SAP SE announced on Monday its intent to acquire data lakehouse pioneer Dremio and artificial intelligence (AI) specialist Prior Labs, as well as a $1.1 billion commitment to scale frontier research, in a move to overhaul how businesses process data for AI.
The acquisitions, expected to close by the third quarter of 2026, represent a tactical shift for SAP. Financial terms for the acquisitions were not disclosed.
While much of the tech industry remains focused on Large Language Models (LLMs), SAP is pivoting toward agentic AI. According to SAP Chief Technology Officer Philipp Herzig, the primary hurdle for these agents isn’t the models themselves, but the “fragmented” state of corporate data.
“Enterprise AI doesn’t stall because the models aren’t good enough; it stalls because the data isn’t ready,” Herzig said. “Dremio eliminates that bottleneck. Combined with SAP Business Data Cloud, we can now take customers from raw, fragmented data to governed, AI-ready intelligence on a single open platform.”
By absorbing Dremio, SAP Business Data Cloud will transition into an Apache Iceberg-native enterprise lakehouse. This architecture allows SAP and non-SAP data to coexist on a single open foundation, removing the costly need to move or convert data formats.
Dremio’s serverless, elastic platform, which is used by global brands like Shell and TD Bank, will let SAP customers scale their data capacity automatically during demand spikes without maintaining expensive, fixed hardware.
Simultaneously, SAP is placing a billion-dollar bet on the Tabular Foundation Model (TFM) through its acquisition of Prior Labs. LLMs excel at generating text, but they often struggle with the structured data (numbers, tables, and statistics) that forms the backbone of global commerce. Prior Labs’ TabPFN technology is specifically engineered to analyze these structures, offering superior accuracy in predicting business outcomes like supplier risk, customer churn, and payment delays.
Under the agreement, Prior Labs will remain an independent company. SAP has pledged more than $1.1 billion over the next four years to transform the startup into a global frontier AI lab.
The integration of Dremio’s data unification and Prior Labs’ specialized intelligence is designed to feed the SAP Knowledge Graph, providing AI agents with the necessary context such as data lineage and organizational relationships to make informed decisions.
The scale of the investment underscores SAP’s ambition to lead the enterprise AI category. By combining open-source standards with specialized tabular research, SAP aims to move beyond simple chatbots toward the future of autonomous, data-driven enterprise agents.
“SAP’s intent to acquire Dremio and Prior Labs, alongside $1.1 billion for frontier research, signals the data-to-agent path is becoming a control plane fight,” said Mitch Ashley, vice president and practice lead, Software Lifecycle Engineering, at The Futurum Group. “SAP holds enterprise transaction data competitors cannot replicate, and is buying the lakehouse and AI research depth to make it operable for agentic workloads.”
“The pressure lands on Databricks, Snowflake, and hyperscalers whose lakehouse strategies were built for analytics,” Ashley said in an email. “SAP customers face consolidation pressure on data architecture, and procurement cannot defer the stack question while SAP, Microsoft, and Oracle assemble integrated data and AI footprints.”
Ron Westfall, analyst at HyperFRAME Research, said SAP is “systematically removing the barriers between disparate data sources to build a unified, AI-ready foundation for the enterprise.”
“Supported by a $1.1 billion research commitment, this strategic shift moves beyond basic generative chatbots toward a flexible agentic AI framework capable of processing complex numerical and statistical data with high precision,” Westfall said in an email. “I see these investments enabling SAP to automate intricate business workflows through specialized intelligence, ensuring that global commerce operations are governed by both deep data integration and advanced frontier research.”
