SAP CEO Christian Klein told Bloomberg this week that SAP plans to charge customers based on AI consumption, moving away from traditional software subscriptions.
This might catch some people off guard. Not long ago, every ERP company, SAP included, was pushing customers from on-premises to the cloud. Once that happened, the conversation shifted from perpetual licenses to subscriptions. Now the journey is changing again: from subscriptions to consumption.
The concept is not entirely new in the mid-market. Acumatica already prices on a consumption basis rather than per-user subscriptions. But tying pricing specifically to AI usage is something different. SAP is the first major ERP vendor I’ve heard make that connection publicly.
Some potential concerns with this model include the definition of what is considered AI. Is every transaction touched by AI and does that mean all transactions are “taxed”? How will a user of software billed by consumption know what their total yearly usage cost might be?
Third-party vendors like AP automation and sales tax providers have used consumption pricing for years. The results have not always been pretty. Invoices are hard to explain. Customers struggle to understand them. Transaction-based pricing starts with an estimate at the beginning of the year, but actual consumption can vary widely from that number. The result: surprise bills.
As I’ve watched ERP publishers talk about embedding AI directly into their products, I figured the meter would eventually get turned on and AI would become a profit center. I just did not expect to see a company as prominent as SAP float this concept so soon.
Source – Bloomberg