SAP said it will invest over 20 billion euros (US$23.3 billion) in its sovereign cloud capabilities in Europe over the next 10 years.

The German software firm, known for its enterprise resource planning solutions, plans to expand its cloud offerings to include an infrastructure-as-a-service platform and a new on-site option for customers to use SAP-operated infrastructure within their data centers.

The investment aims to ensure customer data remains within the EU, supporting compliance with regulations like GDPR.

This move follows growing demand from countries and companies to keep data and computing infrastructure onshore amid increasing interest in AI and data sovereignty.

Global firms including Amazon and Microsoft have also announced new sovereign cloud initiatives in the region.

SAP said the investment will not affect its capital expenditure plans for the next year, and is already included in its financial outlook.

SAP is also involved in the EU’s planned AI “gigafactories,” but will not be the lead partner in the project.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Sovereign cloud adoption is accelerating rapidly across global enterprises

SAP’s massive 20 billion euro investment reflects a market that’s already gaining significant traction among businesses worldwide.

Research shows that 37% of companies interested in sovereign cloud solutions have already invested in them, while another 44% plan to do so within the next two years1.

Over one-third of these companies could potentially migrate 75% of their data to sovereign cloud platforms, indicating the scale of opportunity SAP is targeting1.

This adoption surge is driven by regulatory pressure, with at least 137 countries now having enacted data sovereignty laws that require specific data handling and storage practices1.

The numbers suggest SAP’s investment isn’t speculative but rather positioning for a market transition that’s already underway, with European companies particularly focused on data sovereignty as a critical factor in cloud vendor selection.

2️⃣ Major cloud providers are taking distinctly different approaches to sovereignty