SAP: Two billion euros for sovereign clouds – with and without Microsoft

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Over the next ten years, the software company SAP plans to invest two billion euros in cloud infrastructure designated as sovereign. The money is to be invested in secure, local and regulatory-compliant cloud offerings that are tailored to the needs of public administration and particularly regulated industries, as SAP explained.

Specifically, the money will flow into the expansion of Delos, an SAP subsidiary that uses cloud software from Microsoft. On the other hand, there is to be another service that is a "completely SAP-based offering with sovereign characteristics without the involvement of hyperscalers", i.e. without the US cloud giant on board. The press release did not specify how the investments would be split between Delos and the new, SAP-owned offering. An answer to an inquiry from the iX editorial team is still pending.

Sovereign and perhaps not so sovereign

SAP's own cloud offering will be provided in German data centers and operated locally by SAP, meaning that all data will remain in Germany. The infrastructure is expected to be ready by the end of the year and will then be gradually expanded until the end of 2025. The offering meets the requirements for information with the classification level VS-NfD (classified information – for official use only).

The Delos Cloud, on the other hand, does not rely solely on domestic software. It is intended to solve the dilemma of German authorities who would like to use Microsoft cloud services but are often unable to do so due to data protection regulations: The SAP subsidiary is building a cloud platform for administration based on Microsoft Azure and Microsoft 365. This model is intended to legally protect data from access by US authorities.

With Azure, but technology-neutral

Microsoft will only supply the software, while SAP subsidiary Delos will own and market the cloud and Arvato Systems will operate the data centers. According to Delos, Microsoft will also provide the authorities with the source code for all updates. The requirements for VS-NfD will also be met here.

Delos is set to get started from 2025. Microsoft Foundational Services will be available in the first half of 2025, followed by Microsoft Mainstream Services and Microsoft Office 365 in the second half of the year. SAP services are to be gradually made available on the cloud platform by 2026. However, Delos should also be technology- and vendor-neutral – Open source software and customers' own developments would also be supported.

Delos fanboy Olaf Scholz

Delos is a tricky business for SAP: the company has to make advance payments, but does not yet have any contracts with the federal and state governments for this administration cloud. According to its plans, the federal government will continue to check until the end of 2026 whether the cloud complies with government requirements, for example in terms of information security and confidentiality. The Federal Office for Information Security (BSI) is also involved in the tests. Authorities can only book cloud services if the result is positive.

In addition, the IT strategies of the federal states and local authorities differ greatly. Schleswig-Holstein and Thuringia rely comparatively heavily on open source. Other federal states, on the other hand, want to procure Microsoft services from the public cloud, at least for the time being and in certain, less sensitive areas – i.e. directly from Microsoft instead of Delos and therefore probably more cheaply.

However, SAP has apparently managed to activate contacts in the highest circles to promote the Delos cloud. According to reports, Chancellor Scholz personally lobbied the federal states for the service following a meeting with SAP. At a conference with the minister-presidents of the federal states, Scholz reportedly appealed to the heads of the states to make a commitment to using the cloud. Scholz said that it was a "very decisive moment for Germany" and that he would "sign a contract immediately". However, the attempt to subsequently pass a resolution in the IT Planning Council to highlight the positive aspects of the SAP-Microsoft cloud was rebuffed by the federal states.

Framework agreement worth 700 million euros

But even if nothing comes of Delos, SAP has a pretty big foot in the door of the German administration. As the Handelsblatt reported, the Ministry of the Interior concluded a new framework agreement with SAP in June. It allows the federal administration bodies to use the software manufacturer's portfolio. According to the report, the maximum value is 700 million euros including VAT, the term is two years with an option for up to four years. In an earlier agreement from 2018 to 2023, the federal administration only purchased around 150 million euros from SAP.

However, the agreement is not about the Delos cloud, the Ministry of the Interior explained to Handelsblatt. There are "no plans" to call up Delos services via the existing framework agreement.

(axk)