The News: SAP and Google Cloud announced at Google Cloud Next an expanded partnership that will combine their integrated open data cloud using SAP Datasphere with Vertex AI to launch new generative AI-powered industry solutions, beginning with automotive. The solutions will introduce new capabilities to help customers improve sustainability performance. By using Vertex AI in conjunction with SAP Datasphere, businesses can combine critical business data, the SAP Sustainability Control Tower solution, and third-party environmental, social, and governance (ESG) datasets. The press release with details on the partnership is available on the SAP site.
SAP and Google Cloud Partner on Generative AI-Powered Solutions
Analyst Take: SAP and Google Cloud announced a partnership that will combine their integrated open data cloud using SAP Datasphere with Vertex AI to launch new generative AI-powered industry solutions and help customers improve sustainability performance. Infusing generative AI into SAP and Google Cloud’s open data cloud, enterprise customers can leverage information held in SAP Datasphere and any other data source to improve insights and decision-making. These latest integrations build upon a longer-term strategic partnership between SAP RISE and Google Cloud, which together have garnered a variety of joint enterprise customers.
SAP customers will benefit from the breadth and power of Vertex AI. The company’s Model Garden includes new, open source models, including Meta’s Llama 2 and Code Llama, and Technology Innovation Institute’s Falcon LLM, and will soon incorporate Claude 2 from Anthropic. Further, Google says that it has made significant updates to its Google AI models and has introduced new Vertex AI extensions that connect models to APIs for real-time data and real-world actions.
Automotive Industry to Reap the Benefits of the SAP and Google AI Models
The automotive industry will be one of the first industries to benefit from the combination of SAP and Google Cloud, which are launching new solutions designed to enhance connectivity and customer experience (CX) for customers who use Google Cloud’s generative AI models via Vertex AI and data from Catena-X. Catena-X is the open data ecosystem supported by SAP for the automotive industry that allows companies to securely exchange data about their entire value chains.
Automotive industry OEMs and suppliers posted average profit margins of 8.1% and 5.6%, respectively, for the first quarter of 2023, according to analysis from S&P Capital IQ and Bain, respectively. Although these figures are significantly higher than during the COVID-19 pandemic, the risk of profits being eroded through costly product recalls, supply chain disruptions, and lawsuits due to defects remains a major concern for market participants. Applying generative AI models to industry data likely will help both OEMs and suppliers identify and root out issues before they become a costly item on the balance sheet.
As such, a real value in the announcement lies in the ability to combine datasets from Catena-X with SAP software data to use Vertex AI to build and train generative AI models that optimize their work with automobile manufacturers, suppliers, and end customers. More effective data sharing, analysis, and data modeling between all participants across the value chain can help to identify and mitigate potential vehicle problems before they cause recalls, improve safety through increased knowledge about hazardous road and traffic conditions, and increase product quality by more quickly and accurately predicting design or manufacturing defects.
Focus on Sustainability Practices Is Well Timed
SAP and Google also noted that their customers will be able to utilize Vertex AI together with SAP Datasphere to create generative AI solutions that accelerate companies’ sustainability programs. Mission-critical business data in SAP Datasphere and the SAP Sustainability Control Tower solution can be combined with third-party ESG datasets and Google Cloud’s powerful generative AI models. The use of these AI-infused datasets will permit the creation of tailored sustainability reports, automated AI-powered sustainability alerts throughout the supply chain, and enhanced decision-making with deeper analyses on environmental impact and financial benefits of company activities and actions.
The second annual sustainability survey, conducted by The Harris Poll and sponsored by Google Cloud, surveyed 1,476 top-level executives in 16 countries and found that ESG efforts have fallen from the number-one organizational priority in 2022 to number three in 2023. The lower prioritization of ESG efforts is due to “macroeconomic environment and pressure from external parties to cut corners in their sustainability initiatives and prioritize optimizing client relationships and driving revenue,” according to the survey.
According to the survey, organizations face a lack of tools, with executives seeking better systems to track their progress. Indeed, 87% of respondents said they were looking to incorporate better measurement into their organizations to help make more accurate targets. This is where solutions such as the combination of Vertex AI and SAP Datasphere can be useful, particularly with capturing and assessing the actual environmental and financial impact of decisions.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
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Author Information
Keith Kirkpatrick is VP & Research Director, Enterprise Software & Digital Workflows for The Futurum Group. Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
