In today's Cloud Wars Minute, I review SAP’s move toward AI usage-based pricing and what it means for the future of SaaS, customer engagement, and enterprise software delivery.

Highlights

00:04 — SAP CEO Christian Klein has announced the company intends to shift away from a traditional subscription model towards a pricing model based on AI usage. Klein stated that pricing must reflect the actual usage of AI by customers now.

00:23 — Ultimately, Klein recognizes that the existing subscription model, which is a traditional SaaS model charging per user, is not the right fit for an evolving landscape where AI agents are automating an increasing number of tasks.

00:40 — To support this shift, SAP will be launching forward-deployed engineering teams that include consultants and developers who will work directly with customers to build out dedicated AI applications. It's important to note that this will not be an immediate change, but rather a direction of travel. However, it does align with the company's AI ambitions.

01:22 — Not only is SAP reportedly changing its pricing model to align with the agentic AI Era, but it's also shifting its delivery methods with the proposed forward-deployed engineering teams. This approach feels more aligned with consulting than it does traditional SaaS support.

01:44 — This transformation will impact revenue streams, customer engagement, sales, and investor relations all at once. However, this is not only a necessary shift for SAP, but one that could help the company retain its position as a global tech leader and perhaps even surpass its competitors.

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