Dear guests, ladies and gentlemen, welcome once again to our ESMT event series, Today's Global Leaders. It's great to have you all here in presence and online as well. My name is Astrid Froloff. I'm a TV moderator, politics journalist, and an executive coach, and I have the pleasure to lead you today through the event.
Today we will focus on a big global tech company, which is driving and has driven digital transformation forward like very few others. I'm talking about software giant SAP. Many of you might work with SAP eventually. SAP is in the heart of almost every company, essential for day-to-day operations, and it's an interesting story. In very few years, SAP has evolved from traditional ERP solutions to cloud platform and to cutting-edge AI, and today SAP is the largest software company in Europe and the third largest in the world. Means that SAP is regarding Europe and Germany the only German tech company with a global significance. And of course it's a very great pleasure for us and a great honor, I must say, to welcome the person who was steering the developments of SAP in the past years and managed the companies in very rough times. Very warm welcome to Christian Klein, CEO SAP.
So, I'm looking very much forward to our conversation, but first of all I would like to hand over the mic to our host today. We are very glad that we are hosted by ESMT again, and we are lucky that the president of ESMT is joining us today. Jörg Rocholl, warm welcome.
Thank you very much, Astrid. Thank you very much for such a warm welcome. It's great to be here. And thank you in particular, Mr. Klein, for being with us. This is a great honor, a great privilege for us to learn from you. This is a very special series. The Today's Global Leaders series is one in which we bring together real global leaders to learn in a context in which we can really discuss aspects in much more depth than we would normally be able to. And this is also important to understand what are current developments, current challenges, current dynamics as Astrid had already outlined them in what is going to happen. It is also something that we stand for, that ESMT stands for, because leadership is clearly defined in moments of transformation, and transformation is probably the word that is very common to us in very many dimensions at this point of time. Transformation means there are periods of pressure, of disruption, of accelerated change, and it's also clear that leadership grows through dialogue, through intellectual challenge, and through the willingness to take responsibility when the stakes are high. And it's very clear that probably no other challenge or very few other challenges at this point of time are more relevant here than the question of artificial intelligence and how to deal with them. This is why the theme that we have for today, Leading at Full Speed, in my view couldn't be better describing of what is happening and couldn't be better capturing the reality that many executives face at this point of time. So, questions of how to transform a global organization while it is still running at full steam, how to invest decisively in new technologies while delivering results today, so bringing these parts together, how to ensure that AI generates measurable business value rather than remaining a promise or a headline. And clearly these are not simply theoretical questions, but they are really very important. They are real-life questions.
Now, when we look at ESMT, our students from all over the globe, our executives who come to our programs, they are eagerly engaging exactly into these questions because as you know, and many of you studying here or having studied here know this by heart, we would like to develop leaders who think globally and act responsibly, and who also understand that technological disruption, technological change is a source for sustainable competitive advantage. So, therefore, to grasp and to develop this sustainable advantage is a very important part. And this increasingly is built on data, on capabilities, and of course on disciplined execution. Now, as Astrid had said, Christian Klein leads one of Europe's, maybe Europe's most strategically significant technology company at a defining moment. SAP being one of the founding companies of ESMT is really symbolizing one of the great European success stories. You could also say one of the success stories we would like to have many more of in terms of bringing high tech to Europe and the world, being a competitor to many other very well-known global companies, and really in that sense you could say being a real role model for many other companies being built, being and being in a stage of growth. Now, what is important about SAP is it's not just merely adopting AI. It's really embedding AI into the core processes that run global industry. As Astrid had said, global industry relies on SAP. And it's very important that under Christian Klein's leadership, yes, SAP, not ESMT, sorry, SAP has made, sorry for that, has made a deliberate strategic choice not to compete in building foundational methods or foundational models, but to focus on applied AI. So, what it actually means to companies and how it can be applied to companies and into enterprise workflows. And there's a very clear, very clean conviction behind the strategy. AI creates lasting value only when it's connected to trusted enterprise data. So, coming back to what I mentioned about the reliability of data. Now, at the same time, and that's also something that we need to follow, that we need to observe at this point of time, all this transformation is taking place under the scrutiny of capital markets. So, capital markets now really watch, not only for SAP, for many other companies around the globe, what is happening. So, investors expect proof of value, customers expect productivity gains, and employees expect clarity in direction. So, you could say the traditional CEO model that we always think of, so to have the customer perspective, the employee perspective, and the owner perspective, or you could say the capital market perspective, all brings this together. So, in that sense, the right perfect moment of time, the perfect timing to discuss these parts. All of this requires many aspects. Reshaping organizations, developing new skills, forming strong partnerships, and in the end, and this is very important for us as an institution that has the E in our name, contributing to Europe's technological competitiveness in a globally extremely challenging environment. Also one in which geopolitical shifts play a significant role. So, this is why I couldn't think of a better topic for our series. I couldn't think of a better topic for us here at ESMT, the one that we will discuss today, because this is exactly what we would also like to take our students, our executives, our current or future leaders to go away with, to navigate, to be able to navigate complexity, to manage technological disruption responsibly, and in fact to really create competitive advantages by being able to do so. We are thus extremely delighted, extremely honored, Mr. Klein, that you are with us here today. We look very much forward to seeing what it actually means to lead with full speed in such an era as we see today, and really to see how technological disruption can be turned into long-term strengths and long-term competitiveness for the betterment of the companies and the betterment of the economy as well as the betterment of the society in which we live. So, with this I would like to thank as always, and this is very important to me, the Karl Schlecht Stiftung again for supporting us. Likewise, I would like to really express my sincere gratitude to the Initiative Zukunftsfähige Führung for the continued collaboration, for the great support we receive for making such a great enlightening and envisioning discussion series possible. And with this I would like to first again thank very much, Mr. Klein, for being with us here today, and I would like to invite Uta Menges now to speak on behalf of our supporting partners. Thank you very much again. A warm welcome to ESMT. Looking very much forward to a great discussion. Thank you.
Yeah, thank you, Jörg, and good evening to everyone. A very warm welcome to all who are joining us today here and also on site in the live stream and a special welcome to you, Christian Klein. Thanks for being with us today. My name is Uta Menges and I'm very pleased to be here today representing the Initiative Zukunft Führung. The Initiative for Future-Ready Leadership. The IZF understand itself as a dialogue platform for questions like how must leadership evolve so that employees, leaders, companies and the broader economy can flourish together. We believe that answering this question requires multiple perspectives. It requires insights from business and academia, from practitioners and researchers, from people leading global organizations and from those who experiencing leadership in their daily work. That is why we create spaces for exchange, spaces where leadership can be questioned, explored and even challenged. One of these spaces is this event series, Today's Global Leader, which we are proud to organize together with ESMT, a very fruitful collaboration. Thanks for that. Yeah, today's transformation is certainly the context in which leadership is being redefined today. In such times, companies like SAP play a particularly influential role. SAP does not only build software that powers organizations around the world. It also operates at the intersection of technology, global collaboration and organizational transformation. And that intersection is directly connected with questions about leadership. We are looking forward to exploring these kinds of questions tonight. Yeah, before we begin the conversation, allow me to share a brief personal reflection. When I completed my degree in computer science only a few years ago, the landscape of potential employers looked quite different, but in one respect, it was surprisingly similar. At the time, three global companies were competing particularly strongly for graduates from university. Hewlett-Packard, IBM and SAP. I'm sorry, I decided for IBM. For many of us as students, the decision about where to go was not only about the technology or the products these companies were building. What interested us much as much as the was the culture behind those technologies. We asked ourselves questions like, where can young professionals grow? Where do leaders trust their teams? Where is collaboration encouraged instead of competition? And where are new ideas welcomed? In other words, even back then, we were not only evaluating technology companies, we were evaluating leadership cultures. And I believe that is that this remains true today. Especially for younger generations entering the workforce, leadership culture is not a side topic. It is often a decisive factor. Which brings us back to the core idea of the Initiative Zukunft Führung. That leadership is not only about managing complexity or delivering results, it's about creating environments in which people, ideas and organizations can develop their full potential. Yeah, and that is precisely why conversations like this we have today are so important. So, it's a great pleasure for us to have you here today and to hear more about your thoughts of what leadership means today and what it might need to become tomorrow. And before we dive into the conversation, I hand over back to our wonderful moderator, Astrid. Thank you.
Thank you very much, Uta. Thanks a lot. And before we dive into the conversation with Christian Klein and answer hopefully some of your questions, we will take a step back and look at the bigger picture. It's fascinating to see the speed and the intensity of the developments in digitalization and AI and deep tech innovations hitting the markets faster and faster. And to give us a broader perspective on what's really happening, we will hear first of all now from Thorsten Lambertus. He is managing director of Deep Institute for Deep Tech Innovation at ESMT, side lead of the Creative Destruction Lab and a leading expert in digital transformation and innovation strategy. So, welcome, Thorsten Lambertus.
Good evening, everyone. Welcome, Christian Klein. I'm great to be here. Welcome to I'm looking at things from an entrepreneurial perspective. And when we look at SAP from an entrepreneurial perspective, the only thing that can be stated that is absolute success story. Founded in 1972, scaled globally, grew the company, entrepreneurial transformation and now the market cap of 225 billion. That's significant. So, of course, I cannot end my speech with such a good news. There's also bad news. To some extent, I need to ruin the party here. Why do I need to do that? If you look at capital markets and how they look at what is the future value and who's creating that. If we compare ourselves to the United States, roughly 50% of the S&P market capitalization was created by companies founded after 1970. So, roughly at the time when SAP was founded. And in Germany, this is maybe close to 15%. So, the big other companies that we know like BASF, Siemens, Allianz, Deutsche Bank, you name it. They were more or less founded that is easy to remember. There's two big German not German Munich football clubs. The one was founded in 1860. That is clear what I'm talking about. And the other, Bayern Munich in 1900. And so, not only was that a couple of decades where great football clubs were created, but also all those big companies. The question is, and Jörg Rocholl already alluded to that, where are the future innovators, the future SAPs are coming from because we need 10 times more of those. And of course, if we look at the city of Berlin, we have seen great examples. Like Zalando, Delivery Hero, HelloFresh, Auto1 Group, Trade Republic. They are all great examples for successful startups, but not at that global scale that is actually needed. Platform economies not led by us, cloud infrastructure not really dominated by us, major consumer technology companies also not dominated by us. We see that in the US and in China. Let me give you some numbers just to see where still the gap is in AI. First of all, in 2023, nearly 70% of the global hyperscale data center capacity was located in either the US or in China. And we are competing here for the remaining 30%. That being said, in 2024, 40 notable AI models were developed in the US, 15 in China, maybe three in Europe. And so, across the EU today, only 13.5 of the companies actually apply AI. So, that is the gap in ambition, in capital and in the ability to scale that we need to close. That is one of the core reasons why in 2022 we created Deep, the Institute for Deep Tech Innovation, to make sure that the latest technology technological developments are translated into business and that we prepare those companies to scale internationally. We do that across various verticals, health care, natural capital, cyber, defense, agri-food and of course also in compute and AI. We enable researchers to create the companies. We make sure we mentor through the Creative Destruction Lab some of the best startups that are emerging also in AI and then we make sure we hope hopefully that they can scale and collaborate with partners like SAP. We are playing offense. We want to spark that ambition and build more of those category leaders. Looking at AI from a technology perspective, it is that general purpose technology. It is as foundational as electricity or the internet. So, why is that the case? There's three criteria for being a general purpose technology. The first one, it's applicable across various sectors. I think we can talk about health care, drug design, autonomous grid, precision farming, autonomous freight. You name the industry, we could all come up with great examples of where AI will play a role. Second, it improves continuously over time. If you look specifically at AI technologies, there are some really interesting recent results. So, AI system systems were measured completing tasks that take humans an average of 14.5 hours. And every 7 months, this number is doubling. So, even more complex tasks are today already solved by AI, and even more complex tasks will be solved by AI in the future. The third point is general-purpose technology also sparked other innovations to emerge. It's not only a software play, it's not only the AI algorithm, it's the compute power powering that whole system. It's the efficiency on the energy level. Why is it so so expensive today to train those AI model? Because of the energy intensity of that business. And then we're looking even at material science that might be able to enable more energy-efficient compute. So, it's that full stack of technologies that is complementary to AI that we need to look at. So, this means we need to also innovate the full stack and look at all those different technologies. And we do that at Deep, and we do that also through our Creative Destruction Lab, one of the global leaders in startup mentoring. Just to give you again a very recent number of our applicants for that program every year, 16 sites are across the globe, we see that 1,421 startups out of 2,322. This is 61%. have an AI or ML that they're using machine learning for their application. And again, we're looking across all sectors, that it's just that we're not talking LLMs here or very specifically only AI. This is impacting all different sectors. Just to give you some examples of innovators that came through the program. Ada Health, I think this is well known here in healthcare, the AI symptom checker. Deep Genomics, a biotech startup using AI to decode RNA. Bluejay, which just raised $160 million for AI-powered text research. 100 million for Federato, an AI underwriting platform. Geologic AI, 44 million for critical minerals discovery. Noa Labs, one of the healthcare applications here from Berlin. So, you see those young emerging companies, but you also see companies that were started in 2014-15, and that are now scaling even further, and we need to produce more of those. We also looking at the compute stack in photonics, in neuromorphic computing, quantum computing, Xanadu, one of the key examples that also ran through our flagship program. Superconducting quantum systems, DNA-based storage systems. So, how do we also reduce the energy that it takes to store data, to move data? So, that is all the innovations that we at ESMT here have a look at. The real opportunity for Europe, that is 80% of the world industrial data is locked behind corporate firewalls. And we want to look at manufacturing, and we want to look at how can we unlock that data to create value here in Europe. 3.5 million companies are generating 60% of the exports, that is the German Mittelstand, but only 15% of them are actually making real use of AI. And that needs to change. So, industrial AI, that requires domain expertise, proprietary data, and there lies the competitive advantage. Let me close with SAP was not only a success in creating that company, but again, in scaling it globally. So, it takes this courage also today for more leaders building startups, scaling startups, investing into those innovators, also together with corporates, to build more of those success stories. That being said, I'm really curious to see what it takes to lead that kind of transformation, and I'm looking forward to hearing your insights, Christian Klein. Thank you for the attention. Thanks, everybody.
Well, thank you very much indeed for setting the stage so perfectly, Thomas Ramge. And I'm happy to ask now our special guest to come on stage. I won't waste more time. Give a warm welcome to Christian Klein.
Okay. So, Christian, it's the hot seat. This is Yeah, it is, but it's comfortable, actually, isn't it? Very comfy. You just flew in from the United States. You have been to China before, and we are very glad that you made it straight to the ESMT, joining us today. Thank you very much for this. What impression brought you back looking at the really amazing speed and the developments did in which digitalization is taking place over there?
Yeah, I mean, obviously as So, first of all, welcome. Thanks for having me this evening. Yeah, I mean, as a CEO, you travel from time to time, and despite, you know, having two young kids at home who don't like it always, it's important that you travel the world. Why? Because, for example, now in the Valley, I mean, we have our Palo Alto, our lab there, and we are coding our AI foundation, where we are doing a lot of work with Anthropic, say OpenAI. And obviously, it's for me also as a CEO very important on where is Anthropic going. They just also launched a new enterprise AI platform. Yesterday, Nvidia Jensen announced with NeMo Cloud also a new enterprise AI platform. And obviously, it's super super important for SAP to also understand how we can connect to that. I mean, there are hundreds of millions of people already building agents with Anthropic. And so, what does this mean for SAP? Yeah, because, yes, the share price, the market valuation was 220, it was once 300 billion. We are in a little bit in a penalty box, you know, because no one knows where is the software industry going, and that's why, you know, going to China, going to the US, it's very very important for me to understand the big picture, where where is the industry going, and and to always also challenge a little bit our strategy and to see where does SAP need to go next.
I want to go deeper into this discussion and also talk about the role of Europe, of course, and digital sovereignty, but let's first talk about SAP itself, your company. I read a number which I could hardly believe, about 80% of the world's B2B businesses are touching SAP systems. Is that correct?
That is correct, yeah. That is correct, it's massive, yeah. But you when you see, I mean, that is, you know, sometimes to do a little bit promo here for SAP, you know, sometimes you hear in the press, 'Ah, it's this complex software.' And, you know, there's this sometimes also pretty old school what customers still using. Yeah, but you can see it also the other way around. When you are traveling the world and you see an Exxon downstream, upstream running their whole business, transforming their business with SAP going into the next generation software for renewables. You go to Samsung, the semiconductor, the electronics business. We run the whole commerce side for Samsung. You see the scale of SAP, and I feel, you know, as much as I love my hyperscaler partners, I mean, but, you know, infrastructure, I mean, come on. But, you know, software now attending AI in the future wants the world, and that is what always fascinated me coming out of university. I was never a coder, but I fell in love with business models. I fell in love with, you know, understanding better how industries are running and connect this to tech. And that is what SAP is about. That is the fascination. And is it not fascinating to sit together with the H&M CEO, with Daniel, and talk about where is retail in 3 years from now, and connect this to create AI? And, you know, that is what SAP is about, and this is also where my passion is coming from, yeah.
Some managers claim nothing gets done without SAP. Other managers are joking that with SAP, everything takes twice as long. What is true?
Actually, to be very honest, sometimes both is true. I mean, look, our software runs the most complex businesses in the world. I mean, here for the German army, we are running very very complex scenarios. There was also press about it. I mean, really connected, you know, disconnected ERP ownership somewhere in the ocean in war times, and how do you can still operate, you know, your ship, your logistics, etc. And that is SAP. And is this a complex software? Yes, and we were born 50 years or 50 years ago, and customers built a lot around it. So, you know, this is a complex business, and then you customize it. And on premise, there was no other chance than to customize it. So, sometimes, you know, it's very cumbersome for our customers to move to the new world. And they always remind me, Christian, I like the pace what you are, you know, putting in place for SAP, but also take care of us. We need to come with you. And changing and moving from an ERP on prem heavily customized, doing a lot of change management on the business side, because you need to connect the business always to it, is much harder than, you know, switching a mobile phone. You can do this in 1 hour. And that is, of course, also in all fairness to SAP. That is why sometimes these moves to the cloud and now with AI it's another big transformation for our customers that takes time. But, you know, it's so rewarding when you are there because then you see the new SAP. Of course, some customers are still, you know, seeing the SAP from 20 years ago and it's like when you are using a mobile phone 20 years ago, it also looks different than, you know, your latest mobile phone. Now, for SAP it's then not that easy always to immediately press a button and all the customers are immediately on the latest release of the software.
So, how did you manage to transform? I mean, this is the $1 million question. You're saying it's not just a technical shift. It's also a if I understand you correctly, a shift of mind. It's a cultural shift. It's a different leadership, actually.
Because yes, there are examples of customers who developed with a third-party platform, not with SAP agents, who suddenly shared confidential financial data or payroll data with anyone in the company. You don't want to have that. And so, you see how important it is, almost how you govern end users, human beings in the future, because the B2B world needs to be governed. Now you need to also have a strict governance and security layer for that. And then obviously, when you reach a level of sophistication of always running finance in an autonomous way, then the question is, okay, who is then making ultimately the decision? And this is something where we clearly say at the end there is still a human being, because I don't want to be in the press for messing up a financial close with our agents without having anyone anymore, a chief accountant of one of our customers still looking at the numbers. So, I say, hey, you are still accountable. You can use those agents for closing your books much faster, much smarter, more efficient, better transparency, but at the end there is still a human being who needs to make the decisions and who needs to sign off the results of the agents and what they are actually producing real-time in the system.
Well, that sounds like far, far away in the future, but I mean you're already doing it. So, how do you see the speed of all these digital developments? It's accelerating more and more, right?
Yeah, I mean, to be really honest, the truth is that software development is already changing. In our coders, we have 50,000 people in development. When they are not using Claude, when they are not using ChatGPT, GitHub, or our own tool for developers, something is wrong. That is clear. But again, why is software development so much in focus? Because the LLMs are super smart in understanding the code, unstructured content. This is where they are super well trained on. Now, the other world is then when the business data comes into play, and this is where SAP needs to be faster, where we need to be innovative, because now we are building knowledge graphs. We built Joule, one that is actually a prediction module where you can push a lot of data in, and we have a patent on that, and you need almost no data scientist anymore to run a prediction for replenishment, for demand and supply chain forecasting. This is where SAP needs to win. And then you need to bring together those two worlds, the LLM and then on top our AI foundation, and that will take some time, because now when you have the agents, you still need to bring them into production. And now go to one of our customers. I mean, have fun. There are sometimes 100 ERPs. You don't even know where to start with, different identity services, different data modules everywhere. So, that you can just plug in and play is not the reality. So, you still need to work then with the customer on the adoption of these agents, because again the business world, and especially the one of SAP and the businesses we are running, these are sometimes very, very complex businesses.
I would like to continue talking about Europe, but in the meantime I also want to let you know that after our conversation you are invited to put questions as well. We're going to have a Q&A and also the online audience is invited to send us your questions. I've got a notebook here, so I'll feed your questions in. We've talked about it. Germany and Europe have fallen behind the United States and China dramatically, one must say. How should we cope with this situation?
Yeah, I mean, I want to start first with business before I come to the public sector and the government and the European Union. First, we are still very strong in many industries, but if leaders of those companies are not taking now risk to transform and not changing their business model and not really using now this new technology to transform, this will hit us even more. So, you see what is happening in the automotive industry, you see what is happening. We are not competitive on labor cost, we are not competitive on energy. So, we need to be way smarter in how we apply AI to still manufacture and run our business in a very productive way. That is the first part, and that really has to do something with business leaders taking the risk, being bold, driving the transformation, and don't care so much about the share price first hand. The share price will anyway go anywhere when you are not transforming, but of course share price is important, but then you should really look at it from a mid and long-term perspective, because as a CEO I need to make sure that SAP is performing mid and long-term, and I cannot just maximize profit for the short term, but then have no future business model. The second part is of course Europe. Yes, our founders also decided to start with IBM, and they had a good job, Hasso, Dietmar, and others, but then they said, hey, we actually believe we have a piece of hardware, piece of technology where we believe we can do something great with to solve a business challenge, because Hasso especially told me, Christian, there was so much repetitive task and doing this every day, I felt we need to do something about that. And so, they have given up a very good well-paid job and said, no, I take the risk. I go into the personal risk of founding a company called SAP. It was hard to find a bank, so it was the Volksbank, a local bank who gave some money, but it was really not easy and there were a few times where they almost came to declare bankruptcy because they were running out of money, because again they needed continuous investment to cope with the technology advancements in the industry. And then last but not least obviously, what you then need is you need to scale your business globally. And now think about Europe. Now you have great startups here. I'm going to meet later on Malte from Palantir. We have NN. You have great startups, but honestly, I really admire those leaders because they take a lot of personal risk and they are actually competing at a global scale against other startups in the US, in China in a very regulated market here in Europe. And speed is everything. So, what we need is of course also a framework where we can really reach much more speed, because on the one hand side you need people like that who take the risk, who have great ideas, who are innovators. But then you also need the framework. And there the regulation, the bureaucracy, how long it takes to get people on board. I mean, that all requires time what you don't have to be the fastest with your idea and the startup what you're having. And then last but not least, obviously, what is also very important, it's when you're going to China and the US. I mean, I talk about that and I know sometimes in Germany it's not the most popular topic. But performance matters. And especially a young startup, when you have 100 people and some people just don't perform and you don't have the luxury of so much financial power. You need to have also better some reforms on the labor market and the regulations there, because you need the best of the best people. And so, you need to hire them, but you also need to performance manage them if people don't perform, because otherwise you're falling behind. It's really about speed and actually in the tech industry especially the quality of the people what you're having. And this is of course where we need improvements in Europe. And last but not least, I would say in Europe we call Europe a union, but it's by far not a union. I mean, it's crazy. Even here in Germany when you are selling to a public sector customer here in Berlin, the data protection officer has a completely different thought than the one in Baden-Württemberg in Bavaria. And now think about that when you are a young startup and you need to show the top line and you need to show your investors how fast you are growing the business. And then you're sitting in the sales cycle and everyone has a different read on the AI Act, on the data act, on the Datenschutzgrundverordnung and what you have. And no one knows the one truth to it. And that is of course what drives crazy because I feel with these startups. SAP can still invest and somehow make sure that we are coping with all of these regulations. But the young startups, they really would love, they need a stronger union at the end of the day.
Digital sovereignty, very important topic also for SAP. You wrote in an article the assumption that owning physical infrastructure is the key to independence is wrong. So, why is that? Can you explain this?
I mean, it's sometimes also here. I find it really remarkable that we are having also in the press and the media endless discussion about sovereignty in the US. I mean, we are a European tech company. We are running big parts of the US government. And the regulation for sovereignty is solved. I mean, everyone needs to adhere to FedRAMP. We need security clear personnel. We have a lonely and own legal entity in the US. But then we can do our business. And here you find hundreds of different perspectives on sovereignty. And then you sometimes don't even know which data center is now needed, which people you need to put on the ground. And what we will never reach, when you look across the technology stack, there will be always a piece of hardware from the US, sometimes from China, but predominantly from the US. But that's not the end of the world. I mean, a piece of hardware doesn't mean we are lacking sovereignty. And I always say what is very important, especially for the regulated industries, for the public sector where you need to have higher standards of sovereignty, there it's of course very important that your data, that you understand where your data is located, that you understand who is touching your data, talking about the US Cloud Act, and that you of course are safe when there are geopolitical tensions hitting, that you still can run your business. And that has nothing to do with now a piece of software or hardware coming from the US, from China, because some pieces, some hardware we just don't have in Europe. And that is something where we should just come to one regulation across Europe. That would be actually preferred. I mean, we are building here with T-Systems the most complex sovereign cloud everywhere in the world. And still I have debates also in the press because yes, Microsoft is putting some hardware in there. Okay. And some people still want to run Microsoft Teams and not open source who works every third day. Also fair. Now is this a big problem for Germany? I don't know if this is the biggest problem in Germany. But what is very important is that the German government and the German army knows that SAP is in full control of running the system and that whatever happens in the world, we are still here and we can run the whole stack. So, but instead we are talking about oh, there is a piece of Microsoft in it. I mean, Satya, he also invests here and again we found a module with highly, highly complex. We even decoupled it from the global network so that actually there's no data going out to somewhere in the world. And now you have the same in France. President Macron also wants their own sovereignty. I mean, bad news, he wants somehow slightly different and now you're investing again. But what about having one sovereignty standard for Europe and then you build one in Berlin, one in Paris and one in Brussels and all 27 member states adhere to that. I can tell you many startups here in Europe would love that because they are again coping with that. We can invest into this craziness, but they really can't. And that's why also one standard would be so, so important.
Let me put one last question before we open the Q&A. So, prepare your questions if you would like to. You mentioned the defense sector. SAP is as you said engaged with the German armed forces. I think 85,000 users you have at SAP. The US military recently signed a $1 billion deal with SAP. So, what exactly are you planning in this field which is of course interesting for the industry?
Yeah, defense is one of course of key industries. I mean, we run 25 different industries, but yes, take US Army. They are running the supply chain and predictive asset management on how to having their assets more up and running versus being in maintenance. That is key. And now with AI you can infuse a lot more intelligence into asset management. And this is of course for defense, for navies in the world, for armies in the world, it's very important. SAP is not active on the war field. This is not our business. We are staying out of that. But that is of course very important. But we do similar things for all companies in the world. When you are looking at a Rio Tinto or when you are looking at all kinds of even sometimes in the chemical industries, asset management is for them key. Up time of the assets of the factory is sheer money for them. And this is where SAP is very strong, where we are investing. And this is of course high value. And this is of course where SAP, yes, indeed, we are doing a lot of business there.
So, please raise your hand if you have questions. We pass the microphone. Was in the second row a hand and then you. Please introduce yourself briefly.
Hello. Good evening. My name is Puneet. I'm a student over here at the full-time MBA. One question that goes on in my mind a lot is about the workforce of the future and you addressed that briefly by talking about the developers and how they're adopting AI in their day-to-day tasks. But broadly diffusing that across the workforce and convincing stakeholders even in marketing and sales and HR etc. to start using those tools while also addressing their fear of replacement that oh, if I train AI to do my job, what will that mean for my job? What are your thoughts on this conundrum and how are you addressing that within your organization?
