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How Data Localization Requirements May Impact Innovation For SAP In India

Requirements related to data localization are such a fascinating issue in our globalized world. It’s interesting to see how it can affect even the most international of businesses.

Although data localization in India may affect innovation, it seems SAP is open to hosting applications on local servers if local governments insist.

Bernd Leukert, head of product innovation, said a regulatory mandate to store data on business transactions locally would translate in higher costs for the company and if the government insists it has to store information locally.

“I think it has massive impact because while years ago access to information was a problem because a lot of it was not digitized, distribution of information took much longer, now with digitization of information whenever it is created it can be accessed from a technology perspective. What is regulation doing, I call it a modern way of politics. Government says if you want to do business in my country the data has to be stored in a local data center, that leads to the fact that where technology has overcome the physical boundaries of a country border, suddenly the government is introducing these borders again” Leukert told in an interview.

SAP, which has more than 10,200 customers across India, Sri Lanka and Bangladesh, said the primary impact would be significant investment for setting up infrastructure in India. SAP has completed 20 years in India and the company is setting up another office near the Bengaluru airport to expand its footprint here. The company said it would have its own data center infrastructure across different geographies including India, barring China where it will have to use a different service provider.

“We would not need data centers in so many countries, but if the government forces us this has massive impact on our business. When more countries; let’s take India as a country is having a digital agenda and is digitizing all the services to the people… it needs a data center infrastructure, (and that) is becoming a mission critical infrastructure,” said Leukert.

The SAP board member said under the leadership of Dilip kumar Khandelwal, managing director, SAP Labs India, the company set up a startup studio to enhance the ecosystem. He pointed out that setting up SAP Leonardo Center in India reassures significant commitment of SAP to the region and contribution of the Indian talent to the parent company. The proposed data protection policy of India has sought every organization or business to store a copy of data locally in a server or data center in the country and critical personal data to be processed only in India. SAP said the primary impact would be significant investment for setting up infrastructure in India. As a translator, I can also see how the extra services needed for the setup would jolt up prices. Of course, the requirements to store date locally makes sense from a confidentiality and security perspective, but can’t alternative solutions be found?

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