Despite positive financial results and forecasts, SAP, the enterprise software giant, has announced a significant restructuring focused on artificial intelligence (AI). The company revealed a large-scale restructuring plan affecting 8,000 jobs, equivalent to over 7% of its total workforce of 108,000 employees. This move signals SAP's full commitment to realigning its operations around AI-driven activities. With a planned investment of 2 billion euros, SAP aims to implement measures such as employee retraining in AI skills and voluntary departure programs to support this transformation. SAP assures that the majority of affected positions will be addressed through voluntary departures and internal retraining initiatives.
SAP's experimentation with generative AI technology, including the utilization of OpenAI's ChatGPT, will come with significant implications for its employees. The company believes that embracing generative AI will fundamentally reshape its operations and has committed over $1 billion to support AI-focused technology startups through Sapphire Ventures.
CEO Christian Klein stated, "SAP is embarking on a new chapter: through our transformation program, we will accelerate investments in strategic growth areas, particularly enterprise AI." Despite the restructuring, SAP remains confident in its prospects for 2024.
Additionally, SAP shared positive financial forecasts, expecting double-digit growth in cloud-related revenue and an increase in operating profit for the current year. Cloud revenue is projected to grow between 24% and 27% in 2024, building upon a 23% increase in the previous year.
CFO Dominik Asam expressed satisfaction with the company's performance, noting that the restructuring costs will impact the company's accounts in the short term but are expected to enhance productivity in the long run. Profit forecasts for 2025 are anticipated to reach 500 million.
This restructuring reflects a strategic shift for SAP, underscoring its commitment to AI in alignment with current trends in the technology sector. As companies like Google and Microsoft also pivot towards AI, SAP's emphasis on this technology highlights its forward-thinking approach to remain competitive in the industry.
