I just got back from SAP Sapphire 2025 in Orlando, and while SAP painted a compelling vision of an AI future, I couldn’t help but wonder 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 an analyst’s view of what really matters.
Cloud Migration Elephant in the Room
SAP’s biggest challenge isn’t building great AI capabilities—it’s that the vast majority of their customer base still uses on-premise ERP systems. While SAP was busy showing off its AI Foundation and improved Joule features, I kept thinking about the thousands of companies still using SAP ECC 6.0 or earlier, some of which haven’t been updated in years.
Here’s a reality check: almost every exciting AI announcement at Sapphire requires SAP cloud solutions. The AI Foundation? Cloudy. Enhanced Joule with proactive abilities? Requires cloud infrastructure. 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 They face fundamental integration challenges, grapple with outdated user interfaces, and struggle to get reliable reporting from their current systems. The idea of AI agents autonomously managing their supply chain seems ridiculously far-fetched.
AI: A useful tool, not a magic wand
Don’t get me wrong – the AI capabilities that SAP has demonstrated are truly impressive. Joule’s ability to anticipate user needs and provide contextual insights could really increase productivity. But let’s put the brakes on SAP’s “up to 30% increase in productivity” claim.
I’ve been analyzing enterprise software implementations for years, and productivity gains of this magnitude typically come from process improvements and workflow optimization, not just adding AI to existing inefficiencies. If your procurement process is broken, the AI agent won’t fix it—it’ll just automate the broken process faster.
More realistic winnings come from:
- Reducing time spent searching for information in multiple systems
- Automation of 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 are evolutionary, not revolutionary.
Partnership Strategy: Hedging Their Bets
SAP’s partnerships tell an interesting story. The Accenture ADVANCE program recognizes that many mid-sized companies need significant assistance in modernizing their SAP environments. The Palantir integration suggests that SAP realizes that 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 a SAP transformation, you’re not just buying SAP—you’re buying into an ecosystem of partners and integrations that add complexity and cost.
What this means for your SAP strategy
If you currently run SAP on-premise, Sapphire 2025 should reinforce one key message: the innovation train is leaving the station and heading to the cloud. But before you panic that you’re missing out on AI capabilities, consider these pragmatic steps:
For On-Premise SAP customers:
- First, check your current status. Most companies I work with are not maximizing their existing SAP capabilities, let alone ready for AI enhancements.
- Plan your cloud migration timeline. The date of end of support for legacy SAP systems in 2030 is not being canceled. Use this as your enforcement 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 you.
- Start small with cloud integration. Consider hybrid approaches that connect your on-premises core with cloud-based analytics and AI tools.
For companies already in the SAP cloud:
- Evaluate which AI features actually solve the business problems you have today, not theoretical use cases for the future.
- Pilot before you start changing the weight. 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 the way they work.
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 the most from these AI capabilities are those that have already modernized their SAP infrastructure and cleaned up their business processes.
For most SAP customers still using legacy systems, the real question isn’t whether AI will transform their business—it’s whether they can execute a successful modernization program that will eventually enable them to take advantage of these capabilities.
Your next steps
This week I encourage you to do the following:
- Assess where you are on your SAP modernization journey. Are you ready for the cloud, or do you need to resolve years of technical debt first?
- Map out your business cases for the AI capabilities that caught your eye. Can you quantify the value they would bring in your particular environment?
- Build a realistic roadmap that recognizes both the exciting possibilities and practical limitations of your current SAP environment.
- Start a conversation with your leadership about SAP’s long-term strategy. The decisions you make in the next two years will determine whether you will benefit from the AI revolution or be left behind with legacy systems.
SAP’s AI future promises to arrive eventually, but for most companies the path is through cloud migration, data management and process optimization. Focus on building that foundation first, and AI capabilities will follow when you’re truly ready to use them effectively.
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