SAP CEO: Europe Must Win AI Software Race Over Data Centres
A change is needed as data centre strategy approaches AI demands.
The increasing energy consumption, cooling needs and environmental considerations necessitate a thoughtful strategy for developing modern data centres.
McKinsey & Company anticipates the demand for data centres in Europe to grow from 10 gigawatts (GW) today to around 35 GW by 2030.
This burgeoning demand requires more than US$250-300bn in data centre infrastructure investments, excluding power generation capacity.
However, Christian Klein, CEO of SAP, argues that Europe's focus should be on AI software innovation rather than constructing additional data centres.
Focus on AI software innovation
At SAP's headquarters in Walldorf, Germany, Christian emphasises the importance of AI software leadership over infrastructure expansion.
“On hardware and infrastructure, I would not now try to compete with companies who do a pretty good job, predominantly in the US and China,” he says.
“Where the race is not decided is who now develops the best AI use cases for our life science industry here in Europe, our logistics or our manufacturing.
“Now, finally, we can actually develop new innovation on the AI software layer – this is what matters most for Europe.”
Christian’s stance on the limited demand for data centre expansion contrasts with NVIDIA CEO Jensen Huang’s call for increased European infrastructure, emphasising the need for more data centres and chips to remain competitive in the AI sector.
When compared with the Nvidia CEO’s viewpoint, Christian notes that the necessity for chips and data centres rises only with demand.
“There is not the same demand for these chips in Europe, like in the US, where you have a lot of companies who need them for training large language models, etc.
“Of course, when you now apply AI, develop software, build new use cases – there will be, at a certain point, also a higher demand for chips and for data centres.”
Christian advises that European businesses should build new infrastructure only when needs merit, rather than investing at whim.
Strategic regulation for AI growth
The dialogue about AI and data centre expansion also includes essential regulatory considerations.
Christian advocates for concentrating on competitiveness and opportunity before diving into regulation.
“Can we maybe first talk about competitiveness and opportunities and how we use AI to make our industries more competitive and when we are leading there, then ask the question of how to regulate it?
“I’m not against regulation – as long as we’re regulating business outcomes and ensuring there is fair competition.”
He points out that overly complex regulations can stifle innovation.
“Imagine you are a startup and you want to scale your technology and in every country you are going to in Europe, you hear a different story and how to adhere to any kind of AI act.”
Unified regulatory frameworks essential for growth
According to Christian, the multitude of regulations across European countries creates a daunting environment for startups aiming to scale their technologies.
“Europe needs one framework and not 20 different policies with 100 different interpretations of them. Scaling is not going to happen in that environment.”
Christian’s perspective shows the need for a cohesive, efficient approach to foster AI innovation in Europe, suggesting that the priority should remain on software advancement rather than infrastructure expansion.
