SAP SE Chief Executive Officer Christian Klein said this week that the defense sector has become the fastest-growing business line for the software company as governments around the world increase military spending.
In an interview, Klein described heightened demand for improved software and artificial intelligence to help defense organizations expand and modernize their operations. He confirmed that roughly 10% of SAP's revenue comes from defense-related work.
Klein linked the uptick in interest to a string of major conflicts that have driven nations to raise defense budgets. He said the war in Iran is the latest in a series of events that have accelerated military spending, following earlier increases in European defense budgets after Russia's invasion of Ukraine in 2022. With hundreds of billions of dollars moving into the sector to bolster weapons stocks and readiness, militaries have been looking for projects to update their software and associated systems, Klein said.
As an example of SAP's work in the sector, Klein described the company's migration of systems used by the German armed forces to newer SAP programs intended to run logistics, personnel management and administrative functions. He acknowledged parts of that project were delayed when software errors emerged but said the company addressed the issues and demonstrated the ability to manage complex military plans.
"We had a problem. I’m the first one to admit that," Klein said, describing the technical difficulties that arose.
Those issues included instances when systems became disconnected and then needed to upload recorded data once they were back online - a capability Klein noted is critical for naval warships that can be offline for several days.
He also highlighted the complexity of working across multiple jurisdictions. "Worldwide, there are different regulations, different data privacy requirements. It’s really a complex business, what we are solving," Klein said, adding that navigating those differences is a competitive advantage for SAP.
The comments from Klein underscore the intersection of rising defense expenditures and demand for enterprise-grade software and AI tools to manage logistics, personnel and administration in military organizations. SAP's confirmed revenue share from defense and the company's active projects with the German armed forces illustrate the scale and operational depth of its work in the sector.
Summary
SAP's CEO says the company’s defense business is its fastest-growing line as global military spending rises. The firm gets about 10% of revenue from defense and is migrating German armed forces systems to modern SAP programs. The migration faced software-related delays that SAP has addressed, and the company cites regulatory and privacy complexity as part of the work's challenge and competitive edge.