The companies that will distinguish themselves are those that apply AI to core business processes.
In Madrid, during SAP's annual Sapphire conference, the chief executive of SAP Portugal outlined a vision in which a mid-sized Atlantic nation becomes a meaningful node in Europe's emerging digital sovereignty. Portugal's AI adoption rate already exceeds the European average, and SAP plans to expand its sovereign cloud operations there — not merely to serve Portuguese clients, but to position the country as infrastructure for a continent rethinking where its data lives and who governs it. The deeper argument is philosophical as much as commercial: that the value of artificial intelligence is not created in the laboratory but in the moment a business transforms how it actually works.
- Europe's growing unease with distant, foreign-controlled data centers has made sovereign cloud infrastructure — kept within national borders and regulatory frameworks — a strategic priority, and Portugal is positioning itself to fill that role.
- Portugal's AI adoption rate of 38% outpaces the EU average of 33%, yet the gap between large companies and small ones is stark: while nearly half of large firms are adopting AI, only 9% of small businesses have followed — a tension at the heart of a predominantly SME economy.
- SAP plans to bring more and more senior people into its Portuguese sovereign cloud team in the near term, a concrete expansion tied directly to the government's approval of a National Sovereign Cloud Plan on May 14.
- The real danger SAP's CEO identifies is not technological but strategic — organizations treating AI as a productivity shortcut for individual workers rather than a transformation engine applied to core business processes risk falling behind those that do not.
- Portugal and Spain are jointly pursuing one of five AI gigafactories the European Commission plans to award, with the Iberian bid resting on geographic advantage, transatlantic time zone alignment, and a demonstrated national appetite for technology adoption.
Nuno Saramago, chief executive of SAP Portugal, spoke in Madrid during the company's annual Sapphire conference about a quiet but consequential bet: that Portugal can become a serious European hub for sovereign cloud infrastructure and artificial intelligence adoption. SAP plans to substantially expand its sovereign cloud team in Portugal — sending more people, and more senior ones — seeing the country's geographic position, regulatory environment, and security standards as assets capable of serving clients well beyond its borders. "We have the capacity to make SAP Portugal into a company much larger than just the Portuguese market," he said.
The foundation for that ambition is Portugal's AI adoption rate of 38%, above the European average of 33%. Saramago's argument is that adoption matters as much as invention — that the value of AI is not created in the lab but in the business process, where a company learns to transform how it actually operates. In Portugal, the sectors moving fastest are energy and natural resources, retail, and tourism and hospitality. Yet the country's economy is dominated by small and medium enterprises, and adoption drops sharply with company size: 48% for large firms, 18% for medium ones, 9% for small ones. Cloud services have begun to close that gap, allowing companies to rent computing power rather than build costly infrastructure — all four of SAP's new Portuguese clients in the past four years came directly to the cloud.
Saramago's central warning is about focus. Companies that scatter AI across individual productivity tasks will not capture its transformative potential. Those that apply it strategically to core business processes — forecasting, supply chains, the decisions that directly affect results — will differentiate themselves. These choices, he argues, belong in the boardroom, not the IT department.
SAP has been testing its own AI tools internally for two years and has committed to making its algorithms ISO-certifiable and fully auditable. Saramago does not see European AI regulation as an obstacle; he sees it as a foundation for trust that actually accelerates enterprise adoption. The Portuguese government's approval of a National Sovereign Cloud Plan on May 14 reinforced that direction. Portugal and Spain are also jointly pursuing one of five AI gigafactories the European Commission plans to award — a bid Saramago believes has genuine merit, grounded in the region's geography, its transatlantic time zone, and its combined scale. SAP Portugal now employs 950 people from 36 nationalities. The question ahead is whether that talent and infrastructure can be woven into real economic value, not just theoretical capacity.
Nuno Saramago, the chief executive of SAP Portugal, sat down in Madrid during the company's annual Sapphire conference to discuss something that has quietly become central to his thinking: how a mid-sized European nation might position itself as a serious player in the infrastructure and application of artificial intelligence. The conversation ranged across cloud adoption, workforce transformation, and a specific bet SAP is making on Portugal's future.
The company plans to substantially expand its sovereign cloud operations in Portugal. This is not a small initiative. Sovereign cloud—infrastructure that remains entirely within a country's borders and regulatory framework—has become strategically important as European governments and enterprises grow wary of depending on distant data centers for sensitive operations. SAP already has people working in this space in Portugal. Now it will send more, and more senior ones. The company sees Portugal's geographic position, its security standards, and its regulatory environment as advantages that could allow it to serve not just Portuguese clients but European ones. "We have the capacity to make SAP Portugal into a company much larger than just the Portuguese market," Saramago said.
This ambition rests on a broader observation: Portugal is adopting artificial intelligence faster than most of Europe. The country's AI adoption rate stands at 38 percent, above the European average of 33 percent. That statistic matters because it reveals something often missed in discussions of AI development. When people talk about artificial intelligence, they typically focus on which countries are building the large language models—the foundational technology. But Saramago argues that adoption is equally important. The countries leading in actual AI deployment by enterprises are the United Arab Emirates and Singapore, followed in Europe by Norway, Ireland, and France. Portugal is not far behind. The value, he suggests, is created not in the lab but in the business process—where a company figures out how to use AI to transform how it actually works.
In Portugal specifically, the sectors moving fastest are energy and natural resources, retail, and tourism-related services like hospitality. All of these are industries where agility and productivity tools have become competitive necessities. Yet Portugal's economy is dominated by small and medium enterprises. Only 48 percent of large companies are adopting AI technologies; for medium-sized firms, that drops to 18 percent, and for small ones, 9 percent. The traditional barrier was cost and infrastructure. A small company could not afford to buy servers and hire specialists. Cloud services have changed that equation. A company can now rent computing power and applications as needed, scaling up or down. All four new clients SAP has won in Portugal over the past four years came directly to the cloud rather than building on-premises infrastructure first. Seventy percent of SAP's Portuguese clients are small or medium enterprises.
But there is a catch. Saramago emphasizes that companies must be strategic about where they apply AI, not scattered. The real risk is lack of focus. Many organizations see AI as a tool for productivity—making individual workers faster at individual tasks. That does not scale. The companies that will distinguish themselves are those that apply AI to core business processes, the ones that directly affect results. A financial services firm might use AI to transform forecasting. A logistics company might use it to optimize supply chains. The difference between success and mediocrity will be the difference between treating AI as a productivity toy and treating it as a business transformation engine. This is why these decisions, Saramago argues, belong in the boardroom, not in the IT department.
SAP itself has been using these technologies internally for two years, testing and refining them before offering them to clients. The company has also announced that its AI algorithms will support ISO certification and be fully auditable—a response to European regulatory concerns. Saramago does not see Europe's AI regulation as a drag on innovation. He sees it as a foundation for trust. In enterprise software, precision and auditability are not optional. They are requirements. The regulatory framework, he suggests, actually enables faster adoption because companies can deploy with confidence.
The Portuguese government approved a National Sovereign Cloud Plan on May 14. Saramago called it an extremely positive step. Europe is defining what a European sovereign cloud model should look like, and Portugal is on the radar of major global technology players considering where to establish data centers and local zones. For SAP, it means an opportunity to grow its sovereign cloud team in Portugal substantially in the near term. The company wants to bring senior leaders in this field to the country. It is a concrete announcement, Saramago said, that can begin to be shared now.
The broader question is whether Portugal and Spain together might win one of five AI gigafactories the European Commission plans to award. Saramago thinks the Iberian bid has real merit. The region has geographic advantages, time zone alignment with both Europe and the Americas, and combined scale. But infrastructure alone is not enough. There has to be actual use of that infrastructure, actual value creation. That is where Portugal's demonstrated appetite for adopting new technologies becomes an asset. The country has the talent, the universities, the openness to international workers—SAP Portugal now employs 950 people from 36 different nationalities. What matters next is whether that talent and infrastructure can be woven together into something that generates real economic value, not just theoretical capacity.
Notable Quotes
We have the capacity to make SAP Portugal into a company much larger than just the Portuguese market.— Nuno Saramago, CEO of SAP Portugal
The companies that will distinguish themselves are those that apply AI to core business processes in their sector and have direct impact on company results.— Nuno Saramago, CEO of SAP Portugal
The Hearth Conversation Another angle on the story
You're saying Portugal is adopting AI faster than the European average. But isn't that partly because Portugal started from a lower baseline? Easier to move fast when you're not entrenched in legacy systems?
That's a fair point, but I think it misses something. Yes, some of that is greenfield advantage. But what we're seeing is genuine appetite. New clients are choosing cloud-first. That's a choice, not a default. And in sectors like energy and retail, companies are actively asking how to apply AI to their core operations, not just dabbling.
You mentioned the risk of lack of focus. Can you give me a concrete example of what that looks like—a company doing AI wrong?
Sure. A company gives ChatGPT access to all its employees. Productivity goes up a little. Everyone's writing emails faster. But nothing structural changes. Supply chains still work the same way. Forecasting still uses the same models. That company spent money and got marginal gains. The one that wins is the one that asks: where does AI actually change how we operate? And then focuses there.
The sovereign cloud piece—is that really about security, or is it about European independence from American tech companies?
Both. But they're not separate. Security and independence are the same thing in this context. A European company or government wants to know that its data and its AI systems are not dependent on infrastructure it doesn't control. That's not paranoia. That's prudent governance. And it creates a market opportunity for companies like SAP to build that infrastructure locally.
You mentioned that 70 percent of SAP's Portuguese clients are SMEs. How do you make money serving small companies at scale?
Cloud changes the economics. You're not selling them a server and a license. You're selling them access to a service. The margin per customer is lower, but the cost to serve them is also much lower. And you can serve thousands of them simultaneously. That's the whole point of cloud—it democratizes access to tools that were once only available to large enterprises.
What happens to the people whose jobs are being automated?
That's the honest question. Some roles do disappear. But new ones emerge. You need people who understand how to apply AI in your industry. You need people researching better forecasting methods. You need people managing the ethical and operational implications. We've actually grown our workforce, not shrunk it. But that only works if people are willing to retrain, and if companies are willing to invest in that retraining. That's not automatic.
So Portugal's real advantage isn't that it's building the AI models. It's that it's willing to use them?
Exactly. And that willingness, combined with geographic position, security standards, and a workforce that's open to change—that's what makes sovereign cloud in Portugal valuable. You're not just building infrastructure. You're building a place where European companies can trust their most sensitive operations.