SAP, a global leader in enterprise application software, has announced a dual initiative to bolster its position in the tech industry. The company’s strategic vision involves updating its Ambition 2025 plan and launching a comprehensive restructuring program for 2024.

Under the Ambition 2025 plan, SAP aims for a non-IFRS operating profit of approximately €10.0 billion and a free cash flow of approximately €8.0 billion. This updated plan considers share-based compensation expenses of around €2 billion and anticipates incremental efficiency gains from the restructuring program, showcasing SAP’s commitment to outperforming market expectations.

The transformative 2024 program, expected to cost around €2 billion, will affect 8,000 employees. SAP plans to retrain or facilitate voluntary leave for these employees, aligning its workforce with a focus on key strategic growth areas, particularly in Business AI. The company envisions leveraging organizational synergies and AI-driven efficiencies to prepare for highly scalable future revenue growth.

“In 2024, SAP will further increase its focus on key strategic growth areas, in particular Business AI. It also intends to transform its operational setup to capture organizational synergies, AI-driven efficiencies, and to prepare the company for highly scalable future revenue growth,” states SAP.

The restructuring program is designed to be implemented through voluntary leave programs and internal re-skilling measures, ensuring that SAP exits 2024 with a headcount similar to current levels. Despite the expected €2 billion restructuring expense, SAP anticipates minimal cost benefits in 2024, with the majority of savings, around €500 million, to be realized in 2025.

SAP’s move aligns with industry trends, as a recent PwC survey revealed that 25% of CEOs anticipate AI triggering staffing reductions in 2024. The company had earlier signaled its AI commitment by introducing Joule, a generative AI-powered assistant, to various business applications.

Moreover, SAP’s collaborative efforts with IBM to provide AI solutions for consumer packaged goods (CPG) brands and the retail sector underscore its commitment to expanding its Business AI offerings. The partnership aims to enhance supply chain operations, optimize store delivery routes, and improve overall operational efficiency.

As SAP positions itself for a transformative future, it remains focused on building an enterprise AI ecosystem through direct investments and strategic partnerships. The ambitious plans for 2025 and the restructuring program for 2024 underscore SAP’s commitment to innovation, efficiency, and sustained growth in the dynamic tech landscape.

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