📌 Disclaimer
This article is based on publicly available information as of July 9, 2026, including SAP’s official website, annual reports, and regulatory disclosures. The company’s business direction, products and services, and management strategies may change over time.
This article is not intended as investment advice regarding any specific company. Its purpose is to help readers better understand the IT industry and the companies operating within it.
What This Article Covers
In Part 1, we looked at how SAP became one of the defining companies in the global ERP market.
In Part 2, we will examine how SAP makes money and why the company continues to attract attention in the AI era.
How Does SAP Make Money?
SAP’s customers are businesses rather than individual consumers.
Companies use SAP software to manage essential operations such as accounting, production, procurement, inventory, human resources, and logistics.
In the past, companies typically purchased SAP software through a perpetual license and installed it on their own servers.
In recent years, however, SAP has been rapidly shifting toward cloud-based services.
Companies now pay monthly or annual fees to use SAP’s services, providing SAP with a stable stream of subscription revenue.
SAP also generates revenue from maintenance, consulting, implementation services, and additional software features.
In other words, SAP’s business model is evolving from one-time software sales toward a structure in which long-term subscription revenue plays an increasingly important role.
Why SAP Still Matters in the AI Era
When people think of AI companies, NVIDIA and OpenAI are often among the first names that come to mind.
However, AI first needs high-quality data to work properly.
When a company’s sales, production, inventory, and accounting information is scattered across separate systems, AI cannot analyze it effectively.
SAP integrates and manages this information within a unified system.
In this sense, SAP provides the foundation that makes enterprise data usable for AI.
SAP has also been actively integrating generative AI capabilities into its ERP and cloud services.
Through SAP, companies can automate business processes, analyze data, and support decision-making with AI.
As AI adoption expands, the value of the enterprise data managed through SAP is likely to increase further.
Who Are SAP’s Competitors?
The enterprise software market includes several powerful competitors.
The most notable are Oracle, Microsoft, and Salesforce. Each company has different strengths.
- SAP: SAP has a strong position in ERP and the manufacturing sector.
- Oracle: Oracle has maintained a long-standing rivalry with SAP in databases and ERP.
- Microsoft: Microsoft is expanding its enterprise ecosystem around Microsoft 365, Azure, and Dynamics.
- Salesforce: Salesforce is a leading company in customer relationship management, or CRM.
Companies do not always rely on products from a single provider. In many cases, they use solutions from several companies together.
SAP’s Strengths
SAP’s greatest strength is the high switching cost involved in replacing its ERP systems.
ERP is not simply another software application.
It connects a company’s essential operations, including accounting, production, procurement, human resources, and logistics. Once an ERP system has been implemented, replacing it with another product is extremely difficult.
This is because years of accumulated data and established business processes are embedded within the system.
These high switching costs give SAP a major advantage in retaining customers over long periods.
SAP’s strengths become even more significant for global companies that need to manage subsidiaries and factories across multiple countries within a single system.
What to Watch Going Forward
SAP has recently been accelerating its transition to the cloud.
This is not simply about delivering services over the internet. It is also a strategy for expanding recurring subscription revenue and providing AI capabilities more quickly.
As companies expand their digital transformation and AI adoption efforts, ERP is likely to become an even more important foundational system.
However, intensifying competition, economic slowdowns, and reductions in corporate IT spending remain risk factors that SAP must continue to address.
Investors should therefore look beyond the AI label and examine whether SAP can sustain the growth of its cloud business and continue expanding its enterprise customer base.
DANA NOTES in One Sentence
SAP is evolving beyond ERP into a platform that connects enterprise data in the AI era, with cloud services and subscription-based business models serving as the key drivers of its future growth.
