How SAP is Updating its Strategy to Focus on Business AI

SAP is Updating its Strategy to Focus on Business AI as it Announces a Restructuring Process to Prepare Itself for Future Revenue Growth

Enterprise application software leader SAP has announced a company-wide transformation programme for 2024 as it looks to focus on business growth areas like AI.

The restructuring programming, which will affect approximately 8,000 affected positions – equivalent to around 7% of the company’s workforce – will see the German tech giant make re-investments into strategic growth areas, particularly AI. WIth a number of those positions to be subject to reskilling initiatives, the company says it expects to exit 2024 at a headcount similar to the start of the year.

“SAP will further increase its focus on key strategic growth areas, in particular Business AI,” the company said in a statement. “It also intends to transform its operational setup to capture organisational synergies, AI-driven efficiencies and to prepare the company for highly scalable future revenue growth.”

SAP has announced a number of cloud and AI innovations, including its enterprise generative AI assistant Joule, a natural-language, generative AI copilot. The company also recently revealed former Microsoft executive Walter Sun as its new Global Head of AI, as it looks to further implement AI into its solutions.

SAP joins technology companies looking to AI to drive future growth

To ensure that SAP’s skill-set and resources continue to meet future business needs, SAP plans to execute a company-wide restructuring programme in 2024. It says the majority of the approximately 8,000 affected positions is expected to be covered by voluntary leave programmes and internal re-skilling measures.

SAP says restructuring expenses are preliminarily projected at around €2 billion (US$2.17bn).

Already in 2024 a number of technology companies including Google and Amazon have announced restructuring initiatives prompted by a global increase in AI adoption.

While a number of companies reduced teams in their thousands in 2023, citing challenging economic conditions and a spell of over-hiring prompted by the COVID-19 pandemic, big tech companies today are pointing to AI as the reasons for their restructuring.

In 2023 a number of technology companies revealed they would be focusing on AI going forward, and with an IBM report finding that about 42% of enterprise-scale organisations are actively using AI in their businesses, that AI adoption is set to increase further.

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