February 18, 2024
SAP Announces Plan to Focus on AI, Move to Affect 8,000 Jobs
Finance Business

SAP Announces Plan to Focus on AI, Move to Affect 8,000 Jobs

SAP Announces Plan to Focus on AI, Move to Affect 8,000 Jobs

SAP Announces Plan to Focus on AI, Move to Affect 8,000 Jobs

SAP SE, the German software giant, has revealed a restructuring plan amounting to €2 billion ($2.17 billion), targeting 8,000 roles as part of its strategic shift toward artificial intelligence (AI)-driven business areas. With the anticipation of generative AI reshaping its business landscape, SAP is committing over $1 billion and actively investing in AI-powered technology startups through its venture arm, Sapphire Ventures. The restructuring initiative aims to streamline operations and enhance focus on key growth sectors, particularly business AI.

Embracing Generative AI Transformation

SAP acknowledges the transformative potential of generative AI and is keen on positioning itself at the forefront of this technological shift. The company envisions AI playing a fundamental role in reshaping its business models, driving innovation, and delivering enhanced value to its customers. To facilitate this transition, the restructuring plan will be executed through voluntary leave programs and internal re-skilling initiatives.

Strategic Focus and Headcount Adjustments

The restructuring efforts align with SAP’s commitment to exit 2024 with a headcount comparable to existing levels, which currently exceed 105,000 employees. The emphasis on voluntary measures and re-skilling reflects SAP’s approach to adapting its workforce to align with evolving business priorities. While the restructuring is expected to incur expenses impacting the first half of 2024, SAP aims to strategically position itself for sustained growth in the AI-driven business landscape.

Cloud Revenue Projections and 2025 Outlook Update

In addition to the restructuring plan, SAP shared its cloud revenue projections for 2024, targeting €17 billion to €17.3 billion. The company revised its 2025 outlook, anticipating an adjusted cloud gross profit of approximately €16.2 billion. This strategic outlook underscores SAP’s commitment to the cloud as a key growth driver. The company’s 2023 cloud business revenue reached €13.66 billion, slightly below its forecast but indicative of its ongoing efforts to strengthen its position in the cloud computing market.

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