SAP Reveals Restructuring Plan, Job Changes As It Pushes Towards AI

SAP SE, a German software company, announced it is restructuring, and this plan will also cover job changes for its 8,000 employees so the organization can focus more on AI-related business areas. The company also provided its profit outlook for 2024.

The Walldorf, Baden-Württemberg-headquartered firm will carry out a company-wide restructuring this year and job posts will also be reshuffled. It did not say if layoffs are also part of the plan but assured that the company will maintain its current headcount until the end of the year.

AI and Job Changes Under the Restructuring

According to Bloomberg, SAP intends to implement various job changes throughout this year, explaining that this is being done to make sure that the company’s skill set and resources will continue to meet the business needs in the future.

The software form stated that the majority of the 8,000 affected job posts are expected to be covered by corporate re-skilling measures as well as voluntary leave programs. As of Sept. 30, 2023, SAP is estimated to employ over 106,000 workers.

Under the restructuring, the company will focus on artificial intelligence and grow this side of business ventures. Moreover, the firm expects the generative AI to mostly change its business structure. It has also committed to investing over $1 billion in AI technology startups through its Sapphire Ventures enterprise capital firm, Reuters reported.

Software and Cloud Business Forecast for 2024

SAP also mentioned its 2024 forecast for its cloud and software revenue which is €29 billion to €29.5 billion. The number shows an eight to 10% hike excluding currency fluctuations.

It added that non-IFRS operation profit may also reach as much as €7.9 billion, a 21% growth in constant currency. In any case, it was also noted that the company previously missed analyst predictions for its cloud earnings in the third quarter.

“We met or exceeded our outlook for 2023 in all key metrics. Based on a stellar order entry, our current cloud backlog expanded by 27% - an all-time high. We are confident about the company's prospects in 2024,” SAP’s chief executive officer, Christian Klein, said in a press release. “From this position of strength, SAP is opening the next chapter with the planned transformation program, we are intensifying the shift of investments to strategic growth areas, above all Business AI. Going forward, this will empower us to keep leading with innovation while increasing the scalability of the operating model."

SAP’s chief financial officer, Dominik Asam, added, "2023 was a year of inflection and we kept our promise and achieved double-digit non-IFRS operating profit growth despite an adverse macro environment. In 2024, we will focus on putting the right gradient of earnings growth in place to deliver on our raised ambition for 2025 and sustain growth and financial performance beyond."

Photo by: SAP Press Room