Anyone responsible for a budget knows that uneasy feeling: The annual financial statement is on the table, the figure is higher than expected, and no one can really explain it. Not because anyone was negligent, but because the tools that served us well for years were designed for a different model. In consulting practice, this isn’t an isolated case. It’s a pattern. And it’s one that can be avoided with the right tools.

As long as SAP was a fixed-cost item, the question of value didn’t require a nuanced answer. One license, one maintenance contract, one budget line item. For a portfolio consisting of cloud ERP subscriptions, BTP consumption, Business AI credits, and Business Data Cloud, that’s no longer enough. The question hasn’t changed. The complexity of the answer has.

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?”

West Sussex County Council has once again delayed the implementation of Oracle Fusion for HR and payroll – set to replace an ageing SAP system – following a series of setbacks that have seen expected costs swell to more than 15 times the original estimate.

In a notice to schools, the council said the program team had reviewed the previously planned April implementation date and confirmed that Oracle Fusion would now be implemented in October 2026.

“This revised timeline reflects the scale of the change, impacting over 20,000 users, and the need to ensure a safe, stable system with a reliable and accurate payroll, particularly for schools and term-time employees,” it said.

In January, the council’s Performance & Finance Scrutiny Committee said the Oracle Fusion finance and procurement system was deployed earlier that month to 917 users in line with the “approved timeline,” which was itself a revised timeline. It was supposed to go live in 2021.

It has previously been reported that, as well as being responsible for delays and overspending, the council has taken the step of allowing capital receipts – mainly from the sell-off of council buildings – to fund the project.

In January, documents released to a council committee show the expected use of funds from the sell-off is set to triple in the current financial year compared to a year earlier, up from £4 million in 2024/25 to £12 million in 2025/26.

In November 2019, the southern English authority, which manages a budget of around £2.3 billion annually, agreed to spend £2.6 million on moving off its legacy SAP system onto Oracle Fusion, a report to the committee said in 2024. It later decided it needed more suppliers to help change its business processes and reset the budget to £14.07 million, including £7 million in March 2021 and £7.07 million in October 2022. Systems integrator DXC began working with the council on the project under a five-year, £4 million contract in May 2020. Auditors EY later said there were “weaknesses regarding budgeting, governance and risk management.”

In July 2023, the council found there was no real prospect of a deliverable plan being agreed. It terminated the agreement with DXC on September 1, 2023, despite the company winning a lucrative contract variation. Published data detailing council spending shows that throughout its time working with the council on the project, DXC was paid around £6.6 million, more than 50 percent above the original contract price. The company was approached for comment at the time.

In a statement earlier this year, a spokesperson for the council said the total estimated cost for the program is around £41 million, comprised of the initial £14.07 million spent during the earlier phases and the current approved budget of £27.048 million for its completion.

“We generate capital receipts from the sale of assets and routinely sell assets that we no longer have an operational use for. West Sussex County Council has made a financial choice to use the receipts available to help fund the implementation of Oracle,” they said.