SAP Gambles $2 Billion on AI to Supercharge Business Software
In a bold strategic move, German software powerhouse SAP has declared a staggering $2 billion investment in artificial intelligence (AI) capabilities, solidifying its position as a front-runner in delivering AI-driven business solutions.
However, this grand endeavor comes with a significant caveat a major restructuring plan that will impact 8,000 jobs in 2024. While the company is offering voluntary departure and retraining programs to affected employees, this ambitious leap into AI underscores the reality that even industry giants are not impervious to disruption.
Despite the impending job cuts, SAP anticipates maintaining workforce stability by reinvesting the savings into key growth areas, particularly AI. This move has resonated well with investors, as share prices surged by over 7% on Tuesday morning, signaling optimism about the company's future trajectory.
The revamped game plan is clear: "SAP will sharpen its focus in 2024 on strategic growth areas, with a strong emphasis on AI for business," the company announced. The objective is to further enhance SAP's standing as a provider of intelligent enterprise solutions.
SAP enjoyed a robust net profit of $6 billion in 2023, largely attributed to the windfall from the Qualtrics IPO. While a recalibration of the medium-term profit outlook occurred due to accounting changes, the company remains steadfast in its total revenue and cloud revenue goals of $41 billion and $23 billion, respectively, by 2025.
Amidst the backdrop of AI transforming various industries, SAP is evidently determined to ride this wave. The company had already initiated a strategic overhaul in 2023 to combat sluggish growth, resulting in a global workforce reduction of 3,000 jobs.
By doubling down on next-gen AI capabilities for business, SAP aims not only to sustain its leadership in driving digital transformation for enterprises globally but also to undergo its own internal transformation in the era of AI dominance.