of managing working capital. An AI-powered system can identify rising cash conversion cycles, pinpoint the cause (e.g., receivables), predict future trends by integrating historical data, external economic factors, and credit ratings, and then suggest actions like assurance or factoring. This demonstrates how apps, data, and AI work together to enable proactive decision-making and action.

Trends in AI for Clients

Two significant trends in AI for SAP clients are:

1. Embedded AI: Clients appreciate AI integrated into their core applications, recognizing the limitations of standalone AI wrappers, as evidenced by MIT research indicating a high failure rate for Gen AI pilots.
2. Agentic AI: The increasing need for AI agents that can automate tasks, connect processes, and break down organizational silos. This is seen as crucial for orchestrating entire value chains and improving business results.

The conversation also touches upon the fading excitement around purely productivity-focused AI (like LLMs) and the shift towards AI that impacts top-line revenue, working capital, and cost profiles.

The Evolving UI/UX: Joule

The user interface and user experience (UI/UX) are fundamentally changing. SAP's Joule is introduced as a new UI/UX, a "super orchestrator" with an interface similar to ChatGPT or Perplexity. Joule allows users to ask questions and give instructions, orchestrating tasks across multiple applications without requiring users to log into each one individually. This signifies a new paradigm for interacting with software.

Addressing Legacy Systems and Cloud Migration

SAP acknowledges the challenges posed by legacy software and on-premises systems, which lead to slow processes, high costs, and breakdowns. The solution lies in cloud migration. Clients who have moved their core applications and data to the cloud are better positioned to consume AI innovations at scale.

The Future of SAP Business Suite

Looking ahead, SAP believes the app layer will become commoditized by AI, similar to how the infrastructure layer was commoditized by the cloud. The true value will reside in the data and AI layers. SAP's vision for the future of the Business Suite includes:

• Delivering the best possible embedded AI experience in every application (currently around 400 use cases).
• Being a leader in the agent space, potentially through partnerships.
• Increasing reliance on Joule for the front-end user experience.

The ultimate goal is to leverage AI innovation to deliver better business outcomes, specifically improved top-line revenue, reduced costs, and enhanced working capital for their customers.

A Call to Action: Embrace Innovation

Stephan de Barse concludes with a powerful message for businesses: innovation is real, and AI is happening; be part of it. He highlights that customers with a curious mindset, willing to reimagine their business operations, are already seeing significant benefits. He predicts a growing divide between companies that embrace innovation and change and those that do not, with the former being the clear winners in the marketplace. The key takeaway is that adaptability built on growth, not just resilience, is essential for future success.