As the world’s two largest enterprise-applications companies invest tens of billions of dollars to lead the AI Revolution, the primary factors are shaping up to be not just apps and AI but the data in SAP and Salesforce systems that’s indispensable for great customer outcomes.
Yes, brilliant AI-powered applications are and will be essential; yes, highly intelligent and elegantly deployed copilots are and will be essential; yes, the right blend of organic models and partners models is and will be essential; and yes, new pricing and packaging approaches are and will be essential.
But the more I hear about the power and potential of the AI Revolution, and the more I hear about the ingredients required to create not just dazzling AI capabilities but also — and more importantly — superb business outcomes for customers, the more I believe that while AI has become the new royalty, data is the indispensable power behind the throne.
And so it has come to pass that for the past few quarters Marc Benioff has been spinning a new perspective on his company that makes Salesforce sound like it is and has always been and always will be a data company, and a data company that just so happens to have some applicatio —WHOOPS! — I mean “platforms” (Benioff now calls his iconic apps clouds “platforms”).
Meanwhile, over at SAP, the company has just rebundled its fast-growing S/4HANA Cloud ERP application into a new configuration called the Cloud ERP Suite in large part because, according to executive board member and chief revenue officer Scott Russell, customers are clamoring for unified and harmonized data from across all of their processes and applications because that harmonization will ensure the very best GenAI outcomes for those customers.
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In a recent interview, Russell talked about how the creation of the Cloud ERP Suite — incorporating fully modular applications for financials, procurement, supply chain, HCM, and more — will help customers accelerate and optimize their GenAI initiatives because of the single data model offered across SAP’s apps. Here are a couple of excerpts from that interview that were featured in my recent analysis headlined “SAP’s New Cloud ERP Suite Will Turbocharge GenAI, Says CRO Scott Russell:
End-to-end processes and visibility. “The Cloud ERP Suite is the business suite of capabilities of an integrated portfolio that’s modular and it’s in the cloud and it allows for that unified platform,” Russell said. “For customers, that means it provides a more holistic and more unified and more organized way of being able to connect disparate parts of their business or processes that can sometimes be disconnected because they run on different applications or different systems, and being able to bring it together.”
The essential link to SAP Business AI. “When you think about generative AI and the ability to be able to exploit the data and the insights for a business, you need a suite of capabilities that is connected. And you also want the flexibility and the scalability and agility to manage your business processes, but you want to be able to have that unified view.”
And at the SAP Analyst Summit held earlier this week before the formal opening of the Sapphire event in Orlando, every single high-level SAP executive who offered perspectives on what’s coming from SAP hammered home the huge competitive advantage SAP has because of the enormous stores of data held in SAP systems running the operations of many of the world’s largest corporations.
In fact, in my recent interview with CRO Russell, he made the claim that of all the data SAP customers have, many customers believe their specific SAP data holds the highest value. From the analysis referenced above, here’s Russell:
And what the customers are now saying, especially CEOs — I don’t think there’s a boardroom on the planet that hasn’t had a discussion about this — ‘How can this enabling technology help our business?’ And the expectation is clear. ‘SAP, you’ve got the most important data that runs our business. We’re moving to the cloud with you. How can we exploit that? And what are you bringing to us that is out of the box, as well as the unique insights that we might want to create ourselves.’ That’s why we believe so strongly that we will be the market leader in Business AI. It’s not only because we’re focused on it, but it’s also because the customers are demanding this from us. And we’ve already got a great start with 27,000 SAP customers already using AI within their businesses.”
As for Benioff, on Salesforce’s fiscal-Q1 earnings call last week he not only talked like the CEO of a data company, but also tossed out a few new data-centric metrics that I’ve never heard the CEO of an enterprise-apps company use. Or, for that matter, the CEO of any tech company use. Here’s a sample from Benioff’s opening remarks on the May 29 Q1 earnings call:
“Eight trillion records were ingested into data cloud in the quarter, up 42% year over year. And we processed 2 quadrillion records. That’s a 217% increase compared to last year. Over 1 trillion activations drove customer engagement, which is a 33% increase year over year. This incredible growth of data in our system and the level of transactions that we’re able to deliver, not just in the core system, but especially in data cloud, is preparing our customers for this next generation of AI.”
Repeatedly, Benioff hammered on the point that the AI Wars will be won by the cloud vendor with the best customer data, and it should not come as a surprise that Benioff selected Salesforce as that best-customer-data winner because his company has, as he put it, ” one of the largest repositories of front-office enterprise data and metadata in the world.”
“And when you look at the power of AI, you realize the models and the UI are not the critical success factors,” Benioff said on the earnings call.
“It’s not critical in how the enterprise will transform because there are thousands of these models. Some are open-source and some closed-source models; some are built with billions, and some with just a few dollars.
And then Benioff pulled out his trump card.
“Most of these [models] will not survive. They’re just commodities now, and it’s not where the intelligence lies. And they don’t know anything about a company’s customer relationships,” Benioff said.
“Each day, hundreds of petabytes of data are created that AI models can use for training and generating output. But the one thing that every enterprise needs to make AI work is their customer data, as well as the metadata that describes the data, which provides the attributes and context the AI models need to generate accurate, relevant output.
“And customer data and metadata are the new gold” — I’m sure glad he didn’t say ‘the new oil’ —for these enterprises, and Salesforce now manages, as I mentioned, 250 petabytes of this precious material. We have one of the largest repositories of front-office enterprise data and metadata in the world. And every day, more companies are adopting Salesforce as their front office, bringing all their structured and unstructured data into our platform,” he said.
Final Thought
This week, during the first two days of SAP’s annual Sapphire event, SAP executives hammered home repeatedly similar thoughts about the power of data in helping customers adopt AI solutions that rapidly generate significant business outcomes. My sense is that when it comes to the strategic importance of data as the primary driver of the AI Revolution, there’s very little daylight between the outlooks of the world’s two largest enterprise-applications companies — SAP and Salesforce.
Rather, the primary issue will be practical rather than philosophical: Which company’s data will prove to be more valuable in the AI initiatives of its customers?
Benioff makes the case for the power of data around customer relationships, and that’s an excellent point.
But I believe the advantage goes to SAP because while its CX business is not nearly as large as that of Salesforce, SAP compounds the value its data can unlock in AI applications because SAP has massive amounts of data about suppliers and procurement and supply chains and HCM and expenses and logistics and sustainability and much, much more.
And, of course, as is always the case in the Cloud Wars, the biggest winner in this new battle between SAP and Salesforce will be the customers.
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