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January 24, 2024updated 26 Jan 2024 10:45am

SAP restructuring inspired by AI potential says CEO, as 8,000 roles are eliminated

The SAP restructuring program will see investment ploughed into internal and external AI applications, as well as extensive reskilling for its workforce.

By Greg Noone

SAP will cut 8,000 jobs as part of a £1.7bn restructuring effort, the company has announced. In a statement, the enterprise resource planning (ERP) provider said that its “company-wide transformation program” would see it harness “AI-driven efficiencies” internally and deliver more AI services externally. The majority of the 8,000 positions marked for elimination in the SAP restructuring program will be covered by a mixture of internal re-skilling measures and voluntary leave programs. 

“We are confident about the company’s prospects in 2024,” said SAP’s chief executive, Christian Klein, in a separate statement. “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.”

The SAP logo atop one of its office buildings in Hamburg, used in a story about the SAP restructuring effort announced on January 24th 2024.
(Photo by nitpicker / Shutterstock)

SAP AI adds to good year for ERP provider

SAP’s announcement follows what was a good year for the ERP provider. By the end of 2023, the firm’s non-IFRS operating profit rose by 13% year-on-year, while its cloud backlog amounted to €13.7bn – an increase of 27%. SAP’s predictions for 2025 were just as rosy, with the firm expecting cloud revenues of €21.5bn and total revenues of over €37.5bn. These sums are tied to the success of the restructuring program, SAP continued, though increased investment in other strategic growth areas throughout 2024 will likely see the firm’s overall headcount remain “similar to current levels.”

At its annual earnings press conference, Klein confirmed that approximately two-thirds of employees whose roles were up for elimination would be repositioned within the company. Additionally, he added, SAP would invest approximately €100 million in education to help people find new roles – though whether these would be within the company or elsewhere was left unclear. Deployment of AI solutions internally and externally would also be accelerated. “We’re going to invest nearly a billion [euros] into AI by the end of 2025,” said Klein. “We’ve [also] got to invest in new architects…to make sure that our customers are transforming, not only lifting and shifting [to the cloud].”

AI applications would be deployed to assist the development, delivery, sales and financial functions across the business, said Klein, in response to a question from Deutsche press-agentur. “When you’re looking into some of our ratios where we actually see the most productivity levels, it’s clearly on the go-to market,” added the chief executive. “It’s also in some of the supporting functions.”

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SAP restructuring reflects growing confidence in AI potential

On the subject of upcoming redundancies, Klein was contrite. “I’m a child of SAP, and when you impact people, that’s never easy,” he told journalists this morning. Nevertheless, he continued, “it is important to give our 100,000 people the best future we can.” Klein also presided over 3,000 redundancies at the beginning of last year.

That conviction outwardly rests on harnessing SAP’s AI expertise for the betterment of the business and to enhance its external product portfolio. In September, the firm hired Microsoft Copilot veteran Walter Sun as its new global head of artificial intelligence and added its generative AI assistant, Joule, to its cloud portfolio. Earlier this month, meanwhile, SAP announced new strategic AI alliances with McKinsey, Microsoft and IBM.

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