SAP has announced a mass restructuring with plans to reskill 8,000 employees, as it prepares for an AI-centric future.
The leading CRM and ERP solutions provider shared the news during an earnings call, which led helped its stock surge by seven percent – taking it to an all-time high.
Christian Klein, CEO of SAP, told investors at its 2023 Q4 earnings call: “The transformation program we are announcing today will shift additional resources to Business AI in line with the significant growth potential we see for SAP.
Over the next 2 years, SAP will invest almost €1 billion to develop powerful AI use cases for our customers.
Klein continued: “It is important to be clear this workforce transformation will include a restructuring component. We intend to allocate roughly €2 billion for this.”
“The Greatest Opportunity”
The company’s CEO hailed generative AI as “the greatest opportunity since the rise of the cloud, especially for SAP.”
He revealed that SAP will embed artificial intelligence throughout its solutions, integrating it with all business processes, and making it available to end customers.
To demonstrate its enhanced commitment to AI, SAP has declared a new goal of becoming the number one enterprise application and Business AI company.
SAP executives were quizzed on the possible disruption to sales that may occur as a result of its restructuring efforts.
Scott Russell, Executive Board Member and Head of Customer Success at SAP, responded that although there is an execution element to consider, “the potential is strong” for it to manage these changes while simultaneously accessing new markets and utilizing digital modalities.
Reskilling vs Rehiring
As AI continues to advance, job displacement remains a concern. Indeed, as automation continues to streamline processes, it also poses questions about how traditional roles will change.
Proactive adaptation seemingly offers the answer for SAP. That involves implementing reskilling initiatives, fostering critical new skills, and promoting a more sustainable workforce management strategy that balances human and virtual expertise.
Moreover, Klein explained that it will take “every possible effort” to mitigate the impact that the restructuring program will have on employees. He added the reassurance that it is expecting to end the year with a similar headcount to its current levels.
SAP’s Chief Financial Officer, Dominik Asam, told CNBC in a recent interview, however:
The majority of these people we either want to reskill and transfer to new positions, over offer voluntary measures, [but we] cannot exclude that there will also be non-voluntary departures [as a result of the restructuring].
SAP’s focus on AI comes after its difficult decision to limit innovation to its cloud models, which helps to lay the foundations for its big AI push.