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SAP and Alibaba Deepen Partnership to Accelerate Cloud Transformation

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Key Takeaways

⇨ SAP and Alibaba Group have formed a strategic partnership to accelerate cloud adoption and enterprise AI development, focusing on enhancing Alibaba's enterprise infrastructure with SAP Cloud ERP Private Edition and deploying several SAP solutions.

⇨ The collaboration includes a joint go-to-market strategy aimed initially at the Chinese market, with plans for expansion into Southeast Asia, the Middle East, and Africa, offering enterprises scalable SAP solutions on Alibaba Cloud's infrastructure.

⇨ Integrated AI capabilities, such as Alibaba's Qwen model within SAP’s generative AI hub, represent a key technical aspect of the partnership, emphasizing the importance of cloud migration for effective AI implementation and the necessity of building strategic AI roadmaps for organizations.

SAP has unveiled a significant strategic partnership with the Alibaba Group to accelerate cloud adoption and enterprise AI development. The collaboration, announced during SAP Sapphire in Madrid, expands the companies’ long-standing relationship with Alibaba’s internal adoption of SAP’s cloud ERP and a joint go-to-market initiative focused on key global markets.

“Our collaboration with Alibaba Group is a testament to the power and flexibility of SAP’s cloud solutions,” Christian Klein, Chief Executive Officer, SAP, said.

Standardizing Enterprise Infrastructure

A core component of the agreement is Alibaba’s decision to leverage SAP Cloud ERP Private Edition to enhance its enterprise infrastructure. As a multinational technology company with a massive scale in e-commerce and cloud computing, Alibaba’s adoption of SAP’s cloud solutions is a powerful use case for large, complex enterprises undergoing digital transformation.

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The company also plans to deploy a suite of SAP solutions, including SAP Business AI, SAP Business Technology Platform, and applications like SAP Ariba and SAP SuccessFactors, to optimize its technological backbone.

Expansion in Asia

The second pillar is a joint go-to-market strategy, initially targeting the Chinese market with plans for future expansion into Southeast Asia, the Middle East, and Africa. Under this initiative, enterprises can implement SAP solutions, including RISE with SAP and GROW with SAP, on Alibaba Cloud’s infrastructure. This provides customers in the region with scalable and secure SAP workloads tailored to local business requirements.

“Our joint go-to-market strategy can unlock new opportunities for enterprises by providing them with access to a comprehensive suite of tools and services,” Klein said. “Together, we can help our joint customers drive innovation, improve operational performance, and create new competitive advantages. We look forward to working with Alibaba to shape the future of cloud-powered digital transformation.”

Integrating Alibaba’s proprietary large language model (LLM), Qwen, into the generative AI hub within SAP AI Core is a key technical aspect of the collaboration. This integration is designed to provide enterprise users in China with access to localized generative AI capabilities directly within their SAP software applications, enabling more culturally and contextually relevant AI-driven insights and processes.

“Our collaboration with SAP reinforces our commitment to empowering global businesses with world-class technologies,” Alibaba Group Chairman Joe Tsai said. “By combining SAP’s enterprise software with Alibaba Cloud’s robust infrastructure and AI capabilities, we can help customers build smarter, more agile operations.”

What This Means for SAPinsiders

Cloud migration is a foundational prerequisite for AI implementation. The advanced capabilities of SAP Business AI and integrated partner models are fundamentally dependent on cloud architecture. On-premise systems lack the scalability, real-time data processing power, and API-driven flexibility required for modern AI workloads. SAPinsider’s SAP S/4HANA Migration Benchmark Report 2025 underscores this point, noting that data harmonization—a critical step for readying data for AI—is a key priority for 76% of organizations. SAPinsiders still contemplating migrating to the cloud should note that moving to a cloud ERP via programs like RISE with SAP is the necessary foundational step for any organization that plans to leverage enterprise-grade AI.

SAP’s Business AI strategy emphasizes an open ecosystem. The integration of Alibaba’s Qwen model indicates SAP’s platform-centric approach to AI. At its Sapphire conference, SAP highlighted the expansion of its generative AI copilot, Joule, and its embedding across the cloud portfolio. However, the strategy is not closed; it also integrates models from partners like Google, Microsoft, and others. For SAP users, this signals that SAP Business AI aims to be a flexible hub, allowing businesses to leverage best-of-breed or geographically specific models within a unified SAP environment. SAPinsiders should, therefore, evaluate how different AI capabilities can be applied to their specific business processes while making their AI decisions.

Building a strategic AI roadmap is more imperative now. While the technological capabilities of AI are advancing rapidly, a significant portion of the user base remains unprepared. Research from SAPinsider’s AI: State of Adoption 2024 report indicates that 54% of organizations do not feel adequately equipped for upcoming AI advancements, often citing the lack of a clear business case as a primary obstacle. However, the SAP-Alibaba partnership offers tangible examples of AI applications, such as enhancing supply chain planning with localized data that can help organizations build their strategic roadmaps and justify investment in AI initiatives.

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