SAP Sapphire 2023 Announcements

Nov 24, 2023

After the rush of news from SAP Sapphire 2023, this week IgniteSAP will provide a summary of the new products, services and partnerships that were announced in the keynote presentations and elsewhere during the event.

Along with the announcements during the keynote presentations, SAP updated its financial ambitions for 2025.

Due to strong cloud revenue reflected in the 1st financial quarter of 2023 and end of year results for 2022, along with the divestiture of Qualtrics, SAP now has a revised financial outlook, succeeding the statement in 2020.

Further cloud growth expected over the next two years, more predictable and recurring revenue, higher revenues from support and services, and a better global economic outlook have all contributed to SAP's new mid-term ambitions.

In 2025 SAP is expecting to achieve €21.5 billion in cloud revenue, making the largest share of €37.5 billion in total revenue. Cloud gross profit will reach €16.3 billion and operating profit will be roughly €11.5 billion.

As a result of its previously revised mid-term ambitions, which in October 2020 showed a reduction in overall revenue as SAP adjusted its business model to be primarily cloud-based, SAP share value dipped substantially while the corporation carried out structural changes. Now SAP is demonstrating that these changes have resulted in a flourishing cloud-based software services enterprise.

Importantly, the share of more predictable revenue has reached 86%, with a free cash flow of €7.5 billion. This, along with the proceeds of the Qualtrics divestiture has opened the way for greater investment in innovation, as well as higher overall revenue in the future.

Dominik Asam, SAP's new chief financial officer explained:

"Since the strategy reset in 2020, SAP has made tremendous progress in its cloud transformation. Quarter after quarter, the company has delivered strong results amidst a challenging macroeconomic environment. Looking out at the next 2.5 years, we are now well positioned to accelerate our growth. We are confidently refreshing our mid-term ambition and reiterating our goal of double-digit operating profit and free cash flow growth over that period, while at the same time setting ourselves up for sustainable, dynamic growth beyond 2025″

SAP has also announced a new share repurchase program of up to €5 billion, building on previous repurchase programs totaling €3 billion.

One of the recurring themes of SAP Sapphire 2023 was that SAP is putting in place programs to add generative AI to the toolset of existing AI embedded across the SAP portfolio, and using SAP Business Technology Platform.

In a press release SAP said AI would contribute enterprise agility, anticipate and proactively address change, and lead to better visibility and results.

The newly announced SAP Business AI will help finance teams control costs and reduce risk, sales teams to spend more time with customers, and supply chain managers to predict demand.

Within SAP Customer Experience, SAP Business AI will allow CX teams to increase conversion rates and generate content to personalize customer experiences automatically.

Overall SAP is finding ways to leverage AI and generative AI in each SAP module and with use cases specific to major industries.

SAP has also been keen to show that it is preparing for expected legislation on AI transparency and compliance, establishing their own AI ethics policy and compliance processes.

"It respects the privacy of sensitive data and helps users avoid bias in your decisions"

SAP also announced it will be using AI to make support in SAP S/4HANA more responsive.

During the opening keynote SAP announced an extension to their partnership with Microsoft and showcased the way that SAP SuccessFactors, alongside Microsoft's 365 Copilot, (which uses ChatGPT generative AI and the OpenAI API on Azure) could speed up the employee on-boarding process in Human Capital Management.

"Through an integration between the SAP SuccessFactors Recruiting solution and Microsoft 365, people leaders will be able to fine-tune job descriptions using Copilot in Microsoft Word with additional content and checks to detect bias. The final job descriptions will then be published in SAP SuccessFactors solutions to complete the workflow, without people leaders having to leave their normal flow of work."

The partners are also working to integrate SuccessFactors with Copilot in Viva Learning to address the technology skills gap by encouraging continuous learning in the working environment.

Satya Nadella, the Chairman and CEO of Microsoft said:

"We’re building on our long-standing cloud partnership with SAP and bringing together the power of Microsoft 365 Copilot with SAP SuccessFactors solutions to transform how organizations attract and develop their most important resource: their people."

SAP and Google Cloud announced that they are extending their partnership to bring Google Cloud's data and SAP's Datasphere solution together to make more business data visible in real time.

SAP Datasphere is the successor to SAP Data Warehouse Cloud. It is built on SAP BTP and delivers a unified environment for "data integration, data cataloging, semantic modeling, data warehousing, data federation, and data virtualization".

This simplifies business data landscapes and allows for the meaningful interpretation of data, along with the ability to combine SAP data with data from non-SAP sources.

By combining SAP Datasphere with Google Cloud capabilities like BigQuery, customers are able to extend their data landscape in a coherent manner so they can eliminate data silos and speed up analytical procedures. Google AI and ML services can also be used to inform these processes.

Another important topic in this year's SAP Sapphire event was sustainability. John Kerry, US Special Presidential Envoy for Climate gave a speech, and SAP made several announcements regarding new products to help companies monitor their environmental impact and comply with new legislation in the US and Europe designed to meet climate change and sustainability targets.

"Making real progress on sustainability requires real data. We’re rising to that challenge at SAP Sapphire by introducing the green ledger: ledger-based accounting for carbon, so companies can manage the carbon entering and leaving their systems and balance their "carbon books" the same way they balance their financial books. Together with other innovations, we’re announcing at SAP Sapphire, including bringing our unparalleled industry expertise to sustainability solutions, SAP is moving enterprises meaningfully toward a more sustainable world."

SAP is now offering companies the ability to take carbon accounting to another level by embedding carbon accounting on a transactional level in Rise with SAP S/4HANA Cloud and Grow with SAP.

In order to help companies make progress toward their sustainability targets SAP has updated SAP Sustainability Footprint Manager, and has also announced the SAP Sustainability Data Exchange which gives customers the power to securely exchange data in their supply chain network with partners and suppliers. The solution uses standards for carbon emissions data established by the World Business Council for Sustainable Development. The increased availability of standardized carbon data in the extended supply network will make the task of achieving carbon transparency much easier and less time-consuming.

A parallel solution has also been announced in the SAP Business Network allowing participants to share information about their sustainability and human rights credentials, having a positive impact on supply chains, and giving suppliers the chance to show their compliance with ESG initiatives.

SAP is making it easier for manufacturers to massively reduce waste material and be part of the circular economy by combining a solution used to buy and sell secondary material (SAP Encore) with SAP S/4HANA. A similar SAP solution called Feather has been integrated into SAP Commerce Cloud.

For a full list of announcements made during SAP Sapphire 2023 see the table of contents in the News Guide. These include updates to SAP Signavio Process Management, SAP Analytics Cloud, and many more innovations to the SAP Business Network.

The over-arching topic under discussion in many forms at SAP Sapphire 2023 was how to make businesses future proof and they showcased a huge variety of new products and services that are allowing businesses to achieve that goal.

SAP also demonstrated at Sapphire 2023 with their updated Mid-Term Ambitions that they have led by example and over the last two and a half years have been taking steps and making the hard choices to ensure their own organization is future proof.