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SAP has significantly expanded its strategy for digital sovereignty and AI innovation, unveiling a broadened Sovereign Cloud portfolio that is designed to give enterprises, governments, and regulated industries new ways to balance compliance, innovation, and operational control. The company is positioning the expansion as both a European priority and a global initiative, reflecting growing demand for secure and sovereign cloud environments. The updated portfolio introduces additional deployment options, including SAP Cloud Infrastructure, SAP Sovereign Cloud On-Site, and country-specific services such as Delos Cloud in Germany. Each of these SAP offerings is intended to provide customers with full-stack sovereignty - spanning data, operational, technical, and legal dimensions - while still enabling access to SAP’s broader innovation ecosystem, from the Business Technology Platform to embedded AI capabilities. Customers are able to choose how and where their cloud is deployed, tailoring solutions to specific regulatory environments and security profiles without sacrificing scalability or speed. SAP Cloud Infrastructure represents the foundation of the model within the EU, developed with open-source technologies and operated within SAP’s European data centers to ensure compliance with regional data protection laws. Delos Cloud, meanwhile, supports sovereign cloud requirements in the German public sector. The centerpiece of the expansion is SAP Sovereign Cloud On-Site, a globally available option that allows SAP to manage and operate its cloud infrastructure directly inside a customer’s own facility or a chosen data center. This model gives organizations the highest degree of physical control and data residency while maintaining full compatibility with SAP’s architecture and innovation roadmap. Thomas Saueressig, Member of the Executive Board of SAP SE for Customer Services & Delivery, described the expansion as critical to Europe’s future role in AI and digital transformation, stressing that sovereignty must underpin the region’s ability to apply AI to specialized industry use cases. Martin Merz, President of SAP Sovereign Cloud, characterized sovereignty as the key to Europe’s digital resilience, noting that scalable and future-ready frameworks are increasingly essential as organizations modernize. Deloitte Partner Stephen Glynn added that sovereign cloud solutions are rapidly shifting from optional to essential, particularly in public-sector and regulated industries. Deployment Models SAP emphasizes that the Sovereign Cloud initiative is not tied to a single deployment model but instead designed as a spectrum of options, ranging from SAP-hosted services to customer-owned sites and even hyperscaler-based models where appropriate. This flexible framework reflects customer demand for greater control over sensitive data and infrastructure, particularly as regulatory scrutiny intensifies and digital transformation accelerates. The company has outlined four core capabilities at the center of its sovereign cloud approach: data sovereignty, which ensures customer ownership and regulatory compliance; operational sovereignty, which provides transparency and oversight through SAP-managed environments; technical sovereignty, which gives customers the freedom to run workloads on the infrastructure that best fits their requirements; and legal sovereignty, which ensures alignment with regional legal frameworks and accountability standards. In practical terms, these capabilities allow organizations to run critical workloads such as the SAP Business Suite in sovereign environments, while still benefitting from continuous innovation cycles. This includes integration with SAP Business Technology Platform and SAP Business AI, ensuring that sovereignty does not come at the expense of speed or depth of innovation. By anchoring sovereignty into the core of its cloud strategy, SAP aims to provide the compliance assurance that regulated industries require while also supporting the rapid deployment of next-generation AI applications. SAP has pledged more than €20 billion in long-term investment to strengthen Europe’s digital autonomy, underscoring the company’s determination to support regional resilience with secure, regulation-compliant solutions. The expansion of the Sovereign Cloud portfolio is already being rolled out across multiple countries, supported by hundreds of localized delivery experts and a wide array of certifications to meet regional standards. The global availability of the On-Site model signals that SAP is extending these sovereignty principles beyond Europe, aiming to serve international markets where regulatory and operational needs also demand localized control. For SAP, the expansion reflects a broader shift in how cloud services are delivered and consumed. Customers increasingly expect not only technological innovation but also assurance that their sovereignty requirements can be met without compromise. By embedding sovereignty into infrastructure, operations, and legal frameworks, SAP is offering customers both flexibility and assurance in an era defined by AI-driven transformation, regulatory complexity, and the pressing need for digital resilience.

SAP has significantly expanded its strategy for digital sovereignty and AI innovation, unveiling a broadened Sovereign Cloud portfolio that is designed to give enterprises, governments, and regulated industries new ways to balance compliance, innovation, and operational control. The company is positioning the expansion as both a European priority and a global initiative, reflecting growing demand for secure and sovereign cloud environments. The updated portfolio introduces additional deployment options, including SAP Cloud Infrastructure, SAP Sovereign Cloud On-Site, and country-specific services such as Delos Cloud in Germany. Each of these SAP offerings is intended to provide customers with full-stack sovereignty - spanning data, operational, technical, and legal dimensions - while still enabling access to SAP’s broader innovation ecosystem, from the Business Technology Platform to embedded AI capabilities. Customers are able to choose how and where their cloud is deployed, tailoring solutions to specific regulatory environments and security profiles without sacrificing scalability or speed. SAP Cloud Infrastructure represents the foundation of the model within the EU, developed with open-source technologies and operated within SAP’s European data centers to ensure compliance with regional data protection laws. Delos Cloud, meanwhile, supports sovereign cloud requirements in the German public sector. The centerpiece of the expansion is SAP Sovereign Cloud On-Site, a globally available option that allows SAP to manage and operate its cloud infrastructure directly inside a customer’s own facility or a chosen data center. This model gives organizations the highest degree of physical control and data residency while maintaining full compatibility with SAP’s architecture and innovation roadmap. Thomas Saueressig, Member of the Executive Board of SAP SE for Customer Services & Delivery, described the expansion as critical to Europe’s future role in AI and digital transformation, stressing that sovereignty must underpin the region’s ability to apply AI to specialized industry use cases. Martin Merz, President of SAP Sovereign Cloud, characterized sovereignty as the key to Europe’s digital resilience, noting that scalable and future-ready frameworks are increasingly essential as organizations modernize. Deloitte Partner Stephen Glynn added that sovereign cloud solutions are rapidly shifting from optional to essential, particularly in public-sector and regulated industries. Deployment Models SAP emphasizes that the Sovereign Cloud initiative is not tied to a single deployment model but instead designed as a spectrum of options, ranging from SAP-hosted services to customer-owned sites and even hyperscaler-based models where appropriate. This flexible framework reflects customer demand for greater control over sensitive data and infrastructure, particularly as regulatory scrutiny intensifies and digital transformation accelerates. The company has outlined four core capabilities at the center of its sovereign cloud approach: data sovereignty, which ensures customer ownership and regulatory compliance; operational sovereignty, which provides transparency and oversight through SAP-managed environments; technical sovereignty, which gives customers the freedom to run workloads on the infrastructure that best fits their requirements; and legal sovereignty, which ensures alignment with regional legal frameworks and accountability standards. In practical terms, these capabilities allow organizations to run critical workloads such as the SAP Business Suite in sovereign environments, while still benefitting from continuous innovation cycles. This includes integration with SAP Business Technology Platform and SAP Business AI, ensuring that sovereignty does not come at the expense of speed or depth of innovation. By anchoring sovereignty into the core of its cloud strategy, SAP aims to provide the compliance assurance that regulated industries require while also supporting the rapid deployment of next-generation AI applications. SAP has pledged more than €20 billion in long-term investment to strengthen Europe’s digital autonomy, underscoring the company’s determination to support regional resilience with secure, regulation-compliant solutions. The expansion of the Sovereign Cloud portfolio is already being rolled out across multiple countries, supported by hundreds of localized delivery experts and a wide array of certifications to meet regional standards. The global availability of the On-Site model signals that SAP is extending these sovereignty principles beyond Europe, aiming to serve international markets where regulatory and operational needs also demand localized control. For SAP, the expansion reflects a broader shift in how cloud services are delivered and consumed. Customers increasingly expect not only technological innovation but also assurance that their sovereignty requirements can be met without compromise. By embedding sovereignty into infrastructure, operations, and legal frameworks, SAP is offering customers both flexibility and assurance in an era defined by AI-driven transformation, regulatory complexity, and the pressing need for digital resilience.

The platform gives users access to a single, strong architecture that makes use of the greatest AI-enabled solutions available, enabling businesses to manage contemporary hybrid and multicloud systems more effectively, expedite digital transformatio...

The platform gives users access to a single, strong architecture that makes use of the greatest AI-enabled solutions available, enabling businesses to manage contemporary hybrid and multicloud systems more effectively, expedite digital transformatio...

The global managed services market is poised for rapid and sustained growth, with projections from Credence Research indicating a compound annual growth rate (CAGR) of 14.5% from 2024 to 2032. The market is expected to grow from USD 335.3 billion in 2024 to over USD 990 billion by the end of the forecast period, as organizations increasingly seek third-party expertise to manage complex IT operations, optimize costs, and strengthen cybersecurity defenses. According to Credence Research, several converging trends are fueling this expansion. The growing intricacy of IT infrastructures - driven by technologies such as artificial intelligence (AI), cloud computing, machine learning (ML), and the Internet of Things (IoT) - has outpaced the capacity of many in-house IT teams. As a result, businesses are turning to managed service providers (MSPs) to help maintain performance, ensure seamless integration, and enable scalability across multi-cloud and hybrid environments. Operational efficiency and cost optimization remain core drivers of demand. By partnering with MSPs, organizations can convert capital expenditures into more predictable operational costs, reduce internal workloads, and gain access to automation, analytics, and 24/7 monitoring services. Credence Research emphasizes that this shift allows companies to focus internal resources on innovation and core business priorities while relying on managed services to maintain IT agility and uptime. Cybersecurity, Talent Shortages The report also underscores the accelerating role of cybersecurity in driving managed services adoption. With cyberthreats like ransomware, phishing, and advanced persistent threats (APTs) on the rise, many organizations are prioritizing managed security services to protect sensitive data and maintain regulatory compliance. Credence Research notes that MSPs offering end-to-end security - spanning threat detection, incident response, firewall management, and data protection - are becoming indispensable as organizations grapple with an increasingly volatile threat landscape. Talent shortages are compounding the issue. The demand for skilled IT professionals in AI, cybersecurity, and cloud management continues to outstrip supply, creating operational gaps that MSPs are uniquely positioned to fill. By outsourcing to MSPs, companies gain access to expert personnel without the long-term burden of recruitment and training - an especially appealing proposition in today’s tight labor market. Challenges for MSPs Despite the optimistic outlook, Credence Research highlights several ongoing challenges for MSPs. Chief among them is the need to stay ahead of evolving cyberthreats. Given that MSPs often manage multiple client networks, they are high-value targets for attackers. Any breach can have cascading consequences, amplifying both liability and reputational risk. The need for continual investment in advanced security tools, threat intelligence, and compliance controls is not only resource-intensive but critical to maintaining trust. Pricing pressure is another concern. As more providers enter the managed services space, competition intensifies, often driving down margins. Some MSPs, in pursuit of market share, adopt unsustainable pricing models that limit future profitability and complicate contract renegotiations. Credence Research warns that unless pricing structures evolve to reflect value delivered, MSPs risk long-term financial strain. Scalability is also a key hurdle, particularly for smaller providers. Rapid client growth, service diversification, and the need to integrate with legacy IT systems can strain technical and human resources. Poor demand forecasting and inefficient resource allocation can lead to slow response times and diminished service quality. In terms of compliance, managed service providers must continually adapt to a shifting regulatory landscape. Regional and industry-specific mandates such as GDPR, HIPAA, and CCPA require MSPs to implement localized data storage and processing practices. This adds complexity and cost, especially for providers offering global services. Strong Market Outlook Despite these headwinds, Credence Research maintains a strong market outlook. The increasing reliance on managed services - particularly in areas such as hybrid cloud management, data center outsourcing, and managed security - offers long-term growth opportunities. Businesses that strategically partner with MSPs are likely to achieve better operational resilience, faster digital transformation, and improved focus on strategic initiatives. For organizations navigating digital complexity and IT transformation, the managed services model presents a viable path forward. As Credence Research concludes, the ability of MSPs to offer scalable, secure, and cost-effective solutions will remain critical in helping enterprises adapt to the demands of a connected and data-driven world.