SAP to Invest €20+ Billion in European Sovereign Cloud

SAP, the German software behemoth, unveiled a bold €20 billion ($23.3 billion) investment strategy targeted at bolstering its sovereign cloud infrastructure across Europe over the next decade. The announcement, made Tuesday, signals a significant move to address growing concerns around data sovereignty and regulatory compliance in the region.

The investment will fuel the expansion of SAP’s sovereign cloud offerings, notably incorporating an Infrastructure-as-a-Service (IaaS) platform. This move positions SAP to compete more directly with established players like Microsoft and Amazon in the burgeoning IaaS market, allowing European companies to access computing services through SAP’s data center network.

Furthermore, SAP plans to introduce a new on-premise option enabling clients to leverage SAP-operated infrastructure within their own secure data centers. This hybrid approach provides flexibility and control for organizations with stringent data security requirements.

The underlying objective of this ambitious initiative is to guarantee that customer data remains within the European Union, ensuring adherence to stringent regional data protection regulations, most notably the General Data Protection Regulation (GDPR). This strategic emphasis on data localization addresses increasing demands from European businesses and governments for greater control over their data assets.

“Innovation and sovereignty cannot be two separate things – they need to come together,” stated Thomas Saueressig, SAP board member responsible for customer services and delivery, during a virtual press conference. He emphasized the importance of ensuring that European enterprises have access to cutting-edge technological advancements like artificial intelligence within a “fully sovereign context.”

The pursuit of technological sovereignty has gained significant traction in recent years, driven by geopolitical tensions and a growing awareness among businesses of their reliance on foreign technologies. This trend is particularly pronounced in the context of powerful AI systems.

Reflecting this shift, both Amazon and Microsoft have announced their own sovereign cloud initiatives aimed at ensuring the data of European users is stored within the EU, mirroring SAP’s strategic direction.

The European Commission has prioritized AI as a critical area for investment and development, seeking to foster competition with the U.S. and China. Realizing the need to catch up technologically, the Commission unveiled plans to invest €20 billion in the creation of “AI gigafactories,” large-scale facilities equipped with advanced supercomputers designed to cultivate next-generation AI models.

Saueressig confirmed that SAP is “closely” involved in the development of the new AI gigafactories but clarified that the company would not be the lead partner in the initiative.

Crucially, Saueressig also emphasized that SAP’s €20+ billion investment in Europe’s sovereign cloud capabilities will not impact the company’s capital expenditure projections for the coming year, having already been integrated into its existing financial strategy. This suggests a long-term commitment to data sovereignty and digital autonomy within the European landscape.