While Satya Nadella and Bill McDermott are predicting AI agents will trigger the rapid collapse of enterprise apps, SAP’s top executives contend that agents will enhance modern applications in concert with SAP’s Business Data Cloud to drive massive new business value for customers.
In the face of such wildly different projections from world-class CEOs about the future role of a foundational component of enterprise IT, life is getting more complicated for business leaders responsible for leveraging technology to take their companies into what is sure to be a very different future.
Which leaders’ vision of the future do you choose to believe:
- Beware the Apps Collapse! Are the enterprise apps that have helped drive the global economy for the past quarter-century about to become obsolete as agentic AI pushes them toward irrelevance?
- Prepare for the Agentic Applications Renaissance! Or, as SAP (and also Oracle and Salesforce and Workday) believes, will agents enhance the value and extend the longevity of business apps while expanding and enhancing the business value that agent-powered apps can deliver?
And if you place the wrong bet, how much damage will that cause your company?
Your career?
Massive Change Is Coming: But What Will It Look Like?
One thing that’s certain is that agentic AI will disrupt the field of enterprise applications, which will be forever changed in some profound ways. That looming disruption is, I think, beyond question — but the good news is that customers will gain greatly from that upheaval as agents automate tasks, accelerate operations, optimize processes, and free up humans to do more-meaningful work.
But must that significant progress sparked by agentic AI lead inevitably to the downfall of enterprise apps? Is it inevitable that we will see this prediction from McDermott — made earlier this month and echoing some wildly provocative comments made by Nadella in December — come to pass?
“So in the Era of Agentic AI, the traditional applications stack will collapse…the number of applications companies use will be drastically reduced…Traditional apps will become core databases and feed into the ServiceNow platform, where real innovation will happen.”
(For the full context on that, please check out my May 12 analysis headlined “Apps Apocalypse: Bill McDermott Joins Satya Nadella in Saying AI Agents Will Crush Applications.”)
AI Agent & Copilot Summit is an AI-first event to define opportunities, impact, and outcomes with Microsoft Copilot and agents. Building on its 2025 success, the 2026 event takes place March 17-19 in San Diego. Get more details.
From SAP, the Opposite View
The leaders at SAP — which is by a large margin the world’s fastest-growing applications vendor — are forecasting a very different future for applications. And while it certainly involves substantial changes, the SAP view is far less dramatic than the alternative “apps collapse” scenario.
Plus, it’s worth noting that another major apps company that rarely agrees on anything with SAP —that would be Oracle — is 100% aligned with SAP on the long-term viability of enterprise apps with great enhancements delivered by AI agents.
I think we can view the SAP approach through the lens of the acronym AMA: Agentically Modified Applications. SAP is not saying apps will endure as they are — in fact, SAP is emphatically, aggressively, and comprehensively doing everything within its considerable power to create a new and very different applications portfolio for the AI Era.
In the SAP view, this new generation of Intelligent Applications will achieve AMA status by fusing with two thoroughly modern SAP offerings: Business AI and Business Data Cloud. So rather than the “apps collapse” view that says agentic AI will turn apps into nothing more than CRUD databases (gotta love that term!), SAP believes that the carefully orchestrated fusion of apps and agents will drive capabilities and business outcomes that neither could deliver on their own.
The third component in SAP’s formula is the Business Data Cloud, completing a trifecta that Muhammad Alam, SAP’s executive board member for products and technology, describes as “the flywheel effect” that allows companies to achieve true end-to-end visbility and insights. So Data, Apps, and AI — carefully harmonized and rigorously engineered for the future — enable customers to:
- move more rapidly than ever before,
- gain greater insights into their operations and their opportunities,
- boost productivity,
- accelerate operations,
- enhance employee experiences as well as customer experiences, and
- drive growth.
Alam: ‘Don’t See the Demise of Apps’
During a Q&A session at Sapphire this week, product leader Alam said that while AI is unquestionably transforming applications, the big question is this: What kind of changes will AI bring to applications?
A huge impact, he said, is the ability to provide end-to-end context to enable businesses to reason over data in ways that have never been possible before, particularly with seamless and almost-instant transfer of that reasoning into operations.
“Businesses need to get away from spending so much time and so much money on integration,” Alam said. “And today, for the first time, you can do that because we are clearly committed to being second to none in the performance of each application in the Suite: supply chain, Finance, HR, Procurement, and more.”
As a result, he said, businesses will no longer need to pour vast sums into integrating apps and harmonizing data because the suite runs on a single and unified data model.
“And we don’t think customers should be forced to choose between the quality associated with ‘best of breed’ or the full integration associated with suites, because AI needs harmonized data from one data model. So that’s not a choice that customers should be forced to make.”
And that new reality, Alam said, is the biggest change that AI will have on applications, rather than the apps-collapse.
“The big change AI will bring is not the demise of the apps layer — that is still essential to tie everything together and handle security and governance and many other vital functions.
“We don’t think it helps customers to have to live in disparate worlds of apps and agents being separate.”
Ask Cloud Wars AI Agent about this analysis
