Published on October 25, 2023, 4:51 pm
Welcome to the Cloud Wars Minute, your daily source for cloud news and commentary. In this episode, we will dive into SAP’s reasoning behind charging higher prices for offerings with generative artificial intelligence (GenAI) capabilities.
Is a price war brewing? SAP CEO Christian Klein is advocating for a 30% premium, but the company also offers alternative pricing options like consumption-based models. On the other hand, ServiceNow plans to charge up to 60%, and Salesforce announced a 7% price increase.
In contrast, Oracle has vowed to provide AI capabilities at no additional cost. Currently, these vendors are pitching their strategies based on what they believe will resonate with customers. Ultimately, the market – in the form of customers – will determine the success of these pricing decisions.
Klein shared that SAP has developed 100 different use cases for GenAI. The company has built a foundational data model within its neural network and offers advanced capabilities in sustainability and finance. Furthermore, SAP presents customers with a choice: they can opt for the premium model with a 30% surcharge or choose consumption-based pricing.
SAP boasts deep industry expertise and longstanding relationships with many of its large customers spanning decades. Considering this history, it is unlikely that Klein would propose a 30% premium if he believed customers would readily switch to another provider.
While there is ample room for various possibilities in this landscape, it is essential to recognize that customers hold all the power in shaping these decisions.
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Source: [Generative AI Price War? SAP CEO Klein Makes Case for 30% Premium](https://accelerationeconomy.com/cloud-wars/cloud-wars-minute/generative-ai-price-war-sap-ceo-klein-makes-case-for-30-premium/) (Provided by Acceleration Economy)