SAP Shares “Workforce Transformation” Update After Employee Pushback

Employee reps had accused the transformation of being a pretense for job cuts

SAP Shares “Workforce Transformation” Update After Employee Pushback
CRMLatest News

Published: April 23, 2024

Charlie Mitchell

SAP has shed a little more light on the ongoing workforce transformation taking place within the company.

As announced in January, SAP plans to eradicate 8,000 roles but retrain many impacted employees and offer them new, AI-centric posts within the business.

Yet, as CX Today reported earlier this month, SAP’s European Workers Council accused the enterprise tech juggernaut of using the “transformation” as a guise for layoffs.

Indeed, in an internal email – first publicized by the German newspaper Handelsblatt – the employee reps council stated:

“[SAP appears to have made decisions] solely or primarily based on costs, and not on the actual value that existing employees, teams, and locations represent for our customers.”

Moreover, they voiced dissatisfaction with SAP’s internal communication regarding the move.

Indeed, the Workers Council claimed that leaders had not justified its business logic or provided precise information about the inefficiencies it strives to push past.

However, during an earnings call on Monday, Christian Klein, CEO of SAP, shared an update on the progress of SAP’s workforce transformation program.

Under questioning from business analysts, he said:

We have identified the job profiles which we either reskill or actually want to reduce also via restructuring.

Already, those reductions have started, with 100 employees reportedly fired in SAP’s Montreal office in Montreal last week – in a move linked to the restructuring.

Yet, there is a long way to go, with SAP accruing €2.2BN for the restructure and, according to Dominik Asam, CFO of SAP: “Very little if anything has been paid already in Q1.”

The Next Stage of SAP’s Transformation

After evaluating the future of roles across the company, Klein aims to usher in the next stage of the transformation. He said:

“We bring all the data scientists [and] new capabilities on board across the platform, which we need to capture our future growth opportunity.

In doing so, Klein claims SAP is making “even better progress than expected,” bringing in new AI talent and employees in “future-centered” areas. He continued:

The program will help us to capture growth and increase efficiency at the same time, among other things, by pushing the internal use of AI.

“We expect a triple-digit million amount in efficiencies from embedding AI across all our processes.

“Equally important for us as an employer, where our SAP colleagues are affected by restructuring, we are moving with care and empathy, always aware of our social responsibility.”

While the European Workers Council may disagree, Asam echoed Klein’s words and promised greater transparency moving forward.

“As we mature our restructuring program, we [will] have more clarity on how many people are leaving [and] at what cost,” he said.

Earnings Highlights from SAP

During the earnings call, SAP shared that its cloud revenues had risen by 25 percent year-over-year (YoY) in constant currency, supported by 32 percent YoY growth for its Cloud ERP Suite earnings.

Moreover, the firm revealed that total revenues rose by eight percent YoY while reaffirming its FY2024 outlook.

Yet, although that may appear rosy, it’s critical to note that SAP’s decision to limit innovations to its cloud models last year likely prompted this SaaS surge.

By doing so, SAP broke its 2020 commitment to give its customers a choice between cloud and on-prem deployments.

In December, Paul Copper, Chairman of the UK and Ireland SAP User Group (UKISUG), commented on how that move had upset many of its customers:

On-prem and hosted customers are unhappy, to put it mildly, with the statement from [CEO] Christian Klein stating that SAP will only be releasing new innovations in the cloud.

As such, while the migration numbers look healthy now, how the move will impact SAP in the longer run remains to be seen.




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