SAP launched Business Data Cloud, a platform that gives applications access to structured and unstructured data across its platform as well as third-party data. The effort is getting a big assist from Databricks.
Simply put, SAP's plan to open its applications to third party data fills in a key part of its strategy to put its Joule AI everwhere, leverage AI agents with real business context and automate processes.
According to SAP, the ability to integrate the business data in its ERP systems, third party data and use-case knowhow in areas like finance, supply chain and life sciences give its Joule assistant an advantage. SAP also aims to leverage its process mining and automation applications such as Signavio.
The company previewed its AI strategy during its fourth quarter earnings call. At a high-level, SAP's product strategy includes the following pillars:
- AI everywhere unified by Joule and AI embedded across SAP's platform including Customer Data Hub, SAP Knowledge Graph and SAP Foundation Model.
- BDC that includes a harmonized data model across SAP, Insight Apps for decision-making and actions and an ecosystem of partners.
- A suite that's integrated across user experiences with the ability to configure by customer, industry and use case.
SAP's argument for being an enterprise AI leader is that it has the transactional systems and business processes data, the ability with BDC to unify data types and systems of AI agents led by Joule. SAP CEO Christian Klein said Business Data Cloud will "combine SAP's expertise in miss-critical, end-to-end processes and semantically rich data with Databricks' data engineering capabilities."
Databricks CEO Ali Ghodsi said the SAP partnership will help enterprises "bring together all their data regardless of format or where it lives."
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With BDC, SAP is looking to deliver "fully-managed SAP data products" across business processes in finance, procurement and supply chain. SAP will also infuse contextual data and AI into SAP S/4HANA, SAP Ariba and SAP SuccessFactors.
BDC will also include insight apps that will use data products and AI models connected to real-time data for analytics across the enterprise.
Joule, SAP's genAI copilot, will create agents that combine processes and data. Enterprises will also have the ability to build, deploy and manage their own AI agents.
Speaking at SAP's launch event, Klein said SAP Business Data Cloud will make its AI foundation stronger and enable more analytics and insights. That foundation sets SAP up for Joule Agents.
Klein said:
"We are announcing the availability of Joule agents for claims management, sales and customer service that will help you resolve disputes faster, elevate the speed and quality of sales engagements and process customer inquiries more efficiently. This library of jewel agents is expanding this year to include more agents across human resources, supply chain, spend management, finance and more."
Klein said Joule agents will be able to leverage BDC to run simulations and make better decisions.
Constellation Research analyst Holger Mueller said SAP's strategy makes sense because it needs to line up its data repository with AI use cases. He said:
"For the longest time SAP was not ready for big data, but that did not hurt the German ERP giant - as it did not hurt any of its competitors. But the need for an AI data repository switched this. It is good to see SAP doing the right thing with the SAP Business Data Cloud (BDC). Under the hood BDC is mostly Databricks, but SAP customers who want and need to build AI powered next generation applications don't care. SAP just needs the capability. Equally important is the SAP intention that BDC is open for third party data since any data lake in 2025 needs to be open for any content."
Here's a look at the various moving parts of SAP's Business Data Cloud and the Databricks partnership.
- The launch of BDC gives SAP a centralized data approach to support AI use cases and the application stack.
- For SAP, BDC gives the company the ability to harmonize data across multiple applications and clouds. SAP is also betting on an open ecosystem with integrations with Databricks, Google Cloud, Collibra, Confluent and others.
- BDC will also use Open Resource Discovery, an open-source metadata standard to describe and share data and include governance with automated compliance tools.
- At the core of BDC is Databricks. SAP customers will get native access to SAP data within Databricks with zero-copy data movement, Unity Catalog for governance and most capabilities except for AI, business intelligence, Lakehouse Federation and advanced data engineering.
With the Databricks partnership, SAP is aiming to solve a customer pain point--integrating SAP data with non-SAP data. For SAP, the Databricks partnership may also help customers migrate under the SAP RISE program.
For Databricks, the win would be having SAP migrate from SAP Databricks to native Databricks over time. It remains to be seen how customers choose between SAP HANA and Databricks SQL.
Initial reaction to SAP BDC was positive. DSAG, which represents SAP's German customers, said in a statement: "SAP is aiming to harmonize SAP data management across systems with this offering. This new solution in turn accesses various partial solutions, such as SAP Analytics Cloud (SAP SAC), SAP Datasphere, SAP Business Warehouse and SAP BW/4HANA in the S/4HANA Private Cloud Edition."
"The business data fabric is at the heart of SAP BDC. This is where the data is processed semantically and made available in a standardized way. The data used can come from the connected ecosystem - either directly from all SAP applications or already prepared via existing business warehouse systems," said Sebastian Westphal, DSAG CTO.
Constellation Research's take
Constellation Research analyst Doug Henschen handicapped the SAP Databricks partnership and how it works with BDC. He said:
"According to Databricks, the number one ask among joint SAP customers is a simpler, easier way to get data from SAP into Databricks. The new Databricks on SAP BDC (Business Data Cloud) partnership package gives these joint customers a zero-copy bridge via Delta Sharing that ensures that all the semantics of SAP applications remain intact. The assertion is that this new Databricks instance type will provide simpler and easier data access at lower cost than the alternative of exporting data from SAP with third-party data integration tools. The caveats: this offering is exclusively for customers that have gone cloud with SAP Rise (and not on-premises SAP ECC deployments). This instance type does not include Databricks AI/BI (in a nod to SAP Analytics Cloud) and does not include Lakeflow or Lakehouse Federation."
Henschen's bottom line:
"I suspect new customers will eventually want the Lakeflow and Lakehouse Federation capabilities, but will have to upgrade to get them."
Mueller's bottom line:
"SAP BDC is the most important platform innovation for SAP on this side of the millennium. People will mention HANA as well, but HANA was a replacement for partner RDBMS and did not expand SAP's ability to build the business applications of the 21st century. With SAP BDC, SAP goes back partnering for platform (in this case Databricks) and it is more than relevant for SAP customers as it allows to address non-structured data. While AI is the driver, insights to action and just good old analytics are the benefits. Moreover, BDC created the data foundation for SAP to build its next generation ERP applications. And finally, BDC may likely create the incentive as well as the necessity for SAP customers to upgrade to the cloud."
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