SAP’s 2025 AI Pivot: How Strategic Partnerships are Solving the Data Center Cooling Crisis

Industry Adoption: SAP’s Shift from Direct Operations to an Indirect, AI-Focused Cooling Strategy

Between 2021 and 2024, SAP’s approach to data center cooling was driven by a corporate-wide sustainability mandate. The goal was achieving net-zero by 2030, and with cooling accounting for roughly 40% of a data center’s energy use, efficiency was paramount. The strategy was twofold: optimize its own facilities with technologies like adiabatic cooling and closed-water circuits, and migrate customers to “green data centers” via its RISE and GROW with SAP cloud offerings. This era was defined by partnerships with sustainable infrastructure leaders, such as the 2023 collaboration with Moro Hub to host SAP services in the world’s largest solar-powered data center. The focus was on leveraging commercially mature, energy-efficient technologies to reduce the carbon footprint of existing enterprise workloads.

Beginning in 2025, a dramatic inflection point occurred, shifting the driver from sustainability-led efficiency to AI-driven necessity. The explosion of AI workloads, which can increase rack power density from a traditional 5-10 kW to over 100 kW, rendered conventional air cooling insufficient. This pivot was explicitly articulated by SAP CEO Christian Klein, who stated Europe should prioritize the AI software race over building more data centers. This “software-first” doctrine reshaped SAP’s strategy into an asset-light model, outsourcing the immense capital and operational challenge of next-generation cooling. The change is stark: where the 2021-2024 strategy focused on optimizing existing loads in green facilities, the 2025 strategy is about enabling unprecedented computational density through partners. This is validated by the May 2025 partnership with Deutsche Telekom, Ionos, and Schwarz Group to develop a German AI data center—a project entirely dependent on advanced liquid cooling—and the launch of the SAP EU AI Cloud, a product whose very existence relies on the commercial availability of these cooling technologies.

SAP’s Strategic Investments in an AI-Ready Future

SAP’s investment strategy has evolved from direct operational enhancements to large-scale, strategic funding designed to secure the AI-ready infrastructure essential for its future growth. While earlier efforts focused on internal efficiencies like adiabatic cooling, the period from 2024 onward reveals a massive pivot towards enabling partner-led infrastructure development. The projected $180 billion in 2024 data center spending by Big Tech, including SAP’s hyperscaler partners, set the stage by creating a pool of highly optimized infrastructure that SAP could leverage. However, SAP’s own 2025 announcements signal a more direct and intentional financial commitment. The plan to invest over €20 billion in its European sovereign cloud is not just a software initiative; it is a powerful financial signal to infrastructure partners that there is a committed customer for the advanced, liquid-cooled data centers required to host sovereign AI workloads. This indirect investment model allows SAP to drive the market for next-generation cooling without bearing the direct capital expenditure of building the facilities itself.

Table: SAP’s Evolving Investment and Market Demand Signals

SAP’s Key Alliances in Data Center Cooling and AI Infrastructure

Partnerships are the central pillar of SAP’s data center cooling strategy, allowing it to remain asset-light while influencing and leveraging cutting-edge infrastructure. Between 2021 and 2024, collaborations were focused on sustainability and expertise, such as working with Moro Hub for its solar-powered facility and Danfoss, a cooling technology specialist. These partnerships established a foundation of efficient operations. From 2025, the nature of these alliances shifted to be explicitly about enabling high-density AI. The consortium with Deutsche Telekom, Ionos, and Schwarz Group to build a potential AI data center in Germany is the clearest example of this new strategic direction. It moves SAP from being a mere tenant in green data centers to a core stakeholder in developing the next generation of AI-specific infrastructure, where advanced liquid cooling is a prerequisite for viability.

Table: SAP’s Strategic Partnerships in Data Center Infrastructure

Geographic Focus: SAP’s European Sovereign Cloud and Global Green Data Center Strategy

Between 2021 and 2024, SAP’s geographic activity was opportunistic, following the development of premier green data centers globally. Partnerships in the UAE with Moro Hub (solar-powered) and Tabreed (district cooling), along with a 2023 collaboration with SCCC in Saudi Arabia, demonstrated a focus on leveraging new, state-of-the-art facilities in rapidly growing digital economies. This period was characterized by a geographically diverse approach to securing sustainable hosting environments.

From 2025, the geographic focus has sharpened dramatically on Europe, driven by the twin forces of AI and data sovereignty. The planned €20 billion investment in a European sovereign cloud offering and the German-centric AI data center consortium with Deutsche Telekom, Ionos, and Schwarz Group anchor SAP’s strategy firmly in the EU. This regional concentration is a direct response to customer demands for data residency and regulatory compliance. It also signifies that SAP is targeting its influence in a high-cost energy market where the efficiency gains from advanced liquid cooling are not just an environmental benefit but a critical economic advantage. The company is using its market power to catalyze the development of a specialized, sovereign AI infrastructure ecosystem within Europe.

Technology Maturity: How SAP is Leveraging the Shift to Liquid Cooling for AI

In the 2021-2024 period, SAP engaged with commercially mature and scaling technologies aimed at improving energy efficiency. Its use of adiabatic cooling in its own facilities and its partnerships with operators of solar-powered data centers (Moro Hub) and those using early-stage Direct Liquid Cooling (HPE/Danfoss) reflect a strategy of adopting proven “green” technologies. The goal was to optimize the performance of traditional enterprise workloads by incrementally improving the Power Usage Effectiveness (PUE) and carbon footprint of the underlying infrastructure.

The landscape in 2025 shows a decisive shift toward technologies that are moving from niche applications to mainstream requirements. The industry-wide pivot to AI has made liquid cooling—including direct-to-chip and immersion systems—a prerequisite for new data center builds. While SAP is not developing this hardware, its product launches and strategic alliances are predicated on its commercial availability. The SAP EU AI Cloud, launched in November 2025, can only function effectively on infrastructure that can handle 50-100 kW racks. The potential German AI data center would be non-viable without it. Data points showing immersion cooling can cut TCO by 39% for AI facilities underscore the economic inevitability of this transition. For SAP, advanced cooling has evolved from a “nice-to-have” sustainability feature to a “must-have” enabling technology for its core AI business strategy.

Table: SWOT Analysis: SAP’s Evolving Data Center Cooling Strategy

Forward-Looking Insights and Summary

The data from 2025 paints a clear picture of SAP’s forward-looking strategy: it is using its immense market influence as a software leader to orchestrate the development of the physical infrastructure required for the AI era. By focusing on its core software competency and outsourcing the capital-intensive hardware challenges, SAP has adopted a pragmatic and scalable model. However, this creates critical dependencies that market actors must watch closely.

In the year ahead, three signals will be paramount. First, the progress of the potential German AI data center with Deutsche Telekom and Ionos. Securing funding from the EU’s €20 billion fund would not only validate the consortium approach but also establish a blueprint for sovereign AI infrastructure in Europe. Second, the specific data center operators and colocation providers SAP selects to build out its €20 billion sovereign cloud will reveal the non-negotiable technical requirements for power and cooling. Finally, announcements from SAP’s key partners regarding their deployment of at-scale liquid cooling solutions will be the most direct indicator of the technological foundation supporting SAP’s future AI revenue. The success of SAP’s AI ambition is no longer just about code; it is intrinsically tied to the flow of liquid coolant through the data centers of its partners.

Understanding these strategic dependencies and tracking the commercial activities of key players in the data center ecosystem is crucial for any energy executive, investor, or strategist. For a deeper, customized analysis of the companies and technologies shaping this transition, explore a dedicated research platform like Enki.

Frequently Asked Questions

Why did SAP’s data center strategy pivot so dramatically in 2025?
The strategy shifted from being driven by sustainability goals to being driven by AI-driven necessity. The explosion of AI workloads, which can increase server rack power density to over 100 kW, made traditional air cooling insufficient. This technological shift forced SAP to adopt a new strategy focused on securing next-generation infrastructure capable of handling high-density computing.

Is SAP building its own advanced data centers with liquid cooling?
No, SAP is pursuing an ‘asset-light’ model. Instead of taking on the massive capital expenditure of building these facilities, it is outsourcing this challenge. SAP is using strategic partnerships, such as the consortium with Deutsche Telekom, Ionos, and Schwarz Group, to encourage and influence partners to build the AI-ready data centers it needs.

What is the connection between SAP’s €20 billion sovereign cloud investment and data center cooling?
The €20 billion investment is a powerful financial signal to the market. While designated for its European sovereign cloud, it essentially creates a massive, guaranteed customer for the advanced, liquid-cooled data centers required to host high-density sovereign AI workloads. This indirect investment drives partners to build the necessary infrastructure that SAP’s future products will rely on.

How did SAP’s partnerships change between the 2021-2024 and 2025 periods?
Between 2021 and 2024, partnerships (like with Moro Hub) focused on sustainability and leveraging existing ‘green’ technologies for standard enterprise workloads. From 2025, partnerships shifted to be explicitly about enabling high-density AI. The consortium to build a German AI data center shows SAP moving from being a tenant in efficient data centers to a core stakeholder in developing the next generation of AI-specific infrastructure.

What is the primary risk in SAP’s new AI-focused infrastructure strategy?
The primary risk is a high dependency on its partners’ ability to deliver. The performance, availability, and scalability of SAP’s new AI services, like the SAP EU AI Cloud, are directly tied to third-party infrastructure. If partners fail to build and scale advanced liquid cooling facilities quickly enough, it would create a critical bottleneck for SAP’s growth in the AI market.