German software firm SAP SE is set to undergo a major restructuring plan in order to focus on the growth and innovation of artificial intelligence (AI)-driven business areas. The company announced a 2 billion euro ($2.17 billion) investment, with plans to invest more than $1 billion in generative AI. SAP aims to leverage the power of AI to transform its business and has committed to opening new tabs in AI-powered technology startups through Sapphire Ventures, its enterprise capital firm.
“The potential of AI to revolutionize industries is immense,” said SAP CEO. “We see tremendous opportunities in business AI, and we believe that by restructuring our company, we can better position ourselves to drive innovation and growth in this field.”
The restructuring plan will involve approximately 8,000 roles and will be implemented primarily through voluntary leave programs and internal re-skilling measures. SAP expects to exit 2024 with a headcount similar to current levels. The expenses related to the restructuring will impact the company’s operating profit, primarily in the first half of 2024.
SAP’s cloud business is also set to receive a boost, with the company forecasting cloud revenue of 17 billion to 17.3 billion euros for 2024. Additionally, the company updated its 2025 outlook, now projecting an adjusted cloud gross profit of approximately 16.2 billion euros.
While SAP’s cloud business revenue for the end of 2023 fell short of its forecast, the company remains confident in the potential of AI to drive growth and profitability. “We recognize that we have some ground to cover, but we are taking the necessary steps to position ourselves as leaders in the AI space,” said the CEO.
SAP’s investment in AI aligns with the global trend of businesses recognizing AI’s transformative potential and working towards integrating it into their operations. The company’s commitment to opening new tabs in AI-powered startups demonstrates its dedication to nurturing innovation and collaborating with emerging players in the field.
Analysts and industry experts are optimistic about SAP’s restructuring plan and believe it positions the company well for the future. “By focusing on AI-driven business areas, SAP is positioning itself at the forefront of technological advancements, ensuring its relevance and competitiveness in the evolving landscape of business software,” said an industry analyst.
SAP’s restructuring plan and investment in AI highlight the company’s determination to tap into the power of AI and unleash its full potential. With a focused approach and a commitment to collaboration and innovation, SAP aims to drive growth and shape the future of business AI. As the company continues on this journey, the industry eagerly awaits the transformative outcomes that will undoubtedly arise from this strategic shift.
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