Investing.com -- SAP SE Chief Executive Officer Christian Klein said the defense industry has become the company's fastest growing business line as military budgets increase worldwide.

Klein said in an interview this week that there is high demand for better software and AI to scale defense businesses. The company gets about 10% of its revenue from the industry, he confirmed.

The war in Iran is the latest major conflict to drive a sharp increase in military spending after European defense budgets grew following Russia's invasion of Ukraine in 2022. With hundreds of billions of dollars flowing into the industry to increase weapons stocks and readiness, militaries globally have expressed interest in projects to update their software, Klein said.

SAP is migrating the German armed forces systems to newer SAP programs that will run logistics, personnel management and administration programs. While parts of the project have been delayed because of software errors, Klein said the company overcame them and showed that SAP could handle complex plans for the military.

"We had a problem. I'm the first one to admit that," Klein said. Issues appeared when systems disconnected and then needed to upload recorded data when back online, a necessary function for naval warships that sometimes go dark for days.

"Worldwide, there are different regulations, different data privacy requirements. It's really a complex business, what we are solving," Klein said. "But it is also a competitive advantage of SAP."