On Tuesday, Europe’s most valuable technology firm SAP said that it is going to start a company-wide restructuring in a move to transform its business, primarily focusing on its aim to more than triple its cloud business by 2023.
According to the business software company spokespersons, the company is going to take restructuring charges of 800-950 million euros, especially in the first quarter and is expected to gain 750-850 million worth cost benefits from next year.
While speaking to media, CFO Luka Mucic said that a part of the potential move, the company could reassign a few employees, while offering early retirement to the rest, but is expecting to witness a higher total head count by the end of this year. Mucic added that the upcoming moves aren’t a part of any kind of cost-cutting program, instead it’s just a simplification and fitness program.
Bill McDermott, the CEO of SAP, mentioned that it is a good move for the company to restructure at the beginning of the year. He added that the sooner they embrace such a change the higher benefit the company can expect in the year end in terms of the company performance. He mentioned that they have decided to change when they are strong.
As per the CEO, the business software company is aiming to triple SAP cloud business by 2023. He said that for now they are trying to gain a better market share, and calls SAP the world’s number 1 business software company.
The German software giant said that revenues will ‘increase strongly’ strongly in 2019, on the back of the momentum in its cloud business, which continues to increase earnings. According to the group, software and cloud revenue is expected to rise 8.5% to 10% in constant currencies in 2019 to more than €22.4bn, with 33% to 39% hike expected in cloud subscription and support revenues to reach over €6.7bn as compared to €5bn in last year.