I’ve spent more than 25 years building and scaling supply chain operations before joining SAP to lead SAP Supply Chain Management. The decision came down to something I kept encountering throughout my career: the companies with the deepest understanding of their own operations are the ones best positioned to put AI to work.

And nobody sits closer to those operations than SAP. In every customer conversation I have, I hear a similar tension: leaders know that AI will reshape their supply chains. But they need software that understands their business processes well enough to move from experimentation to impact. That challenge, and SAP’s foundation to meet it, is what brought me here. 

What excites me most about this moment is what I call “the art of the possible,” looking beyond how things work today and imagining what best-in-class could look like if we took advantage of capabilities that simply were not available before. But expanding the art of the possible does not, by itself, create meaningful innovation.

For decades, companies have invested heavily in planning, manufacturing, procurement, and logistics systems that provide valuable visibility. But when a supplier misses a shipment, demand unexpectedly increases, or transportation capacity disappears, people remain essential to connect the dots across systems and functions. By the time they do, the business may already be reacting to the problem rather than getting ahead of it.

What becomes possible when the supply chain is a modern decision engine

Imagine an illustrative scenario: a supplier delay threatens production and several important customer orders. Traditionally, a planning system might generate an alert, leaving teams to determine the implications and coordinate a response. An intelligent system could go further by identifying which customer commitments are at risk, assessing available inventory across locations, evaluating whether production schedules should change, and comparing alternative transportation routes or suppliers. 

Each option involves tradeoffs. Expediting a shipment might protect a high-priority customer order but increase costs. Reallocating inventory could preserve one commitment while creating shortages elsewhere. Adjusting production might minimize disruption but affect other delivery schedules.

Humans evaluate these interconnected decisions against the outcomes that matter for the business, rather than optimizing each function independently.

Success is measured by whether the response reduced missed customer commitments, protected revenue, limited incremental logistics costs, and avoided unnecessary inventory. Comparing results against the original plan helps the system improve future recommendations.

That is a fundamentally different model. Competitive advantage increasingly depends on how quickly an organization can turn change into coordinated action.

Autonomy should remove waiting, not people

As AI assumes a greater role in these decisions, we also need to be precise about what we mean by autonomy. The art of the possible lies in the absence of unnecessary waiting—not removing humans from the loop. Constructing a false competition between humans and machines creates a direct obstacle to delivering autonomy. Instead, we should be laser-focused on eliminating unnecessary work and latency while allowing people to focus their judgment where it creates the most value.

That also means we need to have a more sophisticated conversation about AI accuracy. An agent making a low-risk, reversible decision does not require the same confidence threshold as one making a decision with significant financial, customer, safety, or compliance implications. The question is not simply whether an AI system is “accurate.” It is whether it is sufficiently reliable for the particular decision it is being trusted to make.

Enterprise AI must earn the right to act 

Before AI can be trusted to make operational decisions, it must progressively earn trust. A system might initially recommend responses while planners review its reasoning, compare alternatives, and decide whether to act. Organizations can then measure how those recommendations perform against actual outcomes, including whether they protect customer commitments, respect business constraints, and deliver expected improvements. 

As reliability becomes more tangible, businesses can then feel more empowered to authorize AI to execute defined, lower-risk actions within established limits. More consequential actions should continue to require human approval, with transparent reasoning, documented decisions, and the ability to intervene. 

This is how AI earns the right to act, and this is where SAP has an important role to play. Our applications connect critical business processes across planning and execution, providing the operational context needed to understand how one decision affects another. By combining that context with enterprise policies, permissions and auditable processes, we can help organizations move toward coordinated AI-driven action without sacrificing control.

We are already seeing the foundations of this approach emerge. For example, SAP’s Supply Chain Planning Assistant can help planners identify potential root causes of planning issues and recommend corrective actions. Takeda Pharmaceuticals is using the assistant to support this process alongside automated performance tracking, creating a feedback cycle that can improve planning over time.

As these capabilities mature, the role of supply chain practitioners will evolve as well. Rather than spending most of their time assembling information and manually resolving exceptions, planners can focus on defining objectives, evaluating tradeoffs, challenging assumptions, and making the strategic decisions where human expertise matters most.

The best AI strategy starts with the business problem

Perhaps the greatest risk in this period of rapid AI development is starting with technology and then searching for a problem to solve. 

The better approach is to start with the customer problem: understand the outcome that matters, determine how to measure it, and then ask how AI can achieve that outcome in a way that was not possible before. Better decisions can improve product availability, protect customer commitments, strengthen resilience, and unlock growth. 

As technology expands what businesses can accomplish, innovation must remain grounded in the outcomes customers need. They should hold us accountable not for how many AI agents we develop or how much automation we introduce, but for whether our technology helps them make better decisions, respond faster to change and deliver measurable business outcomes.

Devesh Mishra is general manager and chief product officer for SAP Supply Chain Management.

Most physical AI helps machines act. Physical AI by SAP helps businesses act. By linking robots and physical systems directly to the enterprise processes that run your organization, SAP turns physical execution into a governed, auditable extension of your business, extending the Autonomous Enterprise into the real world.

AI has gone from insight to action and now, with physical AI, it comes into the physical world.

Enterprises have made substantial investments in both AI and physical AI. AI helps business systems deliver remarkable insights and recommendations on financials, inventory, and supply chains. Physical AI creates value every day with physical systems—such as industrial robots, humanoids, sensors, or robot dogs—deployed across production lines, warehouses, field service teams, and logistics networks.

As automation, robotics, and sensing technologies have matured across industries, the volume and richness of the physical signals coming from physical execution has grown substantially; physical operations today generate continuous intelligence about factors such as asset health, task completion, quality, throughput, and exceptions.

Today, however, there is a gap between what the business knows and the intelligence generated by physical operations on the ground. This gap is one of the most common sources of operational friction across industries. It contributes to delayed responses, ill-informed decisions, and physical operations that never enter the business record. As a result, revenue and margins decrease while risk exposure increases.

From enterprise intelligence to physical action

This year at SAP TechEd, SAP revealed how our physical AI removes this operational friction: the system that runs your business is the same system that controls your physical operations.

The enterprise knowledge in your business system triggers the physical actions; physical signals arrive with the business context already attached; physical operations in the field flow back into SAP as structured data intelligence. Every physical action leaves a traceable, auditable record tied to the relevant business process.

The full context of your business is behind every physical action; verified outcomes are brought back into SAP in a secure and governed way for follow-up actions.

When the system that runs your business is also the system that governs how, when, and why physical tasks are executed, the result is a fundamentally different kind of operational capability. For enterprises already running SAP, this means physical execution inherits the intelligence, context, and governance already in place.

This is how physical AI by SAP transcends automation and extends the Autonomous Enterprise into the real world.

“Foxconn’s vision for intelligent manufacturing requires physical systems that understand business context, not just motion commands,” said Dr. Wang, head of Physical AI at Foxconn. “With physical AI by SAP, warehouse tasks from SAP Extended Warehouse Management directly orchestrate our humanoid robots and autonomous transport systems. Asset inspections triggered by maintenance plans flow to our robotic platforms and return verified outcomes back to SAP. This closed loop between enterprise systems and physical execution is what sets this collaboration apart: the robot knows why it acts, and the business system knows what happened.”

How physical AI by SAP capabilities are designed to transcend automation

1. Business-driven physical action

Physical AI is built to ground every physical execution in the business context: order priorities, safety rules, inventory status, and compliance constraints. Every action has a clear reason tied to business outcomes, and the business system remains in control of what gets executed, when, and why. The result is physical execution that is intelligent from the start, not just automated.

2. Physical evidence into digital workflows

Every physical task creates a complete audit trail and physical observations flow back into SAP automatically, transforming field outcomes into business insights rather than isolated records in a separate system. Physical world events become inputs to the decisions and processes that follow.

3. Enterprise-governed execution

Built on the SAP Business AI Platform, physical AI capabilities are designed to provide traceability, auditability, and human-in-the-loop control as first principles. Physical world data flows into SAP Business Data Cloud as new structured data products, enriching planning, predictions, and operational strategy over time.

4. Vendor and hardware agnostic

Working across device platforms, physical systems, and AI models of the customer’s choosing, customers retain freedom over their physical layer. SAP provides the business context, orchestration, and governance. Partners provide the physical execution.

Physical AI at work with customers and partners

Arçelik-LG: physical AI executes and records inbound storage tasks

Arçelik-LG is a joint venture between Turkish durable consumer, Arçelik and South Korea’s LG Electronics, manufacturing air conditioners. Physical AI by SAP enables a humanoid robot to execute and record inbound storage tasks. This has addressed the costly and persistent issue of incorrect storage placements in inbound logistics with potential savings of millions of euros.

• Associated SAP solutions: SAP Extended Warehouse Management
• Physical AI ecosystem partners: FairConsult 24|7
• Video: Arçelik-LG

Intel: physical AI in autonomous warehouse operations

Intel is one of the world’s largest semiconductor manufacturers, operating a vast global warehousing and logistics network and serves as both a  proof-of-concept environment and a technology collaborator. By integrating SAP’s enterprise workflows and warehouse processes with Intel-powered edge AI and robotics technologies, warehouse transport tasks generated in SAP are automatically translated into robot missions and executed autonomously in the warehouse.

SAP provides the business context, workflow governance, and process orchestration, ensuring that every physical action aligns enterprise priorities and operational goals. Intel provides the physical AI hardware and software foundation at the edge, delivering the compute AI and real-time robotics capabilities that enable autonomous systems to perceive, decide, and act in dynamic environments. The combined capabilities of SAP and Intel create a closed-loop system; business decisions become physical actions and operational outcomes are continuously fed back into business systems.

In a proof of concept demonstrated at Intel’s Chengdu site in China, material movement is automated end-to-end, reducing both transport distances and repetitive manual handling. Physical AI capabilities from SAP and Intel demonstrate how enterprise decisions can directly drive physical execution in logistics workflows.

• Associated SAP systems: SAP Extended Warehouse Management
• Physical AI ecosystem partners: Anu Intelligence

Holcim: industrial asset inspections

Holcim is a Swiss multinational building materials and sustainable construction company, operating in heavy industry. The company has significant infrastructure assets with inspection, maintenance, and safety use cases. Since attending the Embodied AI Jam held in August 2026, Holcim has implemented physical AI capabilities for asset inspections with industrial drones and quadruped dogs.

On-site quadruped dogs inspect conveyor belts in dark, dusty areas and the status of kilns in extreme temperatures. Drones inspect assets in heights difficult for humans to reach. And end-to-end automation starts and finishes in a SAP system. In SAP’s asset management solution, the maintenance plan triggers an action for the industrial drone/quadruped dog; once the action is executed, a maintenance notification is created back into SAP.

• Associated SAP systems: SAP Plant Maintenance
• Physical AI ecosystem partners: Cyberwave, Field AI, Hybird
• Video: Holcim

Start your physical AI journey today

From warehouse operations to asset maintenance, from safety inspections to keeping your operations compliant, physical AI capabilities from SAP have the potential to transform your business. It connects the intelligence of your enterprise with real-world execution; the SAP system that you trust to run your business is the same system that informs the actions of your physical systems, be it a robot, an industrial drone, or a robodog.

As a part of Industry AI, you can begin your physical AI journey today with warehouse operations and asset inspection use cases or a physical AI use case, tailor-made to your requirements. Contact SAP via email for more information.

Lukasz Ostrowski is global head of Physical AI and Robotics at SAP.

Artificial intelligence can do far more for public administration than answer questions or digitize individual interactions.

Its real potential emerges when AI connects with the data and processes behind public services, turning a citizen request into coordinated action across the administration.

For public institutions, there is another essential requirement: innovation must go hand in hand with transparency, accountability, and digital sovereignty. SAP combines decades of process expertise with enterprise applications, data, AI, and sovereign cloud technologies.

S.Public, the new SAP Experience Center location for the public sector, brings these capabilities to life. It officially opened in Berlin on October 12, 2026.

From a citizen request to coordinated action

Damage in a public space can be reported digitally in a matter of moments. But that is where the actual administrative process begins: determining responsibilities, planning the work, checking resources and budgets, procuring materials if needed, and closing the case. SAP solutions can connect citizen engagement, maintenance, procurement, and financial management across this end-to-end process.

At S.Public, a playground scenario makes this tangible. A citizen notices damage, such as a broken swing, and reports it by smartphone. The steps that follow show how a single report becomes coordinated action. The real innovation is not the reporting form itself, but the intelligently connected processes behind it.

When AI understands the administrative context

The same principle applies to public funding. Applications involve documents, eligibility requirements, and financial information. AI can check submitted materials for completeness and consistency, flag missing information early, and provide employees with an explained recommendation for further review. The final decision remains with the responsible public authority.

A funding application for a solar installation illustrates this approach in Berlin. The SAP capability behind it is broadly applicable: AI is embedded where employees evaluate information and manage processes. Rather than automating isolated tasks, it supports the broader administrative context.

When digital sovereignty meets AI

How can sensitive data be used with AI while remaining under an organization’s own control? SAP Sovereign Cloud addresses four dimensions of digital sovereignty: data, operational, technical, and legal sovereignty.

At S.Public, this concept becomes something visitors can actually walk through. The new Sovereign Cloud Showroom makes SAP’s security and sovereignty concept physically tangible for the first time. Visitors pass through three security zones: administration, control, and restricted zones. They experience firsthand how the operating environment for SAP Sovereign Cloud and the protection of classified information work together.

A public sector scenario at a seaport shows how this can be combined with intelligent analysis. SAP solutions and the AI assistant Joule bring together selected data from internal and external systems in a sovereign environment. Data on vessel arrivals, terminals, containers, and available inspection capacity is turned into a prioritized overview. Analysts can query it in natural language, while the responsible public officials decide which inspections to carry out.

More than a place for demonstrations

The three examples point to a common development: public services become more intelligent when applications, data, and AI work together across organizational and functional boundaries while accountability remains clear.

S.Public creates a place where customers, partners, and experts can explore and discuss these possibilities. The SAP capabilities behind them extend far beyond Berlin.

The future of public services will not be determined by how much technology public administrations adopt, but by what they enable for people and society.

Andre Bechtold is president of SAP Industries & Experiences and chief revenue officer of Industry AI at SAP.

SAP Cloud ERP Private 2025 Feature Pack Stack 02 (FPS02) delivers new capabilities that help organizations move from AI experimentation toward intelligent, governed business execution faster.

The release combines AI agents that can work directly with core business processes and adds new regulatory compliance capabilities and industry-specific innovations across asset-intensive industries, retail, and energy sectors. Together, these enhancements help strengthen the foundation for organizations that need to scale AI responsibly.

Building the foundation for enterprise AI

As organizations explore how AI can drive business outcomes, one challenge keeps surfacing: AI alone is not enough. To operate at enterprise scale, AI needs access to trusted data, process context, business rules, and governance.

This is why the conversation about AI increasingly becomes a conversation about ERP. AI agents require more than information. They need to understand what actions are permitted, which controls must be respected, and when decisions require human review. SAP Cloud ERP Private can provide this foundation through integrated business processes, harmonized data, and enterprise-grade governance. FPS02 helps extend these capabilities, bringing intelligence directly into the processes where business happens.

AI embedded within business processes

FPS02 introduces AI agents and AI-assisted capabilities across key business domains, helping organizations automate routine work while maintaining oversight and accountability.

In finance, agents and AI-assisted capabilities help support processes spanning planning and forecasting, period-close activities, working capital management, tax processes, and compliance operations. Rather than requiring employees to manually identify issues and coordinate follow-up activities, SAP Cloud ERP Private and analytical business insights can surface risks, recommend actions, and help manage exceptions.

In sales order-to-cash processes, agents enable sales teams to quickly identify fulfillment issues, receive resolutions, and create or update sales orders directly in their workflow, which helps minimize delays and improve customer satisfaction.

Joule and SAP Document AI help streamline quality management by uploading, extracting, and matching certificate data, flagging exceptions, and creating pre-filled defects from natural-language inputs and source documents to help accelerate review, accuracy, and inspection release.

By receiving key observations, recommendations, and a clear action plan directly within business processes, employees can focus on judgment and expertise rather than information gathering and exception management.

Compliance built into the core

FPS02 also delivers important regulatory capabilities directly within SAP Cloud ERP Private.

The release includes support for IFRS 18 indirect-method cash flow statement reporting, helping organizations prepare for evolving financial reporting requirements. Additional updates include support for Germany’s AUSWIB1M foreign-trade reporting requirements and Canada First Nations Tax determination with GST499-1 return generation. By incorporating these capabilities into standard business processes, organizations can address compliance obligations while maintaining consistent governance and operational efficiency.

Industry innovation across critical operations

FPS02 deepens industry-specific capabilities across asset-intensive operations, upstream oil and gas, defense and security, and retail.

For asset-intensive industries, enhancements further integrate permit-to-work processes into maintenance operations, helping ensure operational controls are embedded directly within workflows. Upstream oil and gas organizations can gain new capabilities that extend Joule into production and revenue accounting, while SAP Document AI helps interpret gas plant statements and propose accounting entries for review. Defense and security organizations can benefit from innovations supporting equipment allocation and ERP operations in limited-connectivity environments.

Retail organizations gain four new data products that help expose retail master data through SAP Business Data Cloud, working to create a stronger foundation for future AI-driven processes. FPS02 also introduces operational enhancements including support for partial order fulfillment scenarios, GS1 2D barcode enablement, and expanded product traceability through serial-number integration between point-of-sale and inventory processes.

Advancing the Autonomous Enterprise

The Autonomous Enterprise is not built through a single AI breakthrough or software release. It emerges through the combination of trusted business data, integrated processes, governance, and intelligent capabilities working together across the enterprise.

SAP Cloud ERP Private 2025 FPS02 helps advance that foundation in concrete terms: by embedding intelligence within business processes, strengthening compliance capabilities, and expanding industry-specific innovation.

To explore the full FPS02 release and its implications for your business, visit SAP Community.

Maura Hameroff is chief marketing officer for SAP Cloud ERP Private and RISE with SAP.

WALLDORF — SAP SE (NYSE: SAP) today announced its financial results for the second quarter and half year 2026.

At a glance

• Current cloud backlog of €22.9 billion, up 27% and up 26% at constant currencies
• Cloud revenue up 22% and up 24% at constant currencies
• Cloud ERP Suite revenue up 25% and up 27% at constant currencies
• Total revenue up 9% and up 11% at constant currencies
• IFRS operating profit up 8%, non-IFRS operating profit up 7% and up 9% at constant currencies
• 2026 non-IFRS operating profit outlook updated to reflect dilutive impact from Dremio and Prior Labs acquisitions

Christian Klein, CEO:

“We delivered another quarter of strong current cloud backlog growth, up 26% at constant currencies. This performance is underpinned by our Autonomous Enterprise strategy with strong momentum across our Autonomous Suite as well as our Business AI Platform. Customers are choosing SAP to enable accurate and compliant AI outcomes grounded in their most critical business processes and data.”

Dominik Asam, CFO:

“Q2 was another strong quarter, highlighted by sustained current cloud backlog and free cash flow growth against a volatile macroeconomic backdrop. These results reflect our disciplined execution and our ability to deliver against our operating objectives. As part of that execution, we aggressively drive our own transformation into an Autonomous Enterprise, leveraging AI to boost both effectiveness and efficiency at the same time.”

About SAP

As a global leader in enterprise applications and business AI, SAP (NYSE:SAP) stands at the nexus of business and technology. For over 50 years, organizations have trusted SAP to bring out their best by uniting business-critical operations spanning finance, procurement, HR, supply chain, and customer experience. For more information, visit www.sap.com.

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