Celonis - Europe's defense reckoning has an execution gap and a sovereignty problem

The political mood around European defense has shifted significantly in the past twelve months, with long held assumptions about the role of the US in supporting Europe since the end of the Cold War effectively coming to an end. The United States, under Trump, has made clear - with varying degrees of diplomatic grace - that it expects Europe to carry more of its own weight. NATO members are now under pressure to hit 5% GDP defense spending targets. And across the continent, governments and defense ministries are scrambling to redevelop industrial capacity that was quietly wound down during decades of post-Cold War stability.

You can have opinions on all of this - and many people do. However, an opinion doesn’t translate into practical reality and those of us in Europe are increasingly faced with a new world order that requires decisions to be made, as the money starts to flow. However, as that begins to happen, we need to start asking: where do we spend it?

Capital is largely being directed toward hardware - tanks, fighter jets, drones, munitions - at historic rates. But the logistical, administrative, and industrial processes that need to sustain that buildup are, in many cases, running on legacy infrastructure that was never designed for this moment. It’s possible that the €600 billion earmarked for European rearmament will not automatically translate into capability. Not without a serious rethink of how the defense industrial base actually operates. This is the ‘execution gap’ that Germany-based Celonis is positioning itself to address. 

It isn't just a hardware problem

Celonis launched its formal Defense & Security initiative in February this year, timed around the Munich Security Conference. But Carsten Thoma, President at Celonis, is clear that this isn't a pivot because of a new opportunity, but rather it's a formalization of something the company has been working on for some time. 

The vendor has long-standing relationships with defense suppliers, according to Thoma. And something has shifted in its existing industrial and manufacturing customer base. Companies across Europe that stepped back from the defense sector during the long phase of post-Cold War demilitarization are now returning. The skills, patents, and production facilities are still there, they just need to be reactivated. That, combined with direct pull from governments looking for sovereign, trusted solutions, created the conditions for Celonis to move. Carsten said: 

That's a turning point. We got pulled in partly by that dynamic, and also pulled in at a certain level by government - because, particularly in Europe, there is a clear demand for a sovereign solution that is trusted, that provides the foundation for an unbiased, heterogeneous environment. Europe is inherently heterogeneous, but the requirement is still for robustness, transparency, and observability - and that is certainly not a given.

Thoma frames the core problem in terms that any enterprise technology buyer will understand. The issues bedeviling the defense sector - fragmented systems that don't talk to one another, decisions happening in silos, supply chains without end-to-end visibility - are exactly the same problems Celonis has been solving in commercial environments for fifteen years, across more than 1,400 organizations.

Ana Corina Sosa, Director, Global Defense and Security at Celonis, adds during our discussion: 

Superior hardware is no longer enough in this new era. It's about industrial scale, time compression, data integration, and the speed with which you turn learnings from the battlefield back into your production cycles.

For example, Celonis is currently working with one of the largest submarine manufacturers in the world - a reference they are working toward making public - on reducing the time taken to get vessels into the water, through work order management, intelligent material allocation, and shortage identification across their supplier network.

The logistics challenge is equally acute. Thoma doesn't mince his words: 

We cannot accept that it takes six to nine months to deliver certain spare parts or ammunition to the front lines, within Europe, only because we haven't established a unified governance structure.

The commercial evidence for what process intelligence can can be seen in Celonis’ enterprise install base. For instance, working with one of the world's largest car manufacturers, Celonis improved on-time delivery by more than 11 percent in six months through spare parts and material optimization - addressing shortages, missing commodities, and logistical failures. The translation to defense is obvious. AI-assisted matching of part numbers and SKUs to actual need is the kind of unglamorous work that could have an outsized impact on how effectively that €600 billion gets spent.

As Thoma puts it: 

The €600 billion needs to be well spent, not wasted. And I get deeply frustrated when I see how much is wasted on misalignment and logistics in these areas.

Accountability

However, this is also about more than just operational efficiency. Sosa flags it almost as an aside, but with this volume of public money entering the defense sector in a compressed timeframe, governments will need to demonstrate that spending reached its intended outputs. She notes: 

There is so much money flowing into this sector right now that organizations are going to face very severe accountability and audit requirements. 

We have seen in recent years - during COVID-19, for example - how a rapid influx of money can lead to waste and fraud. Celonis already supports federal governments with financial tracking of this kind and now the same capability is now being applied to defense.

The pressure on defense suppliers is already visible at the contract level. Sosa points to conversations happening right now: 

Do you have the systems? Do you know where your data is? Do you have full transparency of your operations? A lot of organisations are focused purely on output and miss things that could be critical when the moment of need arrives. Do you trust your data? Do you have visibility into how your operations are run? Do you know where your suppliers are coming from? 

Who is ensuring that supplier contracts are being met? We're speaking to defense suppliers right now who are renegotiating contracts to reduce lead times by 55% - who is tracking that? These aren't just missed contracts; these are lives on the line.

The sovereignty question

Whilst the execution gap is a problem of operational efficiency, there is obviously also the sovereignty question, which is always pertinent to EU technology discussions. At the Munich Security Conference, Sosa and Thoma were part of a Celonis delegation engaging directly with government ministers. The headline statistic from those conversations was that 80% of Europe's technology stack comes from the US and China. As Sosa said: 

This is a new dimension of digital sovereignty - one that hasn't been fully grappled with. Traditionally, supply chain risk analysis focused on physical dependencies, like Chinese rare earth minerals. But Europe, until now, hadn't really thought deeply about its digital dependencies. 

Ministers and prime ministers across Europe were explaining how processes and RFPs are being laid out right now, reconsidering cloud infrastructure, data residency, and software stack ownership criteria. We know this is an enormous opportunity for Celonis. 

We at diginomica are seeing this increasingly in discussion with European technology leaders. Whilst not specific to defense, enterprise buyers are increasingly pushing their US technology partners on questions of data residency and sovereignty, in response to changing geopolitical dynamics. 

This structural change in how European governments - and companies -approach vendor selection presents companies like Celonis with an opportunity. As Sosa puts it: 

Our capabilities are at par with US offerings - we simply hadn't been aggressive enough about positioning ourselves in this sector.

Thoma added:  

Part of it you can address from a technical capability perspective: we have a highly containerized solution with standard releases, observability, and governance - that's one dimension. But the bigger question is: what do we collectively want? Are we approaching sovereignty as Europe, or as individual nations?"

That’s a harder question to answer. There is, he argues, a clear need for sovereign clouds at government level on a per-country basis - for internal administration at the highest security level and for the supply chains supporting individual national militaries. But that sits alongside a separate question of how Europe operates as an alliance. For Celonis, navigating both is a manageable technical challenge, according to Thoma:

We can migrate between cloud providers, make them interchangeable, and monitor governance and security across different cloud stacks.

The data architecture matters here too - particularly for defense environments where air-gapping is often not optional but mandatory. Thoma's description of Celonis's approach claims to answer that question:

Our capability [is] to federate data, and to govern data from a compliance perspective at every level: user, entity, jurisdiction, government, association. We already do this with very sensitive data in federated supplier networks and in highly regulated industries.

Thoma is pointed about the competitive distinction: 

Unlike the competition, this is not going into a black box of data storage. It is fully transparent, can be monitored and observed, is compliant, and is multi-cloud enabled - across regulated, secure cloud stacks, even where they are federated across different jurisdictions.

In a procurement environment where governments are increasingly asking not just what a platform does, but who controls it and how it behaves, that transparency is a meaningful differentiator.

The values framing that underpins all of this is one Thoma returns to throughout the conversation. Celonis, he argues, can offer:

...the right counterweight - an alternative that comes with transparency and robustness for companies and governments that believe in the same values we do: democratic governance and sovereignty. That is a genuine USP for us.

Thoma doesn't shy away from the political tensions, but he finishes by saying: 

We will always amplify European sovereignty within our value system, but we are also good global partners where we can be - because we believe in fair partnership.

My take

Celonis's defense initiative is easy to read as opportunistic positioning. European rearmament is the biggest enterprise technology spending story of the next decade, and every vendor with a plausible claim is making their move. But the argument Thoma and Sosa are making is particularly balanced and grounded - coming from an angle that I hadn’t considered before our discussion. 

It’s unsurprising that when you think of defense spending you think of war tanks and fighter jets. But the execution gap thesis is real, and it's underserved. The debate around European defense has been almost entirely focused on the hardware dimension, but the operational layer underneath that - how you actually get the right part to the right place at the right time, how you track spending to output, how you maintain assets in the field - has received almost no comparable attention. That deserves some heavy consideration too. 

Celonis being European is also not just marketing fluff. In the context of defense procurement, it is increasingly a qualification criterion.

Thoma is clear about where he wants Celonis to be in two years: 

...not only the first company that comes to mind in defense from a business intelligence perspective, but also being known for helping to maintain democracy, safe societies, and the protection of the values we believe in.

That is a larger ambition than most enterprise software companies would articulate out loud. Whether Celonis can back it up operationally, at the scale European defense now demands, is the question. The commercial track record suggests the capability is there. The next two years will determine whether the sector is ready to use it.