EXPERT OPINION/ HPE
clouds. As Satya Nadella, Microsoft’s CEO stated at the 2026 World Economic Forum, a company’s technical sover- eignty lies in its firm control of its data and its ability to mix and orchestrate dif- ferent artificial intelligences. The Sovereignty Illusion Data privacy and control have moved from legal footnotes to board-level pri- orities. Geopolitical tensions and recent service-denial sanctions have highlighted the risks of third-party hosting. In 2025, an Indian petroleum corporation, Nayara Energy, was suddenly denied access to its services due to EU sanctions without prior notice. Similarly, the chief prosecu- tor of the International Criminal Court lost access to email due to U.S. sanctions. Loiacono notes that many custom- ers were hesitant to adopt Cloud ERP
linked reporting with non-SAP systems. Loiacono points to a CFO whose holistic ERP ecosystem was “limping along” after a supposedly successful SAP implemen- tation because the migration team was unaware of these critical ecosystem de- pendencies.
math often shifts based on the size of the database and the duration of the contract. For smaller ERP databases, hyperscalers generally charge less due to shared components. However, for longer-duration contracts and larger databases, hyperscale providers gener- ally charge more for Infrastructure as a Service (IaaS) than on-site IaaS cloud services. Moreover, public cloud providers charge for every data movement be- tween availability zones and regions. In contrast, on-site data centers and colocation providers typically allow for unlimited data transmission within the purchased network bandwidth. This also applies to AI: hyperscale AI generally charges per inference token or credit, whereas self-hosted AI can provide for unlimited inference once the infrastruc- ture is in place. Actionability: Aligning with Strategy Loiacono asserts that the goal for SAP professionals should be to align Cloud ERP with their existing business strat- egy, not the other way around. “SAP intentionally created these flexible de- ployment models so that customers can remain in stride with SAP’s clean core strategy without resetting their entire data management strategy to zero,” he notes. His advice is prescriptive: Explicitly ask SAP to evaluate on-site deployment options. These options ensure that no SAP innovation is sacrificed—you re- ceive the same Private edition features and Joule AI capabilities—while main- taining years of purpose-built efficiency and security within your own walls. “SAP intentionally created flexible de- ployment options,” Loiacono concludes. Whether you are optimizing for AI infer- ence, protecting sensitive organizational secrets, or simply avoiding the iceberg of hidden migration costs, the most ef- ficient path forward is the one that rec- ognizes your data as your most valuable asset.
The Physics of Data and the AI Factory
According to Loiacono, we have transi- tioned from a Cloud First era into a Data First world. While a single-hyperscaler strategy might work for smaller firms, modern enterprise-scale customers con- sume a mix of public, private, and on-site applications. Limiting an ecosystem to one cloud provider is not only uncom- mon but can lead to high-priced vendor lock-in. “The real challenge today is data grav-
until they were offered a sovereign option in their own data centers. While U.S. hyperscalers have created Sovereign Cloud subsidiaries, le- gal experts like Dave Michels and French MP Philippe Latombe argue that these measures may offer only a sovereignty illusion. Because of the U.S. FISA Section 702,
ity,” Loiacono says. “Ag- gregating and analyzing insight from disparate data- sets is compounded by hy- perscale cloud movement fees—egress, inter-availa- bility zone, and inter-region costs—and the simple laws of physics.” For example, download- ing one petabyte of data at a sustained throughput of 10Gbps would take approx-
“Explicitly ask SAP to evaluate on-site deployment options.”
cloud providers are mandated to coop- erate with security agencies globally and are prohibited from even notifying the customer of the data acquisition. “The ultimate data sovereignty of SAP ERP data results from a customer main- taining their own direct physical control of such data in their own data center,” Loiacono asserts. Options like SAP Cloud ERP Private CDC and SAP Sovereign Cloud On-site allow systems to continue functioning even if temporarily discon- nected from the outside world, providing the ultimate level of protection against external service denials. The Economic Reality Check When evaluating the business case, the
imately nine days and cost hundreds of thousands of dollars in egress fees every single time. Conversely, uploading that same data is slow and often non-compli- ant with organizational privacy rules. This is where the SAP Cloud ERP Pri- vate, Customer Data Center (CDC) op- tion becomes a strategic lever. It allows organizations to eliminate data move- ment costs by keeping the ERP process- ing power where the data generated lives. Loiacono believes that while SAP’s Joule AI will be a vital agent for ERP-specific tasks, most enterprises will maintain a locally managed AI factory for aggregated inference. This prevents limiting em- ployee productivity based on the credit- based pricing models common in public
80
Made with FlippingBook - Share PDF online