SAP Launches Restructuring Program to Incorporate AI into Operations
SAP, the provider of enterprise application software, has announced the launch of a restructuring program aimed at integrating more artificial intelligence (AI) into its operations. The company plans to impact 8,000 employees through either retraining or voluntary leave. SAP’s goal is to focus on key strategic growth areas, particularly in Business AI, and transform its operational setup to capture organizational synergies and AI-driven efficiencies.
The restructuring is expected to cost approximately 2 billion euros ($2.2 billion), but will result in savings of 500 million euros ($545 million) from efficiency gains by 2025. Despite the workforce reduction, SAP intends to have the same number of employees by the end of 2024, as it plans to reinvest in strategic growth areas.
CEOs Predict Staffing Reductions Due to AI
According to a recent survey conducted by PwC, 25% of CEOs believe that artificial intelligence will lead to reductions in staffing this year. A quarter of CEOs expect generative AI to result in job cuts of at least 5%, while nearly half believe that generative AI will increase profitability in the next 12 months. However, 47% of CEOs think that AI will bring little or no change.
SAP Focuses on AI Integration with Generative AI-powered Assistant & Business AI Offerings
In September, SAP announced the addition of Joule, a generative AI-powered assistant, to its business applications in areas such as human resources, finance, supply chain, procurement, and customer experience. Furthermore, SAP is continuously enhancing its Business AI offerings, with over 26,000 cloud customers using AI capabilities across multiple solutions. The company’s comprehensive strategy involves both direct investments and third-party partnerships to build an enterprise AI ecosystem.
SAP Partners with IBM for AI Solutions in Consumer Packaged Goods and Retail Industries
SAP has recently joined forces with IBM to provide AI solutions for consumer packaged goods (CPG) brands and the retail industry. The partnership will focus on improving supply chain operations, store delivery routes, product portfolios, and order settlement, among other areas.
The collaboration between SAP and IBM underscores the increasing emphasis on AI integration in various industries, as companies strive to enhance efficiency, streamline operations, and drive profitability.
Analyst comment
Positive news: SAP Launches Restructuring Program to Incorporate AI into Operations
As an analyst, I would predict that the market will react positively to SAP’s restructuring program. The incorporation of artificial intelligence (AI) into its operations is a strategic move that aligns with industry trends. The focus on key growth areas and the potential for cost savings will likely be well received by investors.
Negative news: CEOs Predict Staffing Reductions Due to AI
As an analyst, I would anticipate a negative market reaction to this news. The survey results suggest that AI adoption may lead to job cuts, which could raise concerns about unemployment and potential workforce displacement. This could result in uncertainty and possible investor caution.
Neutral news: SAP Focuses on AI Integration with Generative AI-powered Assistant & Business AI Offerings, SAP Partners with IBM for AI Solutions in Consumer Packaged Goods and Retail Industries
As an analyst, I would expect a neutral market reaction to this news. SAP’s focus on AI integration and partnerships with IBM indicate a commitment to staying competitive in the AI space. While these developments may attract interest from investors, the impact on the market as a whole is not likely to be significant.