SAP is telling the software industry not to write off traditional SaaS companies as AI changes how businesses build and buy software. Despite SAP’s stock falling by more than 20% over the past year amid the wider “SaaSpocalypse”, SAP global president of customer success and Americas Jan Gilg believes the sell-off has gone too far. “As usual, I feel the pendulum will swing back,” Gilg told Business Insider. Gilg further added that there will be “users,” “losers and winners” and said he believes SAP will be among the winners.The comments come as AI tools from companies such as Anthropic and OpenAI raise questions about whether businesses will continue paying for traditional software. SAP, Salesforce and Workday have all faced pressure as investors assess how AI could change the software market.
SAP stock rebounds after SaaS sell-off
SAP’s shares have recovered strongly after the company reported its latest earnings in late July. The stock has risen roughly 40% since the results, helped by cloud growth and progress in business AI.Gilg described the earlier sell-off as “a bit of an overreaction on the entire industry.” He said SAP is responding by investing in AI and data while also changing how it charges customers.“Everybody has AI on the agenda right now,” Gilg said.
SAP says AI will not easily replace mission-critical software
One concern during the SaaSpocalypse has been the rise of “vibe coding”, where AI tools can help people create software without traditional programming methods. Gilg said SAP does not currently see customers replacing its software this way, particularly when it comes to critical business systems.“It’s really multifaceted. On the one side, there was the idea that customers will vibe code their software themselves rather than buying packaged software. We don’t see that frankly,” Gilg said. “We don’t see that, especially for mission-critical purposes. It’s not just about features and functions. It’s about auditability, governance, and the maintenance of the software.”He said SAP’s role could become more important as companies look for ways to connect AI with business data and existing systems.
SAP sees another challenge emerging: the rising cost of using AI
Gilg said companies are already seeing higher “token costs”, referring to the amount of AI usage they pay for. He expects businesses to look more closely at whether their AI spending produces measurable results.“Customers are seeing token costs go through the roof already,” Gilg said. “How do you measure and control that, and how do you show an outcome for that? Budgets won’t necessarily increase. It will still have to come from somewhere. Therefore, the scrutiny will become much, much bigger.”“We do see new players out there from Anthropic, OpenAI, Palantir, and so on,” Gilg said. “That’s going to be the battlefield of the future.”
SAP is changing how it charges for AI
SAP is also changing parts of its pricing strategy as AI becomes a bigger part of its products. The company is moving some services from traditional subscription models toward consumption-based pricing, where customers pay according to how much they use.“What outcome are they driving?” Gilg said. “That’s how we charge the consumption of those agents, which is very transparent to customers. Also, it’s much easier to justify why they would actually pay for it. That’s the current model many are following.”