SAP Job Cuts Prove Harsh Realities of Enterprise Transformation

SAP

SAP SE Reports Slowing Growth After $10 Billion in Deals, now needs to save between €750 million and €800 million

SAP announced that it was restructuring in order to save between €750 million and €800 million (between approximately $856 million and $914 million). While not said in so many words, the fact could well be not so simple. This restructuring could mean up to 4,000 job cuts as SAP shifts into more modern technologies. “We are going to move our people and our focus to the areas where the new economy needs SAP the most: artificial intelligence, deep machine learning, IoT, Blockchain and quantum computing,” CEO Bill McDermott told a post-earnings press conference.

SAP SE is not the only brand to go through this. IBM has been trying to concentrate its transformation over the last several years, and has struggled to make this change by framing workforce reduction and moving to modern skill sets. According to the CFO Luka Mucic, this move is less about cost-cutting, and more about ensuring the long-term health of the company. He , however, admitted it  involved job cuts.

The company believes that in spite of these cuts, it will actually have more employees by this time next year than it has now, but they will be shifted to these new technology areas. “This is a growth company move, not a cost-cutting move; every dollar that we gain from a restructuring initiative will be invested back into headcount and more jobs,” McDermott said. SAP maintains that its cloud revenue will reach $35 billion in revenue by 2023. He also mentioned that the company would be offering a generous severance package to any employee leaving the company as a result of today’s announcement.

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