As two of the world's largest enterprise application companies invest tens of billions of dollars to lead the AI revolution, the key element is not just apps and AI, but also data in SAP and Salesforce systems that is critical to good customer outcomes.
Yes, great AI-powered applications are and will remain essential. Yes, a highly intelligent and well-deployed co-pilot is and will remain essential. Yes, the right mix of organic and partner models is and will remain essential. And, yes, new pricing and packaging approaches are and will remain essential.
But the more I hear about the power and potential of the AI revolution — and what it takes to create not just great AI capabilities, but more importantly, great business outcomes for customers — the more I become convinced that while AI is the new king, data is the essential force behind it.
And over the past few quarters, Marc Benioff has developed a new view of his company, talking as if Salesforce has always been, and always will be, a data company that just happens to have some kind of application (whaaat?) “platform” (Benioff now calls the iconic app cloud a “platform”).
Meanwhile, SAP has rebundled its fast-growing S/4HANA cloud ERP application into a new configuration called the Cloud ERP Suite, largely because customers want integrated, harmonized data from different organizations, according to board member and chief revenue officer Scott Russell. all Harmonizing processes and applications ensures the best GenAI outcomes for customers.
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In a recent interview, Russell spoke about how the creation of a cloud ERP suite that incorporates fully modular applications such as finance, procurement, supply chain, and HCM helps SAP accelerate and optimize its customers' GenAI initiatives with a single data model delivered across its apps: Below is an excerpt from the interview featured in my recent analysis, “SAP's New Cloud ERP Suite Will Accelerate GenAI, Says CRO Scott Russell.”
End-to-end processes and visibility. “A cloud ERP suite is a business suite that is modular, in the cloud, an integrated portfolio, that delivers a unified platform,” Russell said. “For our customers, this means providing a more comprehensive, integrated and orchestrated way of being able to connect and bring together different parts of their business and processes that tend to be disconnected because they're running on different applications and different systems.”
Important links to SAP Business AI. “When you think about generative AI and the ability to leverage data and insights for your business, you need a connected set of capabilities. You also need the flexibility, scalability and agility to manage your business processes, but you also need a unified view.”
And at the SAP Analyst Summit held prior to the official opening of the Sapphire event in Orlando earlier this week, every senior SAP executive offering their views on the company's future stressed that the vast amounts of data stored in SAP systems running at many of the world's largest companies gives SAP a huge competitive advantage.
In fact, in a recent interview with CRO Russell, he argued that of all the data that SAP customers hold, many consider their own specific SAP data to be the most valuable. From the above analysis, Russell said:
And what our customers, especially our CEOs, are saying right now — and I don't think this topic has been brought up in any boardroom on the planet — is, “How is this enabling technology going to help our business?” And the expectation is clear: “SAP has the most important data that drives our business. We're moving to the cloud with you. How can we leverage that? And what are the outside-of-the-box insights that you're giving us, the unique insights that we want to generate on our own?” That's why we strongly believe we're going to be the market leader in business AI. And it's not just because we're focused on it, it's because our customers are asking us to do this. And we're off to a great start, with already 27,000 SAP customers using AI in their business.”
On Salesforce's first-quarter earnings call last week, Benioff not only spoke like a data CEO, but also unveiled some new data-centric metrics that I've never heard an enterprise app CEO use. Any Technology companies use. Below is an excerpt from Benioff's opening remarks during the company's first-quarter earnings call on May 29.
“We ingested 8 trillion records into our Data Cloud during the quarter, up 42% year over year. We also processed 20 quadrillion records, up 217% from last year. Over 1 trillion activations drove customer engagement, up 33% year over year. The incredible growth in data in our systems and the level of transactions we can deliver not only in our core systems but especially in our Data Cloud are preparing our customers for the next generation of AI.”
Benioff has repeatedly emphasized that the AI war will be won by the cloud vendor with the best customer data, so it's not surprising that he picked Salesforce as the winner with the most customer data, since the company has, in his words, “one of the largest repositories of front-office enterprise data and metadata in the world.”
“When you look at the power of AI, the model and the UI are not the key success factors,” Benioff said on the earnings call.
“It doesn't matter how a company transforms, because there are thousands of these models. Some are open source, some are closed source. Some were built for billions of dollars, some for just a few dollars.”
Then Benioff played his trump card.
“Most of these [models] “They won't survive. They're just a product now. The information isn't there. And they know nothing about the customer relationship of the enterprise,” Benioff said.
“Every day, hundreds of petabytes of data are generated that can be used to train AI models and generate output. But to make AI work, every business needs customer data, along with metadata that describes the data. Metadata provides the attributes and context that AI models need to generate accurate, relevant output.
“And customer data and metadata is the new gold for these companies.” I'm really glad he didn't say “the new oil.” And Salesforce currently, as I mentioned earlier, manages 250 petabytes of this valuable 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 and bringing all their structured and unstructured data into our platform,” he said.
Final thoughts
Over the first two days of SAP's annual Sapphire event this week, SAP executives repeatedly emphasized similar thoughts about the power of data to help customers adopt AI solutions to rapidly generate big business outcomes: My sense is that there is little difference in the outlook of the world's two largest enterprise applications companies, SAP and Salesforce, when it comes to the strategic importance of data as a key driver of the AI revolution.
Instead, the main question will be practical rather than philosophical: which companies' data will prove more valuable to their customers' AI initiatives?
Benioff makes a great point about the power of data when it comes to customer relationships.
However, I believe SAP has an advantage because, although their CX business is not as large as Salesforce’s, they have a vast amount of data across suppliers, procurement, supply chain, HCM, expenses, logistics, sustainability, and more, which allows SAP’s data to increase the value they can unlock with AI applications.
And of course, as always in the cloud wars, the biggest winners in this new battle between SAP and Salesforce are customers.
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