SAP’s Cloud Evolution: Transforming ERP for the AI Era
SAP SE is a German multinational software corporation that develops enterprise software to manage business operations and customer relations. Founded in 1972, SAP has grown to become the world's leading provider of enterprise application software, serving more than 440,000 customers across 180 countries.
As a global leader in enterprise applications and business AI, SAP (NYSE:SAP) stands at the nexus of business and technology. For over 50 years, organizations have trusted SAP to bring out their best by uniting business-critical operations spanning finance, procurement, HR, supply chain, and customer experience. For more information, visit www.sap.com.
In recent years, SAP has been at the forefront of integrating emerging technologies like artificial intelligence, machine learning, and the Internet of Things into its solutions. This focus on innovation has allowed SAP to maintain its position as a leader in the enterprise software market, continually adapting to meet the evolving needs of businesses in the digital age. SAP's commitment to helping companies become intelligent enterprises has made it an essential partner for organisations undergoing digital transformation across various industries.
With over five decades of experience in enterprise resource planning (ERP), SAP’s market-leading solutions are proven and time-tested. But as businesses increasingly move away from legacy infrastructure and turn to cloud solutions, the company has adapted its offerings to meet the changing needs of its diverse customer base.
Traditionally, any ERP systems were complex, on-premises installations that required substantial investment in hardware, software and IT personnel. These systems, while powerful, often struggled with issues of scalability and accessibility, and could require frequent, costly upgrades.
Over the past decade, SAP has witnessed a dramatic shift in attitudes towards cloud ERP solutions, which aim to address some of these pain points. As a result, the cloud ERP market reached a valuation of US$44bn in 2023, driven by the increasing need for scalable, flexible business solutions.
As Evert-Jan (EJ) Tromp, Vice President Cloud Sales EMEA at SAP notes: “Ten years ago, many would have been hesitant to move their ERP to the cloud. Now, it's become the norm.”
A journey of evolution
EJ’s career at SAP spans over 15 years, beginning with the company's acquisition of Business Objects in 2008 in what was one of SAP's first major acquisitions. “At that time, I was looking after the analytical portfolio at Business Objects across EMEA for the channel part of the organisation,” he recalls.
“I joined Business Objects as a trainer in the late 1990s,” EJ explains. “I progressed through various roles, from training to post-sales, pre-sales, and then channel management. I rebuilt the channel for Business Objects in the Netherlands, which led to regional roles and eventually becoming part of the SAP family.”
EJ’s journey within SAP has seen him take on increasingly significant roles, culminating in his current position overseeing the mid-market business across EMEA. “Since 1st April, I've been overseeing the line of businesses across the whole of EMEA, working with a team of specialists to manage all our revenue streams across the region,” he explains.
This EMEA region, comprising nearly 100 countries, presents a unique set of challenges and opportunities. “The main challenge is the sheer complexity of the region,” EJ explains. “These markets span both ends of the spectrum – from very mature ones where we're introducing new offerings, to emerging markets with enormous potential where we're still building our presence.”
This diversity is both a challenge and a source of excitement. “One of the great things about the role is the ability to work across different geographies. We have mature markets alongside rapidly emerging ones in Africa and parts of the Middle East region. The pace of business varies significantly between Western Europe and these fast-growing markets.”
The cultural aspects and different stages of market maturity across SAP’s portfolio make the job fascinating, with EJ likening it to a Rubik's cube: “You get so many different angles, which is what makes the job so interesting.”
However, this complexity also brings with it its share of challenges. “The challenge lies in growing the business while simultaneously developing these markets,” he notes. “Additionally, the geopolitical and economic situations in some parts of the region can throw unexpected challenges our way. So, there's never a dull moment.”
Cloud ERP: Driving scalable solutions
As EJ identifies, the journey to widespread cloud ERP adoption has been gradual, marked by initial reluctance – particularly for core business processes. However, in the following years, the landscape has shifted dramatically as businesses view their ERP systems in a different way. “When I joined SAP in 2008, the focus was on tailoring solutions to each customer’s specific needs,” EJ recalls. “Everyone believed their processes were unique and required customisation.”
SAP’s cloud ERP offerings have evolved to meet this evolving landscape, and today the company now offers two main platforms in RISE with SAP and GROW with SAP. “We offer two main propositions: RISE with SAP – which provides more flexibility for customers who want to maintain a level of control – and GROW with SAP, which leverages SAP’s 52 years of experience to offer a standardised, best-practice approach,” EJ explains.
As EJ outlines, GROW with SAP features three core elements: simplifying everyday work, growing the business and securing success. Powered by SAP S/4HANA Cloud Public Edition, the solution offers a preconfigured package of resources that allows companies to use tools, methodologies and services to help them get up and running on their cloud ERP journeys within as little as four to eight weeks.
“We focus on improving the user experience and automating repetitive tasks,” he explains. “For example, in finance, tasks like invoice matching or processing credit notes can be tedious. We aim to streamline these processes.”
On growing the business, he adds: “We ensure that the ERP layer we provide is ready for the next step a business wants to take. This is crucial for companies that need to pivot their business model quickly, as we saw during the COVID-19 pandemic.”
The third pillar, securing success, is perhaps the most critical. “This is where the return on investment truly comes from – when customers can run their business with confidence based on the SAP solution.”
This evolution in SAP's offerings reflects a broader change in customer attitudes. “Many customers, particularly CFOs, are now recognising that their competitive differentiation doesn't lie in basic processes like general ledger management,” EJ observes. “They're increasingly willing to adopt standardised processes for these areas, allowing them to focus innovation where it truly matters for their business.
“Recent global events, like the Suez Canal blockage and the COVID-19 pandemic, have highlighted the need for businesses to be more agile and adaptable. This has accelerated the shift towards cloud-based, standardised solutions that can be quickly implemented and easily modified as business needs change.”
Embracing AI in cloud ERP
AI is playing an increasingly important role in SAP’s offerings, and GROW with SAP is no different. As EJ states, SAP's AI strategy is built on the foundation of its vast data resources. “With 70% of the world’s transactions going through SAP systems, we have a unique opportunity to leverage this data for AI applications.”
A key component of this AI integration into SAP’s core cloud ERP offerings is its copilot Joule, an AI assistant that can answer questions, trigger processes and provide multiple scenarios for decision-making. However, EJ is quick to emphasise that while AI can provide valuable insights and alternatives, “the business owner still makes the final decision.”
The integration of AI into SAP's core offerings is progressing rapidly. “We're rapidly expanding the number of processes that benefit from AI integration,” EJ notes. “At the start of the year, we were talking about 80 processes with AI elements. By the end of the year, this number will be significantly higher.”
To support this AI-driven transformation, SAP has formed several new partnerships. “We've formed new partnerships, including with Nvidia, and we're seeing a new ecosystem of partners emerging to drive AI-powered solutions.”
Partners in innovation
SAP’s cloud strategy relies heavily on its ecosystem of partners, and EJ highlights the partnership with Inetum as an example of this new approach. “Our partnership with Inetum is a great example of how we're working with partners in new ways. In the past, SAP controlled everything, including localisation. Now, we’re providing partners with frameworks and enabling them to build localised versions.”
He adds: “Inetum saw an opportunity in Francophone Africa, a region where SAP hadn't developed localised versions of GROW with SAP. They took our framework and built a localised version for that market. This has been massively successful, with Inetum onboarding a significant number of customers onto GROW with SAP in that region.”
This partnership model allows SAP to extend its reach and provide localised solutions in markets where it might not have a direct presence. “Partners often have the proximity to customers and prospects that we might lack in countries where we don't have a physical presence,” EJ explains.
The role of partners extends beyond geographical reach. “Partners can bring specific industry expertise that we might not have in every market unit or country. This is crucial as we work across 26 different industries with SAP technology.”
This new approach to partnerships also creates new opportunities for SAP's ecosystem. “This approach creates a different dynamic between SAP and our partners. Partners like Inetum can build their own IP and create recurring revenue streams, which wasn't possible in the on-premises world.”
Best practices for cloud migration
As businesses increasingly recognise the benefits of cloud ERP, many are embarking on the journey of migrating their existing systems. However, this transition can be complex and challenging.
A fundamental step in the migration process, according to EJ, is for businesses to thoroughly review their existing processes. “Take a step back and review your processes. Try to get as close as possible to core functionality,” he advises.
EJ also emphasises the importance of embracing standardisation wherever possible. “We're now having different conversations with customers,” he explains. “Instead of focusing on replicating existing processes, we're encouraging them to look at how they can adopt standardised best practices and identify where they truly need customisation.” This approach often yields surprising results, with many businesses discovering that only a small percentage of their processes actually require customisation. The outcome, EJ notes, is “more efficient and effective implementations.”
For businesses ready to make the leap, EJ recommends considering GROW with SAP, which not only facilitates the initial migration but also ensures that businesses can continually evolve and adapt their ERP systems as new technologies and capabilities emerge. “If possible, embark on the GROW with SAP journey, as it offers continuous innovation," he states.
In terms of technical implementation, EJ advises leveraging SAP's established frameworks and tools and its DTP (Data Transformation Platform). "If you need to build additional functionality, do so with the ecosystem, but keep the core as clean as possible,” he suggests.
The growing importance of AI in ERP systems adds another dimension to migration considerations. Here, EJ points out the advantages of sticking close to standard functionality. “Remember that by keeping close to standard functionality, you can more easily leverage AI capabilities, as we ensure integration between our core systems and AI features,” he explains. This alignment with core functionality positions businesses to rapidly adopt and benefit from emerging AI-driven ERP enhancements.
A critical point that EJ emphasises is the need for businesses to be judicious about retaining legacy customisations. “Be cautious about holding onto legacy customisations,” he warns. “While they may have been necessary in the past, they can hinder future innovation and integration.”
The future of cloud ERP
Looking ahead, EJ sees public cloud becoming increasingly dominant in the ERP space. “Public cloud is increasingly becoming the norm. While it's difficult to predict exactly where we'll be in 12 months, I expect we'll exceed our current aspirations,” he says. “We're seeing a shift where customers are now proactively asking partners about public cloud offerings, rather than us having to introduce the concept.”
As for the role of AI in the future of ERP, EJ believes we've only scratched the surface. “The potential is unlimited, and I expect we'll see remarkable developments in the coming year.”
As EJ notes, the pace of change in AI adoption has been particularly striking. “It's interesting to note how quickly things are changing,” he says. “Just a year ago, AI wasn't a central topic in our GROW with SAP events. Five months later, it was front and centre, with customers recognising its potential to address significant business challenges.
“Given the pace of change, it's hard to imagine what the future holds, but I'm confident we'll continue to move the needle for our customers and partners in exciting ways.”
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