One of Europe’s leading enterprise software companies, SAP, has unveiled a major restructuring initiative, redirecting its focus towards artificial intelligence (AI). The German tech giant announced a €2 billion ($2.2 billion) investment for the year, earmarked for transformative measures, including buyouts and comprehensive retraining programs. The strategic move aims to position the company for future scalable revenue growth, acknowledging the increasing significance of AI technologies.
As part of the restructuring, SAP anticipates impacting more than 7% of its workforce, affecting around 8,000 jobs out of its 108,000 employees. The company emphasized that voluntary leave programs and internal re-skilling measures would be primary mechanisms to address the workforce changes. With reinvestments planned, SAP aims to exit 2024 with a headcount similar to current levels.
CEO Christian Klein highlighted the significance of the transformation program, stating, “SAP is opening the next chapter: with the planned transformation program, we are intensifying the shift of investments to strategic growth areas, above all Business AI.” The company remains optimistic about its prospects in 2024, anticipating a positive trajectory aligned with its evolving strategic focus.
SAP joins a growing list of global companies prioritizing AI as a key driver of innovation and growth. Last summer, the company announced investments in three generative AI firms, reinforcing a commitment to allocate over $1 billion for AI-powered enterprise tech startups. This move reflects the broader trend of tech companies like Wipro and Huawei channeling significant investments into AI capabilities and comprehensive training programs.
In a separate announcement on Tuesday, SAP reported annual earnings that exceeded expectations. The company foresees a substantial increase in revenue, ranging from 24% to 27%, for its crucial cloud business in the upcoming year, anticipating accelerated growth in this domain. Following these announcements, SAP’s shares experienced a 4% surge in after-hours trading in New York.
SAP expects most expenses related to the reorganization to impact the first half of 2024, affecting operating profit. The company’s strategic realignment underscores the dynamic landscape of the tech industry, with AI emerging as a central focus for innovation and sustained growth.
