SAP Restructuring 8,000 Roles to Drive AI Growth
German software firm SAP SE has announced a 2 billion euro ($US2.17 billion) restructuring plan, targeting 8,000 roles, as it seeks to enhance its focus on artificial intelligence (AI)-driven business areas.
SAP is confident that generative AI will bring fundamental changes to its business, and it has committed to investing over $1 billion in this area, including supporting AI-powered technology startups through its enterprise capital firm, Sapphire Ventures.
The restructuring plan is aimed at better aligning the company with key growth areas such as business AI. SAP plans to implement the restructuring primarily through voluntary leave programs and internal re-skilling measures, with the aim of exiting 2024 with a headcount similar to the current levels, which stand at over 105,000 employees. The expenses associated with the restructuring are expected to impact operating profit, particularly in the first half of 2024.
Additionally, SAP has provided its forecast for cloud revenue in 2024, projecting it to range between 17 billion euros and 17.3 billion euros, and it has updated its 2025 outlook, anticipating adjusted cloud gross profit to reach approximately 16.2 billion euros.
However, it is worth noting that the company’s key cloud business revenue fell short of its forecast in 2023, amounting to $13.66 billion euros instead of the anticipated 14.06 billion euros. Previously, SAP had also missed analysts’ expectations for cloud revenues in the third quarter.
