ISG Software Research Analyst Perspectives

SAP was formed in 1972 to create standardized business software that would integrate all business processes and enable data processing in real time. Following the success of the initial release and subsequent R/2, the company went public in 1988 and has grown into one of the world’s largest software companies, reporting more than $37 billion in revenues in its most recent annual report. Through internal development efforts and numerous acquisitions, including Business Objects, Sybase, Ariba, SuccessFactors, Fieldglass and Concur, SAP has built out a portfolio of business applications along with a technology platform to address the information processing needs of enterprises. The company recently hosted an event titled SAP Business Unleashed which was focused on new data and artificial intelligence (AI) capabilities in its portfolio. At the event, they announced SAP Business Data Cloud and SAP Databricks, which are designed to address enterprise needs around data and AI. SAP Business Data Cloud (BDC) is the unification of capabilities that previously existed in two separate offerings: SAP Datasphere and SAP Analytics Cloud. As its name implies, Analytics Cloud was SAP’s analytics offering. However, unlike many of its competitors, it also included planning capabilities. SAP Datasphere was the evolution of SAP’s data warehouse as a service (formerly called SAP Data Warehouse Cloud) and included data management, data integration, data federation, data governance and data catalog capabilities. We recently covered SAP Datasphere in our Data Intelligence Buyers Guide and SAP Analytics Cloud in our Analytics and Data Buyers Guide. In both reports, SAP was rated an Overall Leader. Now, these products have been unified into a single offering, eliminating the need for integration since all the data and metadata are shared between the two. SAP Databricks is another component embedded into BDC. Databricks is a popular data and AI platform which I’ve recently written about and was rated Exemplary in the ISG Buyers Guide on Analytic Data Platforms. It offers a complete set of data management, data engineering and AI capabilities. Within BDC, it will enable custom AI and data processing beyond what SAP offers in its pre-built applications, and it will facilitate “zero copy” access to SAP data via federation capabilities. SAP Databricks can also be used to incorporate external data into custom workloads or to access SAP data in a much more open fashion than in the past. As I have written recently, generative AI (GenAI) is evolving to incorporate agentic AI. Agentic AI helps automate tasks, reducing or eliminating the need for human involvement. SAP is also evolving its GenAI capabilities and announced plans for a collection of pre-built AI agents across finance, service and sales, with more planned throughout the year. across finance, service, and sales, with more across the SAP Business Suite portfolio in 2025. In the first quarter of 2025, SAP plans to make a cash collection agent available which can analyze disputes, validate the details and recommend resolutions. Other agents announced include a Q&A agent that can monitor customer interactions, spotting questions and providing relevant answers; a knowledge creation agent that can identify and incorporate the knowledge of novel case resolutions into an enterprise’s knowledge base; and a case classification agent that can route a case to the correct team. In addition to pre-built agents, SAP previewed new AI agent builder capabilities in Joule Studio, SAP’s agentic and GenAI platform. The studio can be used to define agents and orchestrate activities among multiple agents, including both pre-built and custom agents. The fact that BDC includes planning capabilities should make its agentic AI capabilities more helpful than platforms without planning capabilities. In fact, my colleague Matt Aslett asserts that through 2027, less than one-third of analytics software providers will include driver-based planning capabilities, making decision intelligence and agentic AI less effective. SAP has stated that its focus is on embedded AI, and its plans for pre-built agents across various business functions and applications support that strategy. Given SAP’s huge presence in the business applications market, this approach makes sense. However, with BDC and the embedded Databricks offering, SAP also offers enterprises the tools they need to customize and extend their data and AI efforts to incorporate non-SAP data. I recommend that enterprises learn about these new capabilities. SAP customers can begin to plan when and how they can migrate to the new capabilities. Those who are not customers should understand what is available either as part of an evaluation of SAP or to make sure your application provider is developing similar capabilities. Regards, David Menninger

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SAP Unleashes Business Data Cloud for Unified AI Strategy

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