SAP Announces 2 Billion Euro Restructuring Plan Affecting 8,000 Jobs

SAP SE, the world leader in enterprise application software, has announced a wide-ranging restructuring plan for 2024 with a budget of approximately €2 billion. The strategic move will affect around 8,000 positions across the company as SAP pivots to focus more on AI (AI) business areas. This decision reflects the evolving landscape of the technology industry, where AI and cloud-based solutions are becoming increasingly important.

SAP’s restructuring is part of its wider ambition to adapt to the changing demands of the digital economy. The company plans to increase its focus on business AI, which it identifies as a key strategic growth area. Through this process, SAP aims to transform its operational setup to capture organizational synergies and drive AI-based efficiencies. This transformation is expected to prepare the company for scalable future revenue growth.

The restructuring strategy includes a combination of voluntary redundancy programs and internal retraining measures to manage workforce transition. Despite the significant number of roles affected, SAP anticipates maintaining headcount similar to current levels through the end of 2024, reflecting reinvestment in strategic growth areas.

Financially, SAP forecasts that most of the restructuring costs, estimated at around €2 billion, will be recognized in the first half of 2024, impacting IFRS operating profit. However, excluding these restructuring costs, the program is expected to deliver only marginal cost benefits in 2024. SAP’s 2024 financial outlook and updated 2025 non-IFRS operating profit and free cash flow ambition fully reflect these expected cost savings and reinvestment.

For 2024, SAP forecasts significant growth in its cloud revenue, forecasting an increase of 24% to 27% at constant currencies, compared to €13.66 billion in 2023. The company also expects an increase in cloud and software revenue, estimating an increase of 8% to 10% at constant currencies, compared to €26.93 billion in 2023.

SAP’s proactive move into AI-driven business areas is in line with trends seen in the technology sector. Big tech firms are increasingly focusing on AI and automation to improve efficiency and innovation. SAP’s early experimentation with OpenAI’s ChatGPT and plans to embed generative AI technology into its products underscore its commitment to this strategic direction.

In conclusion, SAP’s €2 billion restructuring plan marks a significant step in its evolution as a technology leader. By focusing on AI-driven business areas and improving operational scalability, SAP is positioning itself to effectively navigate the rapidly changing technology industry landscape. The company’s efforts to maintain workforce levels through retraining and voluntary programs demonstrate a commitment to its employees during this transformative phase. With these measures, SAP aims to strengthen its position as a major player in the enterprise software market, adapting to the future needs of the digital economy.

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