I have been discussing various software companies with Gemini over the last few days. Here is the summary of the results of my conversation about $SAP (-4,21%):
1. internal developments and strategy
SAP is currently taking the final step in its transformation from a traditional license model to a cloud-based platform economy.
- Cloud transformation: With the "RISE" and "GROW" programs, management is accelerating the migration of existing customers to the cloud.
- AI integration: Artificial intelligence is being integrated into the Business Technology Platform (BTP) as a native component. Surcharges on existing cloud subscriptions are planned for AI-supported process optimizations.
- With the AI co-pilot Joule SAP has created a central interface that operates across the entire portfolio (ERP, HR, CRM). Joule not only serves as a simple query mask, but is also designed to proactively control and analyze complex business processes. It is particularly important that the agent utilizes the figures directly from the systems and does not fantasize - SAP is at the source here.
2 Challengers and competitive situation
The competition has become more specialized in 2026, putting SAP under pressure in various sub-segments:
- Oracle:
$ORCL (-1,55%) is the most dangerous pursuer in the battle for ERP supremacy. With the Fusion Cloud Oracle offers an architecture that is often perceived as less fragmented than the historically evolved SAP landscape. Particularly critical for SAP: Oracle uses its own cloud infrastructure (OCI) as a price lever. While SAP pays rent for hyperscalers (AWS/Azure), Oracle controls the entire tech stack from chip to application. This often enables Oracle to make more aggressive offers for AI integration. - Specialty providers (best-of-breed): In the areas of human capital management (HCM) and financials, providers such as $WDAY (-5,32%) are gaining market share, as their cloud architectures are often considered less complex to implement.
- Ecosystem competition: In the midmarket $MSFT (-1,94%)
Dynamics 365 represents a growing threat. The deep integration into the Microsoft stack (Office/Azure) offers cost advantages that are putting SAP under pressure in this market segment. - Platform competition: Companies such as $CRM (-5,25%) or $NOW (-5,44%) are increasingly occupying the user interfaces. There is a risk that SAP will be degraded to the pure "data backend level".
3. the "Moat"
Despite the competition, SAP has unique selling points that form a deep moat:
- Process complexity: SAP remains dominant in the discrete manufacturing and process industries (automotive, chemicals, pharmaceuticals) due to its ability to map complex global supply chains and production processes.
- Regulatory and compliance: The software fulfills local legal and tax requirements in almost all regions of the world. This is a decisive security aspect for globally operating groups.
- High switching costs (lock-in): Due to the deep integration into the operational core business processes, a system change is associated with considerable risks and costs.
4. risks
- Migration deadline 2027: The expiry of maintenance for legacy systems (ECC) creates enormous implementation pressure. Delays in customer projects could dampen growth rates in the cloud sector in the short term.
- Dependencies: As SAP relies heavily on the infrastructure of $MSFT (-1,94%) , $AMZN (-1,1%) and $GOOG (-2,07%) for its cloud offerings, there is a dependency on the margins and technical roadmap of these partners.
- Opportunity costs: The high expenses for AI development and restructuring tie up capital that could be lacking for inorganic growth (acquisitions) in new technology fields.
Conclusion: SAP currently remains a defensive anchor in the technology sector with market leadership in critical industries. However, there is little room for disappointment in cloud migration and the competition is not sleeping.
