SAP unveils restructuring plan affecting 8,000 jobs

SAP unveiled a plan to restructure operations this year to trim costs and focus more on artificial intelligence (AI), affecting about 8,000 employees.

The “majority” of the positions touched by the restructuring will be “covered by voluntary leave programmes and internal re-skilling measures”, SAP said on Tuesday (Jan 23), adding that it expects to end the year with headcount virtually unchanged. The German software maker said the changes will be made throughout 2024 “to ensure that SAP’s skill set and resources continue to meet future business needs”. SAP said it had 107,602 full-time workers as at Dec 31.

Separately, SAP reported a 5 per cent gain in fourth-quarter non-IFRS revenue to 8.5 billion euros (S$12.4 billion). Analysts, on average, estimated 8.4 billion euros. Cloud sales increased 20 per cent to 3.7 billion euros. Operating profit was 2.5 billion euros in the period ended Dec 31, the company said, compared with an average estimate of 2.5 billion euros.

SAP, Europe’s biggest software company, has been focusing for the past few years on transitioning its enterprise business to cloud subscriptions from a traditional licensing model. The company, like software rivals, is trying to incorporate AI tools into its products given the heightened demand for the technology.

“SAP is opening the next chapter: With the planned transformation programme, we are intensifying the shift of investments to strategic growth areas, above all business AI,” Christian Klein, chief executive officer, said.

The Walldorf, Germany-based company projected 2024 cloud and software revenue of 29 billion to 29.5 billion euros, an 8 to 10 per cent increase excluding currency fluctuations. Non-IFRS operating profit will be as much as 7.9 billion euros, an increase of 21 per cent in constant currency.

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The company also gave an operating profit forecast of 10 billion euros for 2025, which reflects a reduction of two billion euros for share-based compensation expenses. The outlook includes 500 million euros due to “incremental” gains from the restructuring, SAP said. It continues to expect total revenue of at least 37.5 billion euros in 2025, including cloud sales of more than 21.5 billion euros. BLOOMBERG