On January 23rd, German software giant SAP SE (SAPG.DE) announced a comprehensive restructuring initiative, allocating 2 billion euros ($2.17 billion) to realign 8,000 roles. This strategic move, revealed on Tuesday, aims to sharpen the company's focus on burgeoning sectors, particularly those driven by advancements in artificial intelligence (AI).
SAP envisions a transformative impact of generative AI on its operations and is committing over $1 billion to this arena. This investment extends to fostering AI-centric technological innovations within the startup ecosystem, facilitated through its corporate investment arm, Sapphire Ventures.
The restructuring endeavor is strategized to zone in on pivotal growth territories, prominently in the business AI domain. SAP plans to execute this transition primarily through voluntary departures and dedicated internal skill development programs. The company anticipates maintaining its workforce size by the end of 2024 at levels comparable to the present.
Currently, SAP's workforce surpasses the 105,000 mark, a figure verified by the company's official online presence.
The financial implications of this restructuring are expected to be most noticeable in the initial half of 2024, notably affecting the operating profit margins. In a separate disclosure on the same day, SAP projected its cloud revenue for 2024 to be between 17 billion and 17.3 billion euros. Additionally, it revised its 2025 forecast, predicting an adjusted cloud gross profit in the vicinity of 16.2 billion euros. This comes after the company's cloud revenue for the year ending 2023 tallied at 13.66 billion euros, not meeting the anticipated 14.06 billion euros and falling short of market expectations for the third quarter.
