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SAP Unveils €2 Billion Restructuring Plan to Propel Growth in AI-driven Business Areas

Berlin, January 24, 2024, The Europe Today: German software giant SAP SE announced a comprehensive restructuring plan amounting to €2 billion ($2.17 billion) on Tuesday, targeting 8,000 roles as part of its strategic shift towards emphasizing growth in artificial intelligence (AI)-driven business domains.

SAP envisions a transformative impact on its business with the advent of generative AI and has committed to invest over $1 billion, alongside opening avenues for AI-powered technology startups through its enterprise capital arm, Sapphire Ventures.

The restructuring initiative aims to enhance focus on critical growth sectors, particularly business AI. SAP plans to implement the program primarily through voluntary leave programs and internal re-skilling measures. The company anticipates exiting 2024 with a headcount “similar to the current levels.” SAP presently employs over 105,000 individuals, according to its website.

The restructuring expenses are expected to impact operating profit, with a significant portion incurred in the first half of 2024.

In a separate announcement on Tuesday, SAP provided a forecast for 2024 cloud revenue in the range of €17 billion to €17.3 billion and updated its 2025 outlook, projecting adjusted cloud gross profit of approximately €16.2 billion. The company’s cloud business revenue at the end of 2023 fell slightly short of expectations, coming in at $13.66 billion euros, missing the forecast of €14.06 billion euros. This follows SAP’s previous shortfall in analyst expectations for cloud revenues in the third quarter.