SAP's Strategic Overhaul Meets Critical Security Test

As SAP prepares to release its first-quarter figures, the software giant is navigating a pivotal moment defined by a radical business model shift and a pressing security vulnerability. The company is fundamentally moving away from pure subscription fees, introducing a consumption-based pricing model for its artificial intelligence tools. This strategic pivot arrives just as a critical security flaw, with a near-maximum risk score of 9.9, demands immediate attention.

The identified security weakness, part of 22 new patches released in April, allows attackers with low-level privileges to upload their own SQL commands. This could grant direct access to central data storage, enabling theft of sensitive information or even the deletion of entire databases. SAP has issued a patch that completely deactivates executable code in the affected program, with the temporary workaround of removing specific upload rights from user accounts. Such incidents pose a significant threat to customer trust, particularly for SAP's crucial cloud products.

Concurrently, the Walldorf-based group is executing a profound commercial transformation. It is abandoning the traditional "Software-as-a-Service" subscription for its core AI products like Joule and Datasphere. Instead, customers will pay for "AI Units," billed only for their actual use of AI agents that automate complex processes. Management acknowledges this shift may create short-term uncertainty but views it as essential for long-term revenue scalability, mirroring its earlier cloud migration. Internally, SAP is consolidating its Customer Success and Customer Services divisions into a single, more agile unit.

Should investors sell immediately? Or is it worth buying SAP?

Investors have responded positively to these decisive moves. Shares recently climbed over two percent to close at €153.54, continuing gains from the previous session. This marks a notable recovery from a volatile start to the year, during which the stock fell by as much as 24 percent on a three-month view. The price recently broke above its 20-day line around €150 euros.

To fortify the data foundation for its new AI-driven services, SAP is actively bolstering its technology through acquisition. The company announced in late March it is acquiring data management specialist Reltio, a deal expected to close by the third quarter. This purchase is designed to enhance data quality for automated agents and strengthen the in-house Business Data Cloud platform.

The market now awaits concrete financial data, with the company in a quiet period ahead of its earnings release on April 23. Analysts are focusing on the short-term cloud contract backlog, which is forecast to grow by up to 25 percent on a currency-adjusted basis. The average analyst price target for the stock stands at approximately €232.

Following the earnings report, shareholders will turn their attention to the annual general meeting on May 5. The ex-dividend date follows shortly after, with a proposed payout of €2.50 per share.

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