SAP SE and OpenAI have announced a strategic partnership to launch 'OpenAI for Germany,' focusing on integrating AI into Germany's public sector with an emphasis on sovereignty and data security.

This initiative will expand SAP's Delos Cloud infrastructure in Germany to 4,000 GPUs dedicated to AI workloads, hosted on SAP's subsidiary Delos Cloud using Microsoft Azure technology.

The project supports Germany's national AI strategy and high-tech agenda, aiming for substantial growth in AI-driven economic value by 2030, while aligning with European efforts for digital sovereignty.

SAP's CEO Christian Klein, seeking new growth avenues amid past cloud transition struggles, is betting heavily on AI to drive future expansion, with the partnership representing a significant step forward.

The collaboration aims to enhance operational efficiency and innovation in government services, ensuring data security and regulatory compliance to foster public trust.

The partnership builds on a 16-year relationship and involves implementing hybrid AI architectures that combine cloud and on-premises deployment to meet data residency and sovereignty requirements.

This initiative is among the first large-scale efforts to incorporate AI directly into European government functions within a fully compliant legal framework, potentially setting a regional standard.

The project will utilize strict regulations and technical controls to ensure security, data protection, and transparency, aligning with EU's ethical AI and regulatory frameworks like the EU AI Act of 2024.

Initial solutions will include SAP Business Technology Platform and SAP Cloud ERP, providing secure management of critical processes while supporting Europe's goal of reducing dependency on non-European cloud providers.

The European Sovereign Cloud, scheduled to launch its first AWS region in Brandenburg by the end of 2025, will operate independently from existing AWS regions, emphasizing data residency, resilience, and operational autonomy.

This move is part of broader European efforts to achieve digital sovereignty, with a projected AI spending in the public sector reaching $10 billion by 2026, and aims to position Azure as a key player in government contracts against competitors like AWS and Google Cloud.

Market reactions have been positive, with SAP's shares rising over 2% following the announcement, reflecting investor confidence in its AI and sovereignty strategy, which is seen as critical for Europe’s technological independence.