Dive Brief:
- Following slow growth in Q4, SAP is undergoing a companywide restructuring which will have a restructuring charge between $915,000 to $1.1 billion, most of which will fall in the first quarter, according to the company's quarterly report.
- CEO William McDermott and CFO Luka Mucic said the company will cross the 100,000 employee mark by the end of the year, in the earnings call Tuesday morning. But around 4,400 jobs will be impacted by the restructuring. Some employees will receive early retirements and exit packages, while others can expect new assignments; the company has already started lift-and-shift transfers of entire departments to new areas where skills fit, Mucic said.
- McDermott and Mucic said the second restructuring in four years would help double down on investments in strategic growth areas.
Dive Insight:
The company reported relatively strong earnings for FY 2018, with cloud driving new growth for the legacy software company.
SAP is moving employees to focus on areas where the new economy needs the company, turning it into "a fighting machine," according to McDermott. These include database, cloud, artificial intelligence, deep machine learning, internet of things, blockchain and quantum.
McDermott emphasized the restructuring as a "growth company move, not a cost-cutting move," and pledged that cost benefits from the move — expected to range between $850 million and $970 million — will go back into the company's employee base.
"Every dollar that we gain from a restructuring initiative will be invested back into headcount and more jobs," he said.
The company was optimistic about 2019 and later prospects for Qualtrics, a 2018 software acquisition that closed on January 23. SAP acquired the customer experience management company for $8 billion.
