SAP CEO Christian Klein talks cybersecurity and Europe's digital sovereignty | POLITICO

Thank you.

Absolutely. I mean, digital sovereignty has an increased importance. I mean, when you see the geopolitical tensions in the world, I have many CEOs who ask me the question, what happens in China when export controls are coming? I have large operations in China. So the topic matters. It's just important that we are not getting too theoretical and that we stay pragmatic, because you will never see a technology stack which is completely built in Europe or in China or in the US. And that's why it's very important to have a pragmatic definition of what sovereignty really means and how can I avoid a lock-in into a certain technology which I maybe regret if the world is turning upside down.

Yeah, I mean, look, also SAP, we are running on hyperscalers, on US hyperscalers, we are running on Alibaba. We are using chips from Nvidia. And obviously I cannot create a lock-in of SAP into Microsoft, as much as maybe I would love to have that. I need to also be flexible, I need to be agnostic. And the same is true for the customers. I mean, when I'm talking to governments here in Munich, they're always telling me, 'Christian, when I now make a decision to go into the cloud and AI with SAP, how easy it is to switch the one or the other component?' And I guess that is the right discussion to have, and how mission-critical and how fast can I switch this component.

I mean, absolutely. We are running in 120 countries, we are running the largest multinationals, and they are coming to us and say, 'Hey, I need a local solution for China. I need a solution for Europe. I want to be protected against the US Cloud Act.' So we actually are giving customers choice. We have here our own data centers. We are working together with local infrastructure providers like T-Systems, but we also want on the hyperscaler, so customers have choice and we give them the guarantee that we can also switch, that we stay agnostic. And the same is also true on the AI side. We are running certain AI use cases from SAP obviously with our own AI foundational module, and then we build it on top of any LLM. But we can switch from OpenAI to Mistral within two weeks. And if the customer says, 'Christian, I don't want to have GPT, I want to have Mistral,' yeah, we deploy our digital coworker, we deploy our agents also on Mistral. And I guess that choice in these geopolitical times is very important.

Of course, I'm getting oftentimes the question, why is there not another SAP in Europe? And I guess there are certain reasons for that. I mean, first, when you just stay on the topic sovereignty, it explains a lot why sometimes it's so hard to build a business in Europe. While we are discussing back and forth what sovereignty really means, I mean, in the United States, we come in as a European software vendor, but there are clear rules, there is a clear definition, we don't even talk about what sovereignty means, there's a FedRAMP certification, we have an own legal entity for the US Navy, for the US Army, and then we do business. And here you come to Germany, and you know, the federal side has hopefully one definition. Then you go into the states, they have their own definition. The data protection officers have their own reading into it. And then how on earth can you scale a business? Yeah. And so then you're ending up in religious decisions. And then when new tariffs are coming, it's getting even more religious. But that is not the stability, the foundation what you need to do business. And especially as a big tech, we can navigate this somehow. And we do a lot of business also elsewhere in the world. But think about our startups and they need speed. Yeah. And that is of course very, very hard to scale a business and gain speed because the same idea for AI has probably also another startup in the US and China. So speed matters.

Yeah, I mean, when I look at SAP, we did our cloud transformation in the last six years and we have 110,000 people and we brought in 40,000 new people into the company. It was also a massive skill transformation. Now the way how we coded software will be also now very different in the next years. There's probably no one anymore in SAP who will code software in a natural way like we did for 50 years. Now I have to talk to my workers' council and said I would love to include these code generation tools. I need vibe coders. I need fast, very fast boot camps on the ground. I need to change the profiles and probably not only in software development. I mean, this is where we have the biggest change right now. But think about our legal department who is checking the contracts. Hopefully an agent. I don't need, you know, all of the traditional lawyers I have inside SAP. And now my US and Chinese competitors, they are moving. They're just deciding that and reskilling their workforce. And that takes time. Also, when you think about, in two weeks I have a full-stack developer on board in the US. Here when I hire a full-stack developer, if I find someone, it takes me six months. And that is a world, I mean, in tech, who is moving so fast. That's why the labor reforms, the social market reforms, they are probably not only needed to make our economy more competitive, but it's also a matter of survival for many of the tech companies or even other industries right now.

Yeah, I mean, there you see where my gray hairs are coming from. I mean, look, it's also in Europe, when I look at SAP, and there's a lot of talk right now, is software dead because with vibe coding you can just rebuild everything what all of these SaaS players are coding.

Yeah, yeah, and I can still sleep at night and I tell you why, because we have also assets. Yeah. And I come also why we also have assets, strong assets in Europe. I mean, when it comes to SAP, when you would tell now Claude or GPT, 'How can I collect cash faster as a company?' they can read a contract very well, so the unstructured side, the LLMs are super strong and getting stronger every day, but what they don't have is any business data, any financial data, is there any escalation data in the system which maybe you know why the customer is not paying and so on. So you need always both. You need the LLMs, but you also need an AI foundation for business data. And then when you have the cash collection agent, the cash collection agent also needs to talk to the sales agent because, hey, there's something going on what I don't know why the customer is not paying. Today human beings are doing that. In the future, these agents need to talk real time and solve this cash collection dispute, and that's why, and that is SAP. Yeah. So we take the best LLMs and then we put our business data and business process on top. We train that. If I wouldn't do that, SAP would have no future. But I have to transform and we know how to do it. And now it's all about speed and execution. And when it comes to Europe, we oftentimes say, 'Oh, we are dependent on the hyperscalers and so on.' I mean, first of all, we have some European infrastructure. The second piece is the game which is not yet played is exactly that. How can we apply AI? How can we build the best agents for the chemical industry, for the retail industry, etc. And this is where we have a lot of expertise in Europe, a lot of data, a lot of understanding how these businesses could run in the future. And this is where, if I would now do a startup, I would build a startup who is really focusing on applying AI in one of the verticals, in one of the key industries where Europe is very strong at, and then go. So that's why, I mean, the situation is not hopeless, but we need to get our acts together.