BARC Perspective: SAP BDC – Breaking Tradition and Embracing Data Products

What happened?

On February 13^th 2025, SAP announced the new managed software-as-a-service offering SAP Business Data Cloud (BDC).

Business Data Cloud (BDC) consists of multiple existing and new services built by SAP and its partners:

• Object store which is an OEM from Databricks

• Databricks Data Engineering and AI/ML Tools

• SAP Datasphere

• SAP BW 7.5 or SAP BW/4HANA as PCE hosted option

• SAP Analytics Cloud

• Joule, SAP’s AI assistant

• Continuously extended offering of predefined data products and insight apps (analytical applications built with SAP Analytics Cloud) which will be complemented by partners

BDC will be in a controlled GA release in Q1 2025, so available for selected customers at first stage.

Why is it important?

• Existing SAP BW customers (especially those using version 7.5 and below) will receive an additional modernization option. They can move their BW system (unless they used too much ABAP) into BDC (and therefore cloud) and benefit from extended maintenance till 2030.

• The predefined content (data products) is expected by many SAP customers to help them build a data foundation for different analytical use cases more quickly.

• BDC can serve as a business context-aware data foundation for any analytical and AI use cases with data partly stored in an object store which should be more cost-effective than loading the data in-memory.

What is interesting about it?

• With BDC, SAP is reviving the popular and successful concept of a packaged Data & Analytics (D&A) platform. Compared to SAP BW however, it offers enhanced functionality, improved openness, and adherence to industry standards.

• SAP has recently started to emphasize the business aspect in its messaging (see related BARC blog post in German), a strategy it is continuing with BDC. This suggests that the company is moving away from developing every single technology component within the D&A stack itself. Instead, SAP is focusing on its core strength – leveraging its deep understanding of business processes to transform the resulting data and metadata into valuable D&A insights. For example, one of the new components, the object store, was not developed by SAP but is an OEM version of Databricks.

• BDC is a paradigm shift: The once-sacred HANA, which has been the core of every SAP offering for the past few years, is no longer the only option for data storage. Instead, the Databricks object store provides an industry-standard and more cost-efficient solution for storing data.

• Customers using analytics outside of SAP systems faced the challenge of extracting SAP data and transferring it to their target environments. A market for data integration and connector solutions has emerged and remains particularly attractive for these customers. However, those operating both SAP and non-SAP data platforms “side by side” are more likely to benefit from the predefined data products in BDC. This, in turn, could have a negative impact on the market for third-party technology – except for scenarios that are not covered by BDC (e. g. on-premises data sources). 

• SAP is embracing the trend towards building data products. 

• SAC & Datasphere will no longer be sold separately – the BDC offering will replace the individual products; detailed packaging and licensing information will be provided in H1 2025.

Background and technological fit

• The partnership with Databricks underscores the high value of structured data, especially database records, for AI/ML model training and inference. This is consistent with BARC’s research showing structured tables are the most preferred input for AI/ML initiatives. Moreover, BARC research also shows that the importance of unstructured data is also growing in importance.

• Similar to SAP Datasphere, BDC continues to partner with vendors such as Collibra, Confluent and DataRobot.

Potential challenges for customers

• Limited Availability for On-Premises Strategies
  Since BDC is a managed cloud service, it is not an option for customers committed to an on-premises strategy.

• Reduced Value for Customers with Predefined Semantics
  Organizations that have already rebuilt their data semantics or rely on third-party technologies may see limited benefits from SAP’s predefined content.

• Uncertain Future of Databricks
  While Databricks is preparing for an IPO, the company’s future ownership remains unclear, and there is a possibility that it could be acquired by an SAP competitor, impacting long-term interoperability.

• BDC Can Only Be Purchased Through SAP
  Databricks customers who want to benefit from BDC must purchase BDC capacity units exclusively from SAP, limiting procurement flexibility.
• Unclear Future Openness of the Platform
  While SAP presents BDC as an open platform, it remains uncertain what (‘live’) consumption interfaces will be available for data products or Insight Apps, potentially restricting integration options.

• Potential Vendor Lock-In with SAP’s Offering
  SAP’s platform bundles multiple functionalities – including analytics, semantics (catalog), data integration, and storage – into a single ecosystem. While this provides a comprehensive solution, it also reduces flexibility, making it difficult to replace individual components. Additionally, integrating non-SAP complementary services may present challenges.

• Risk of Paying for Redundant Data & Analytics Components
  By bundling various D&A components, SAP may cause customers to pay for services they already use outside of BDC. Organizations that run both SAP and non-SAP D&A platforms in parallel, may find a cross-platform data catalog more beneficial than one that is solely integrated into SAP BDC.

• Unclear Pricing Strategy for Existing SAP BW Customers
  It is currently unclear how SAP will prevent SAP BW 7.5 and BW/4 customers – who have already invested in analytics frontends – from paying twice when moving to BDC.

• BW developers still need additional education
  Typical BW developers appreciate the BW application that guides them in building a data platform. Both Datasphere and BDC are relational solutions that require learning their specific modeling approach. However, compared to Datasphere, data products may ease some of the workload.

Potential benefits for customers

• Simplified Access to SAP Data
  Predefined and ready-to-use data products provide more convenient and integrated access to SAP data.

• Stronger Data Foundation for AI and Unstructured Data
  Enhanced data management capabilities support AI-driven use cases, while the integration of unstructured data sources through Databricks further expands analytical capabilities.

• Advanced Data Engineering Capabilities
  Robust data engineering tools empower data scientists and technical users with direct access to raw data for deeper analysis and innovation.

• Potential Cost Reduction for SAP Data Warehousing
  High HANA costs are a common concern for BW and Datasphere customers. The introduction of an object store has the potential to reduce overall data warehousing costs, although actual savings will depend on licensing models and discount policies.

• Predefined Analytical Content with Insight Apps
  Insight Apps leverage data products in analytical applications, allowing users to gain benefit from predefined content.

• Enhanced User Interaction and Data Analysis with Joule Integration
  The integration of Joule improves the way users interact with the system and analyze data, making data exploration and insight generation more accessible. Moreover, users can build their own agents.

• Better Data Understanding with the Data Catalog and Knowledge Graph
  The data catalog and knowledge graph enhance data transparency, governance, and accessibility, providing a more structured way to navigate and utilize data assets.

Strategic Outlook

• SAP’s offering of SAP data products is beneficial for customers and a strategic move to stop SAP customers from copying data from SAP systems to other data platforms. However, time will tell whether customers will adopt the predefined content and how much value the predefined Insight Apps will deliver. Additionally, the platform’s openness to third-party frontends and its ability to consume data products remain key aspects to watch, especially given existing limitations in accessing Datasphere (e. g. Power BI OData).

• The range of data products still needs to be expanded further to support additional business processes with content.

• Details will show how the product works with live and federated data, for example in the context of AI.

• Together with SAP’s operational solutions such as S/4HANA and SAP Business AI the new SAP BDC platform shapes the updated SAP Business Suite offering.