SAP Announces Restructuring Plan, Anticipates 8,000 Job Cuts, and Sharpens Focus on Artificial Intelligence

SAP Announces Restructuring Plan, Anticipates 8,000 Job Cuts, and Sharpens | The Enterprise World

(Source – The Wall Street Journal)

In a strategic move to reinforce its position in the market and intensify its commitment to artificial intelligence (AI), SAP announces Europe’s largest software company and has unveiled plans for a comprehensive restructuring initiative that will impact approximately 8,000 jobs. The German software giant envisions a surge in its operating profit to around €10 billion next year as a direct outcome of this transformation.

As part of the restructuring slated for this year, SAP is set to enhance its concentration on key growth areas, with a particular emphasis on “business AI.” The company aims to identify and implement “AI-driven efficiencies” across its operations, signaling a dedicated push towards integrating AI into its core business strategies. Responding to inquiries about the number of jobs that will be affected, SAP announces did not provide immediate comments. However, the company stated in a filing on Tuesday that it intends to conclude 2024 with a headcount comparable to existing levels due to “re-investments” in other operational areas.

Google’s cloud computing unit 

SAP announces has been navigating a transformative path over the past few years by transitioning its enterprise business towards cloud subscriptions, departing from traditional licensing models. In a significant move, the company announced a partnership with Google’s cloud computing unit in May, envisioning a seamless integration of data from diverse sources and the use of AI to enhance operational efficiency for clients. Like its counterparts in the software industry, SAP is actively working to embed AI tools across its entire product portfolio.

The restructuring initiative is positioned to align the company’s resources with future business requirements, ensuring that SAP remains agile and adaptive in a rapidly evolving market landscape. The majority of affected positions are expected to be addressed through voluntary leave programs and internal “re-skilling measures,” according to details outlined in the filing. As of December 31, 2023, SAP employed a total of 107,602 full-time workers.

SAP announces restructuring, affecting 8K workers in AI push

€500 million in “incremental” gains

In a separate SAP announces disclosed its fourth-quarter non-IFRS revenue, which stood at €8.47 billion ($9.2 billion), surpassing analyst estimates of €8.35 billion. However, the operating profit for the same period, ending on December 31, amounted to €2.51 billion, slightly below the average estimate of €2.53 billion.

The Walldorf-based company projects a non-IFRS operating profit of up to €7.9 billion by 2024, reflecting a 21% increase at constant currencies. Looking ahead to 2025, SAP anticipates a profit of €10 billion, attributed to a €2 billion reduction in share-based compensation expenses and €500 million in “incremental” gains arising from the ongoing restructuring efforts. The ambitious plan signifies SAP’s commitment to innovation, efficiency, and sustained growth in the dynamic technology landscape.

Also Read: Why Migrating to SAP S/4HANA is Logical and Beneficial in 2023?

Did You like the post? Share it now: