SAP acquisitions of Dremio, Prior Labs target AI development
The tech giant's latest purchases add a data lakehouse that enables users to access data across systems and tabular foundation models that fuel predictive AI.
Following closely on the heels of its March acquisition of master data management specialist Reltio, SAP on Monday revealed that it plans to acquire data lakehouse vendor Dremio and AI model developer Prior Labs to better enable AI development and management.
As enterprise data management workloads evolve to become enablers of AI-powered insight generation and process automation, vendors such as SAP -- which provides data platform capabilities as part of its array of offerings beyond Enterprise Resource Planning (ERP) -- are attempting to simplify AI development and management for their customers.
SAP's acquisition of Reltio, which SAP disclosed on March 27, adds master data management capabilities that enable users to unify their data to make it more easily accessible for AI and analytics workloads. The acquisition of Dremio, which provides a data lakehouse platform optimized for open source Apache Iceberg tables that make data interoperable between platforms that support the format, will similarly simplify access to data for enterprise workloads.
Purchasing Prior Labs, meanwhile, adds tabular foundation model capabilities that enable organizations to use data stored in tables to fuel predictive AI initiatives.
"These acquisitions make sense strategically," Kevin Petrie, an analyst at BARC U.S., said. "SAP specializes in structured data, which remains the leading input for AI initiatives, and Prior Labs enriches the predictive AI capabilities that SAP users can apply to that data."
Financial terms of the purchases were not disclosed, and each remains subject to regulatory approval and other customary closing requirements. SAP's Dremio acquisition is expected to close during the third quarter of this year, while its purchase of Prior Labs is expected to close during second or third quarter of 2026.
Founded in 2015 and based in Santa Clara, Calif., Dremio had raised $410 million in venture capital funding before its acquisition. Prior Labs, founded in 2024 and based in Berlin, had raised nine million Euros in funding.
Additive capabilities
Although enterprises continue to invest heavily in developing agents and other AI applications aimed at making employees better informed business processes more efficient, many are struggling to build AI tools that can be trusted to properly perform in production.
These acquisitions make sense strategically. SAP specializes in structured data, which remains the leading input for AI initiatives, and Prior Labs enriches the predictive AI capabilities that SAP users can apply to that data.
Kevin PetrieAnalyst, BARC U.S.
Feeding such applications with high-quality, relevant data is one of the main barriers that halt AI initiatives.
Through integrations developed since the start of 2025, SAP now enables users of its Business Data Cloud to access data in Snowflake and Databricks. The acquisition of Dremio's lakehouse capabilities will extend the reach of SAP's Business Data Cloud to a new array of external data sources -- including on-premises databases -- without forcing users to move data into SAP.
"With Dremio, we're able to add the modern lakehouse architecture. … We're super excited about this opportunity," Irfan Khan, president and chief product officer of SAP data and analytics, said during a virtual press conference.
David Menninger, an analyst at ISG Software Research, noted that the significance of the acquisition is that it demonstrates SAP's ongoing evolution toward enabling access to more than just SAP's ERP data for its users to build effective AI and analytics tools.
"Dremio furthers SAP's recognition that enterprise customers have lots of data that is not in SAP and represents a commitment to provide support for those data sources," Menninger said.
Petrie, meanwhile, noted that Dremio's lakehouse platform is particularly valuable to SAP customers because of its data federation capabilities. Data federation is a data management strategy that creates virtualized views of data so it doesn't have to be moved or copied, which eliminates the cost and risk of migrating data between platforms as well as any data sovereignty concerns.
"The Dremio acquisition … is critical because migration complexity and rising sovereignty concerns prevent organizations from moving all their analytics and AI inputs into SAP," Petrie said, adding that Dremio rates highly in BARC's user evaluation surveys.
The acquisition of Prior Labs is aimed at better enabling SAP users to build models that fuel predictive AI initiatives, according to Philipp Herzig, SAP's chief technology officer.
"Similar to large language models for unstructured data, we want to democratize the access for predictive AI, a market which is as large as the generative AI market," Herzig said during the press conference. "That is exactly where Prior Labs comes in."
Menninger noted that enterprises have struggled to use LLMs as part of their AI pipelines given that the non-deterministic nature of LLMs can lead to different outputs based on the same input. Tabular foundation models produce more reliable outputs.
"It is hard to govern processes where the output may change each time the process is run," Menninger said. "Prior Labs is focused on delivering foundation models for structured, tabular data. That way, users can have the flexibility of LLMs applied in a deterministic way."
Consolidation continues
Beyond better enabling SAP users to develop agents and other AI tools, SAP's acquisitions of Dremio and Prior Labs are part of a growing consolidation trend.
Consolidation tends to come and go in cycles.
For example, there was significant consolidation among data and analytics vendors in 2007 when IBM acquired Cognos, Hyperion was bought by Oracle and SAP purchased BusinessObjects. More followed in 2019 when Tableau was acquired by Salesforce and Google bought Looker within days of each other.
Beginning with Salesforce's acquisition of Informatica in a deal that ultimately closed in November 2025, another consolidation wave seems to be rising. As enterprises attempt to simplify complex AI pipelines and lower the high cost of AI development by reducing the number of tools and vendors needed to create AI workflows, independent vendors are finding it more difficult to compete.
Last November, data integration vendor Fivetran and data transformation specialist DBT Labs agreed to merge. In December, IBM acquired streaming data vendor Confluent. Now, first with Reltio and then Monday's moves to buy Dremio and Prior Labs, SAP is boosting its AI development capabilities through acquisitions of previously independent companies.
"The acquisitions are part of an inherent cycle in the software industry," Menninger said, while noting that there is usually room for a few independent vendors in each market segment. "Large companies acquire smaller companies as a way to supplement their R&D efforts. As markets become more mature, such as the data management market, it's natural for many of these companies to get acquired."
Petrie similarly noted that acquisitions reflect platform vendors such as Salesforce, IBM and SAP taking advantage of the market to add capabilities that enable them to capture more of their customers' spending. In addition, such vendors are adding capabilities that provide competitive advantages by enabling access to competitors' platforms.
"They recognize that migrations are tough and they need to help customers manage heterogeneous data environments," he said.
SAP, without being specific, continues to look for further acquisition opportunities, according to Herzig.
Eric Avidon is a senior news writer for Informa TechTarget and a journalist with more than three decades of experience. He covers analytics and data management.
