SAP CEO says the world is entering the 'next phase of globalization'

SAP CEO says the world is entering the ‘next phase of globalization’

The CEO of German tech giant SAP said the world is entering the next phase of globalization — and he’s largely optimistic on the outlook for technology despite challenges posed by higher interest rates and supply chain disruptions.

“We are entering from my perspective the next phase of globalization,” SAP chief Christian Klein told CNBC’s “Squawk Box Europe” at the World Economic Forum in Davos, Switzerland.

In this era of change, companies will want to shift their focus toward building up resilient supply chains and improving their sustainability credentials, Klein said.

He added that companies are coming together to secure their supply chains and tackle corporate responsibility issues by better using data.

Supply chains have been challenged by a confluence of factors, not least the Covid pandemic. Lockdowns caused major disruptions to economic output, and highlighted a dependency on China for global trade.

The Ukraine-Russia war compounded those issues, as Russia is a significant supplier of oil and gas, and Ukraine is the source of of vital exports related to food, agriculture and industrials. That has led to upheavals of supply chains and higher prices for consumers and businesses around the world.

Sanctions on Russia, meanwhile, led companies to rethink where they base their operations — including SAP.

Despite that, Klein said he’s optimistic about the path ahead.

“We in the tech sector, we at SAP, we are very confident about the year ahead,” Klein said.

Reflecting on the gloomy state of macroeconomic conditions, he said there have been cutbacks in tech, as well as the broader economy, and that CEOs of large enterprises are becoming increasingly cautious about spending.

There have been waves of layoffs happening in tech, including at the likes of Amazon and Metaas higher rates and fears of a recession force them to be more prudent with spending.

“We had for a very long time negative interest rates,” said Klein. That has now changed in both Europe and the United States, with the Federal Reserve, European Central Bank and Bank of England hiking interest rates to tame soaring inflation.

Tech as a ‘solution’

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