SAP SE’s Chief Executive Officer Christian Klein is setting up a new unit with hundreds of people to push the adoption of its artificial intelligence features and plans to overhaul how it charges clients as the technology threatens its legacy subscription model.

As more customers adopt SAP’s new tools in the coming years, the company will charge customers based on AI consumption, moving away from regular software subscriptions, Klein said in an interview in Berlin last week. The company will also create “forward deployed engineering” teams starting in July that will work with customers to develop its AI applications on top of SAP’s technology, he said.

Klein, 45, characterised the pivot to AI as a reinvention that will change how SAP allocates and rewards employees, how it interacts with customers and the way it takes in revenue. He’s under pressure to prevent clients from switching to alternative tools from generative AI companies, like Anthropic PBC and OpenAI, which have shaken investors’ confidence in traditional enterprise software businesses.

“It would be foolish to still charge subscription base, because AI is so powerful that it will automate a lot of tasks,” Klein said. Companies deploying AI agents that complete tasks for employees will need fewer users. “This is a big change in the way you price, the way you commercialise.”

SAP, Europe’s largest software company, has lost about a fifth of its market value since the beginning of the year. Share prices of software companies around the world have plunged in recent weeks on fears that AI tools will eventually upend their business model — particularly that of software-as-a-service companies that still tend to charge for access to their products by the user. The potential for AI, especially agentic AI, to accomplish more tasks in less time is forcing SaaS firms like SAP to rethink how their customers pay.

The company’s early attempts to introduce AI to its customer base, which it’s said includes more than 90% of Fortune 500 companies and government and military customers globally, haven’t always gone smoothly. Several SAP customers and resellers cast doubt on the AI tools’ performance and questioned their value. Klein earlier this month announced a shake-up of the company’s executive board, relinquishing his responsibilities for sales and increasing time spent on AI. The aim is to “focus more on the next transformation: making SAP an AI company,” he said this week.

Customers have also struggled with the way the company’s tools are priced. Subscription pricing is predictable, and some executives have had trouble forecasting how much they’ll spend on consumption-based models, Klein said. They’re also grappling with how to transform their operations around AI at scale, and SAP will deploy consultants to help with integrating it. “The excitement is obviously there” to adopt the new technology, he said.

Klein’s been travelling between the company’s offices in Palo Alto and Bangalore to oversee the development of the company’s AI products and how they can be tailored for customers. He believes SAP’s advantage over Claude and ChatGPT is access to customers’ data and the ability to work closely with them to tailor agents to their specific needs. In the next few years, SAP’s developers will have completely shifted away from features and into building agents, he said.

“Some people call it micromanagement, I call it going into the machine room and understanding a little bit better what kind of agents we develop,” he said. “At the end, it’s the CEO who’s accountable for making sure that the end-to-end transformation works.”

In the new forward-deployed-engineering unit, teams will be made up of consultants and developers with industry-specific expertise to help customers deploy tailored AI solutions quickly and gain value from the tools SAP sells, he said. Employees across different departments will be brought together to work with customers to design the tools they need. For example, when working with a client that’s trying to improve delivery times, “you need to talk to the truck drivers and really see what they are doing today — and then you design the solution,” Klein said.

AI is the Walldorf, Germany-based company’s second major technological pivot in less than a decade. The first was pushing customers away from one-time sales of software they’d run on machines in the office to cloud-based subscriptions. Ultimately, Klein forced the change through, telling enterprise clients that they had to shift their data into the cloud before SAP stopped supporting the older products. The change is expensive and complex for clients. Many are still grappling with it and have yet to start their cloud migrations.

Internally, some SAP executives have expressed concerns that the company won’t find a strategy to get clients to make this next leap and use the new AI products.

“You need to redefine, almost forget, what our transactional software did for 50 years,” Klein said. “Completely rethink, redefine, how does finance work? How does supply chain work?”