As of: January 24, 2024, 10:13 a.m
By: Lars-Eric Nievelstein
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The software giant SAP is investing billions in AI conversion.
8,000 jobs are to “change”.
The big goal behind it: More efficiency in the company.
Walldorf – Just a few weeks ago, SAP hit the headlines because of a controversial evaluation program for its employees.
The group is now planning a “transformation” of thousands of jobs.
In 2024, the software company says it wants to place a stronger focus on “strategic growth areas”, especially AI for companies.
The declared goal: an increase in efficiency.
Company Name |
SAP SE |
Positions affected by the AI conversion |
8,000 |
Cloud revenue growth rate (projection) |
24 percent to 27 percent |
Transformation program aims to push AI at SAP
“Transformation Program 2024” – this is what SAP calls the measures ahead of the company.
The “company-wide restructuring” is expected to affect around 8,000 employees.
About a year ago, SAP had already cut 3,000 jobs.
She wanted to concentrate more on the core business around corporate management software.
“With the planned transformation program, we are shifting more investments into strategic growth areas, primarily in AI,” said CEO Christian Klein about this step.
SAP also wants to “develop groundbreaking innovations in the future and at the same time improve the efficiency of our business processes.”
8,000 jobs affected by restructuring
In detail, SAP wants to use volunteer programs and internal retraining measures for “most of the approximately 8,000 positions”.
The number of employees should not change - it is just not clear whether they will ultimately be the same employees.
SAP estimates the resulting restructuring costs at around two billion euros, which will primarily be incurred in the first half of 2024.
“This will influence the operational event,” said the DAX group.
The SAP headquarters in Walldorf.
The software company was able to increase its sales by 6 percent to 31.2 billion euros last year.
(Symbolic image) © Uwe Anspach/dpa
In the current year it is therefore expected that the program will only bring in a small cost advantage.
However, the restructuring should influence the result for 2025.
The artificial intelligence efforts are intended to prepare the company for future revenue growth.
In 2023, SAP had already presented the AI helper Joule, which is intended to make typical company tasks easier for employees.
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“Winning Culture” at SAP – grades for employees
However, artificial intelligence is not the only lever that SAP wants to use to increase its efficiency.
A few weeks ago, the media reported on a new evaluation system that would grade SAP employees based on their performance.
Managers should be able to divide employees into three categories: “Performers” for the top employees, “Achievers” for the midfield, and “Improvers” for anyone whose performance is not sufficient in the manager's eyes.
However, it is questionable whether this system will ever be used.
The works council viewed this practice as “critical” at best.
Experts feared that the “bottom” percent should be put under such systematic pressure.
Getting someone to resign is often easier than terminating them.
“Nobody can handle that psychologically for long,” the
Handelsblatt
quoted a works council member as saying.
21 percent growth in operating profit expected
For 2024, SAP expects a growth rate of 24 percent to 27 percent in cloud revenue.
These should be between 17.0 billion euros and 17.3 billion euros.
Together with software revenue, the company forecasts a currency-adjusted growth rate of 8.0 percent to 10.0 percent (to 29.0 billion euros to 29.5 billion euros).
The operating result (also adjusted for currency effects) is expected to be in a range between 7.6 billion euros and 7.9 billion euros.
For comparison: in 2023 it was 6.51 billion euros.
According to the group, this corresponds to a growth rate of 17 percent to 21 percent.