SAP's business model is transitioning from seat-based licensing toward a consumptive and eventually outcome-based model, but this is a joint journey with customers — many enterprises still demand cost predictability and are not yet ready for purely consumptive pricing.

Philipp explains that SAP is clearly moving toward consumptive and eventually outcome-based pricing (like Sierra's model), but in practice it's a hybrid today — a mix of seats and consumption. Customers are not uniformly ready: some demand predictability for budgeting, others fear exploding costs, and not all trust the outcomes enough yet. ✦ AI generated

Philipp Herzig · No Priors · 2026-04-23 · original ↗

It does, absolutely. I mean, there's no question, and we have prepared for this already. So for me, it was always very clear. I mean, for the most part, SAP software is seed-based, licensed today, with a few exceptions, like Concur or Fieldglass, for example, or the business network. But, you know, very clearly with AI, it was very clear for us that, you know, step by step, it will go towards this consumptive world, right? At first consumptive and then maybe in the next step, once we have more verifiability in the system, then also towards maybe an outcome-based license model to, for example, what Sierra is doing and so on and so forth. But the reality is also, it is today for us, it's a hybrid model. It's consumptive, but it still has a certain element of seats in there and so on and so forth, because also it's a joint journey with the customer. Because the customer is saying they are not yet ready. in many cases, for a purely consumptive model, right? Because they need one predictability, right? And then, of course, they are not yet fully also everywhere trusting the outcome, right? Or node and also, of course, is the value already there, but then they are afraid of that the costs may explode from a consumptive perspective, et cetera, et cetera. So at the end of the day, what we have designed is a hybrid that is basically ready for this consumptive world, but actually meets the customers where they are today knowing that they demand still a lot of predictability in the enterprise space in order to cost control the whole thing for themselves as well.

verbatim transcript · starts at 33:51