SAP, a global leader in enterprise application software, has announced a significant restructuring plan that will affect approximately 8,000 jobs. The restructuring, which has a budget of €2 billion, is part of SAP’s efforts to adapt to the changing demands of the digital economy.
SAP plans to concentrate more on AI-driven business areas, reflecting the evolving landscape of the technology industry. With AI and cloud-based solutions becoming increasingly pivotal, SAP aims to enhance its focus on Business AI as a key strategic growth area.
To achieve this transformation, SAP will implement a mix of voluntary leave programs and internal re-skilling measures to manage the transition of the workforce. Despite the impact on jobs, the company anticipates maintaining a similar headcount by the end of 2024 through re-investments in strategic growth areas.
Financially, SAP expects the majority of the restructuring expenses to be recognized in the first half of 2024, impacting IFRS operating profit. However, the program is projected to yield only a minor cost benefit in 2024, excluding these expenses.
Looking ahead, SAP forecasts significant growth in its cloud revenue for 2024, with a projected increase of 24% to 27% at constant currencies compared to the previous year. The company also expects growth in cloud and software revenue, estimating a rise of 8% to 10% at constant currencies.
SAP’s move towards AI-driven business areas aligns with the broader trend observed across the technology sector. Many major tech firms are prioritizing AI and automation to enhance efficiency and drive innovation. SAP’s early experimentation with OpenAI’s ChatGPT and plans to embed generative AI technology in its products further highlight its commitment to this strategic direction.
In summary, SAP’s €2 billion restructuring plan, impacting 8,000 jobs, reflects the company’s ambition to adapt to the changing demands of the digital economy. By focusing more on AI-driven business areas, SAP aims to capture organizational synergies and drive AI-based efficiencies, ultimately preparing the company for scalable future revenue growth.
