Published on October 23, 2023, 10:04 am
Welcome to the Cloud Wars Minute, your daily source of cloud news and commentary. In today’s episode, we take a closer look at SAP’s reasoning behind charging higher prices for offerings with generative artificial intelligence (GenAI) capabilities.
SAP CEO Christian Klein is advocating for a 30% premium on these offerings. However, SAP also offers other pricing options such as consumption-based pricing. ServiceNow, on the other hand, has announced that it will charge up to 60%. Salesforce plans to raise its prices by 7%. It seems like a price war might be brewing in the cloud industry.
Oracle, however, has taken a different approach and stated that it will charge nothing for new AI capabilities. Ultimately, it will be the customers who decide which pricing model works best for them.
Klein highlights 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. SAP aims to provide customers with choices: they can opt for the premium model with a 30% premium or choose consumption-based pricing.
SAP’s deep industry expertise and longstanding relationships with customers give Klein confidence in proposing the 30% premium. He believes that customers value SAP’s offerings and won’t easily jump ship to other providers.
In this evolving landscape of GenAI pricing, customers hold all the power. They have various possibilities to consider when selecting their cloud provider and pricing model.
To stay updated on the latest happenings in the world of cloud computing, watch more episodes of Cloud Wars Minute [link].
Source: “Generative AI Price War? SAP CEO Klein Makes Case for 30% Premium,” Acceleration Economy [link].