SAP swaps costly AI models for cheaper alternatives, targets over €2 billion in gains

Oct 28 : SAP, whose software is used by many of the world's largest companies, is replacing some expensive artificial-intelligence models powering its products with cheaper alternatives, a move it expects will generate more than €2 billion in efficiency gains over the next two years.

CFO Dominik Asam told Reuters the company had removed some of the most expensive AI models from products including its internal consulting assistant and replaced them with lower-cost alternatives where performance remained strong.

SAP uses more than 70 AI models from providers including OpenAI, Anthropic and Google. Asam said the company increasingly chooses the cheapest model capable of performing a task to the required standard, while still expecting overall spending on AI to rise as adoption grows.

"The goal is healthy margins as scale grows, not an absolute reduction in AI expenditure," SAP said in answers to Reuters questions.

Unlike many AI providers, SAP charges customers for completed tasks rather than for the underlying computing resources used to generate responses, meaning lower operating costs can help improve profitability.

Customers are also paying closer attention to where AI models come from. Asam said government agencies and companies in regulated industries increasingly ask specific requirements and exclude models based on origin, while European customers increasingly demand local solutions.