SAP CEO: Europe Needs to Focus on AI Race over Data Centres
AI technology's rapid advancement is reshaping operational landscapes across industries, raising the stakes for digital innovation.
Central to these changes are highly complex and expansive data centres designed to cater to the evolving demands of AI.
These facilities are facing rising energy consumption, enhanced cooling needs and environmental concerns linked to their locations.
McKinsey predicts a soaring increase in the power demand for European data centres, projected to climb to 35GW from 10GW by 2030, necessitating investment between US$250bn and US$300bn in data infrastructure alone, excluding energy generation capabilities.
Contrary to this growth prospect, Christian Klein, CEO of SAP, suggests Europe direct its focus on excelling in the AI software sector instead of augmenting its data centre footprint.
Europe has to pick its battles
“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,” Christian 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,” he adds.
“Now, finally, we can actually develop new innovation on the AI software layer – this is what matters most for Europe.”
This viewpoint contrasts with Nvidia CEO Jensen Huang, who recently emphasised the necessity of infrastructure development within Europe to participate effectively in the global AI competition.
Christian argues that the demand for chips and infrastructure will naturally arise when AI software applications increase.
But, he argues: “There is not the same demand for these chips in Europe, like in the United States, 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 believes European firms should concentrate on building infrastructure as needed rather than pre-emptively establishing data centres.
European companies should only build new infrastructure when the need justifies it, rather than "just building data centres for the sake of building data centres".
European solutions for European problems
The debate over AI advancement and its related infrastructure needs further intertwines with regulatory considerations, as AI capabilities expand rapidly.
Christian however calls for a more opportunity-focused regulatory discourse in Europe. He suggests starting with how AI technologies can boost industry competitiveness, postponing regulatory frameworks until after establishing leadership in these domains.
“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.
“The problem here in Europe is regulators have all the right strategic intent, but then they are putting these rules in place and member states keep the measures they already have – adding another layer.”
Despite acknowledging the need for regulation, Klein criticizes the complexity and inconsistency of current European policies that stifle growth.
“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.
“Europe needs one framework and not 20 different policies with 100 different interpretations of them. Scaling is not going to happen in that environment.”
