Thread regarding SAP layoffs

DA said last year, to paraphrase, SAP was run for the benefit of its employees and now it will be run for the benefit of its shareholders. I didn’t realize he specifically meant CK, HP and himself.

What do you mean "new name" the NLT term has been used for at least a year. I was laid off in NLT 2024 back in July.

@5wtk+1w0xfWu2 In the Q3/2024 Quarterly call, there were 8 outside participants from the investments houses - basically these are the ones who are following SAP. All were analysts (none were the regional heads of anything... although not sure what difference this would make.??)

These ones asked about 7 questions, nothing too difficult of CK and DA. Of course at this time the stock is performing at record peak levels, so no one would rate SAP as a sell. But the Financial sites have already noted that while the stock is soaring, SAP is in midst of thousands of layoffs.

So the point was that as long as CK and DA have bullets to use to drive stock performance ( and these bullets are called HC) , then they can continue to run down the expenses and boost stock price.

The "real" time for everyone to be concerned is when these two start running out of bullets to use -hopefully everyone has already run for the hills at that time.

And yes I looked at the transcript of the Q3 call and still interesting that DA never reported on "net profit"... lots of other metrics but nothing on this key one.... maybe in front of our next All Hands call, a question should be submitted as to why SAP stopped reporting on this one ?

@3wdj+1w0xfWu2 Have you seen who the people are on these quarterly earnings calls? Regional Heads from JP Morgan, Goldman Sachs, Jeffries, UBS, etc. Investment banks and institutional investors grilling the CEO and CFO on key metrics. Our company is already being swallowed by investors. They tell the world whether SAP stock is rated as a buy or sell. When you should be worried is when many of them rate it as a hold or sell.

As long as the founders remain involved, nothing drastic will happen.

Most likely once they depart and a new Chairman and Board are installed, only then we will have new C level people in place. At that point then everything will depend on what the vision of this new group of leaders is.

But in the meantime, I see CK and DA running the company from the expense side of the house - they are becoming quite proficient at this. Of course, there are 3 forms of Profit, Gross Profit, Operating Profit and Net Profit , all of which are impacted by expenses. Since Asam has been CFO, SAP has not been reporting "Net Profit", just Gross and Operating (check the Quarterly Results yourself). Net profit is what is left over after all expenses and operating cost are taken out ( i.e. payroll costs). Net profit is commonly referred to as a company's “bottom line” and is the true indicator of a company's profitability and the holy grail of how competent the Leadership is in running the company.

In the last several years, SAP has let go of 15 -20K employees and cut expenses, but still Net Profit is not as attractive as they would like ( surely this is why "Net Profit" is currently is not reported ). So look for more and more expense reductions to take place in the coming year(s) to boost this key metric. CK and DA have learned that good expense reduction can really boost the stock price and their own portfolio and that is how they choose to run the company, which never fares well for the employees.

Regarding the eventual departure of Hasso and Dietmar, no question we will be run much, much differently than we are today no matter who takes over. This could be worse or it could be better, we will have to wait and see.

However my concern is that the company falls into the hands of investors who look to make a quick profit by even more cuts than our current situation, then we will all be at even greater risk.

For those who were here during the short tenure of the Elliott group, then we saw just how a hedge fund operator can come in dismantle the company , out an significant number of top positions ( L2 and above) and for the rest of the employee base, do a layoff at the same time.

Yes, this strategy paid off well for Elliott, so that their efforts drove up the stock price and within one year they were in and out of SAP and they made a nice profit.

So when the time comes and Hasso and Dietmar are no longer the gatekeepers, should we get a Hedge fund company to take over, it could really wind up being a blood bath here.

And I don't think this situation is that far away.

@3zwu+1w0xfWu2
“Our Cloud companies also either as one package or individually could be sold to one of our competitors. “.

I was wondering this myself. My impression is that that three of the products that comprise ISBN can no longer (By varying degrees), be considered as being best in class products.

I also don’t see these three products as being “Must-haves” for SAP. They do bring in a very nice amount of ARR, that contributes to SAP’s bottom - line, the ARR would be a good reason to divest too.

I think SAP is too big for a buyout. However I could see that poor leadership which advances stock price on expense reduction ( by way of layoffs, departures, VERP..) and props up sales figures by way of acquisitions, is ripe for ruination.

Once Hasso ( and Dietmar) are no longer in the picture I can see monumental changes for SAP which will turnaround the company as it exist today. Let us not forget, since it's inception SAP has been run by the founders, never has there been outside decision makers charting how SAP will progress.

Therefore once our leadership has run out of opportunities to cut costs and is up against the wall, I can see the company being split up and liquidated - this is not out of the question. Surely our ERP biz (and maintenance rev. ) will be quite attractive to much smarter companies who know how to leverage this biz, which not too long ago was rated Best in Class. Our Cloud companies also either as one package or individually could be sold to one of our competitors.

It's the price we pay for not having very seasoned leadership running a Fortune 100 company and who is managing by shrinking our HC. Like they say, "you cannot grow by shrinking yourself"

It's just a matter of time.

I think eventually Google or Microsoft will buy SAP out based on how technology has evolved in the last 2 years, and for that to happen, they want to get rid of the excess fat. A leaner SAP with low operating costs is what will make it attractive to them. We are moving towards that direction, gradually.

@2rjk+1w0xfWu2 I am aware that it is very difficult to layoff anyone in Germany, but the articles which were posted referenced "layoffs". Maybe they were right or maybe they were wrong, I don't know.

I also know that in Germany the VERP program requires both sides (employee and SAP) to agree on accepting the VERP (not like this in other countries) and so everybody who applied was not going to get the VERP. But I do expect, after speaking with several WDF colleagues that the VERP program is likely to be an ongoing/yearly program for Germany employees, so if this is the case, those who didn't get it this year are likely to get it in the future.

Nonetheless, whether we speak about Germany, US or any other location, who is the individual(s) who are keeping track of the "actual" number of people who took VERP, who was laid off and who left on their own? I think all of us knows that there is nobody who tracks this information on a "reliable and honest" basis ". Therefore we, as employees, can only look at the numbers which SAP pushes out and as we see from the Employee Survey, the level of morale, the level of trust and the level of honesty which the employees have in our Leadership is at all time low levels.

This was the point being made, is that none of us knows at all, now or in the year(s) ahead what exactly SAP is doing with it's headcount. So, when we get information from the company on such details, while there was a time long ago when we could believe what was being told, the employees have now spoken, and they said they have no trust in our Leadership.... and this is a pretty bad statement on such an important topic like whether your contributions will result in keeping your job or being put out on the street.

@ @2fvz+1w0xfWu2 there were no real layoffs in Germany everyone left voluntarily. The numbers in the media (I heard nothing official from the Board) is approx. 2800 VERP and 700 voluntary redundancies. Apparently the general interest was much higher and 5300 initially signaled they would consider leaving. I know quite a few that were refused voluntary redundacy and of course some decided to stay and not take the package. I think nothing will happen in Germany for the next few years but the jobs are gone there will be minimal replacements here.

Just to be clear, SAP announced earlier this year that 2600 jobs would be reduced in Germany by way of VERP and severance pck.

In this latest announcement, it's now reported that 3500 jobs will be reduced in Germany, but no metrics on how much of this number are VERP and how much are layoffs.

In any case, "who" is the person from which employees can go to "with trust" to get an accurate number once this is done ( assuming there is an endpoint) and get the real numbers as to who got laid off and who took VERP?

Fact is that none of us will ever really know the real numbers of how many got reduced and thru what process. We are all in the dark as to what really happened.

SAP’s NA HR team has started to “call back” the MM execs that got sacked earlier in the year. I cant wait to see this… sounds like an SOS

This isn't new information, the 3500 extra are the people who in Germany took up saps offer to get the he-l out of this sinking ship with a golden lifeboat more than what they had anticipated. I don't blame them I might well have done it as well. There is going to be a giant restructuring next year as they change all the product areas to be focused on who we sell the products to that has already been announced to p&e teams

The one key piece of information which wasn't included in SAP press release on the 10,000 layoff number is, When will this happen?

Is this coming Q1/2025, will it be spread out over H1, will it be throughout the entire year?

I suspect that CK and the Board don't want to provide a date, this way they can just have an open window to continue Layoffs as they see the need to up the stock price and keep the layoffs going on a revolving door basis.

In the end, this works out well for them, because nobody will ever really know what exactly was the number laid off - was it 10,000, or maybe 15,000 or some other number, but giving them the ability to take out as many as they (already) have targeted in order to bring down the total HC to their desired number as fast as they can.

My expectations is that if the company has taken the unprecedented step of laying off 3500 in Germany and the overall target is to move out 10,000.

Then I am fully expecting the remaining 7000 to come out of NA. Would not be surprised to see some offices shut down to get to this number - keeping in mind that we already went thru a couple of rounds where SAP laid off 10,000 so there is becoming limited opportunity to find roles to layoff without shuttering the entire office and relocating somewhere else ( either in US or offshore)

I suspect SAP will wind up with maybe 2 locations in NA when all is said and done (geographically one on East coast and the other on West coast) both of which will be drastically reduced in size and limited to roles that are directly customer facing.

I believe the Board is now looking at our future biz to be entirely "transactional" w/o the need for a lot of back office sales support needed. Basically you buy the Cloud product for the one year subscription and the whole process is cookie cutter and automated - no need any longer for the supporting cast.

As SAP moves more and more into the Cloud, it will have to shed more and more HC. Cloud is nowhere near as profitable as was our ERP Business. Cloud products are not meant for large scale Business Enterprise's, but rather for SMB.

These products don't require the HC in Development applications because SAP has bought its way into the Cloud Biz.

Just think in terms of a pendulum, the more our business swings towards Cloud, the more HC we will lay off - it's just that simple

https://allwork.space/2024/11/germanys-sap-chooses-india-as-new-epicenter-for-workforce/#:~:text=SAP%20is%20building%20a%20second,based%20out%20of%20the%20country.

"Germany’s SAP Chooses India As New Epicenter For Workforce" It's all right here in this article as to what CK and the Board have planned ( ...for some time now). New building for 15,000 employees in India - and where do we think these 15,000 new jobs will come from? Just to level set, 15,000 is just about the total employees in NA.

I have nothing against my friends in India, but for those in high cost locations like Germany and NA, you should be very concerned about future employment, which will begin to disappear in a substantial way.

What cannot be moved to India ( or another shared service center) will be outsourced to a low cost provider in country

CK made it very clear in this article as to what should be expected and that is “ SAP will over proportionally” hire in India. Should no longer be any questions about what is coming.

“Lifting and shifting” to Medium -cost locations (TM Cristian Klein) saves a bunch of money. The issue for client - facing roles is that service does usually suffer for myriad reasons. It’s a calculated risk for CK and DA, they obviously see the degradation of customer service as a trade-off for the savings

I have been with SAP for more than 20 years and can say for sure, that this is no longer the company I am familiar with. Morale is the worst ever for SAP and for that matter for any company. Employees are no longer having confidence in the company or even more so in our leadership. It's hard to believe anything we are told. Honestly I don't even think my L2 or L1 managers really even know what the Board's long target is on Headcount.

I do think that CK and the rest have figured out that expense reduction by way of layoffs will drive up the stock price to record highs and so I see more and more layoffs coming in the years ahead.

Bottom line is that we need a new Chairman ( we all know that it is still Hasso calling the shots) and the sooner the better. It's hard to understand a strategy that abandons the ERP product which made SAP ( along with the maintenance revenue) and to just walk away from this in favor of Cloud biz which is over saturated with competitors fighting for peanuts on margin.

SAP, what has happened to you??

I also saw the same information on other sites as well.

https://breakingthenews.net/Article/SAP-said-to-cut-3500-jobs-in-Germany/63201903

I am a bit surprised that the Board was able to demand compliance from the Workers Council, without any job action. I have managed global teams and whenever there was an impending layoff of a WDF employee, they had to be given "significant" time ( could be up to a year) to find some other SAP Department they could go with.

Was stated that some 2500 were approved for the VERP - this along with this 3500 to be laid off will take out about 15% of the overall workforce in Germany.

This tells me that if the Board is serious enough to lay off this many employees in the home country then high cost places like the US are going to see a blood bath. The only jobs which will be left in the US will be Sales roles, otherwise everything else is going to one of the shared service centers.

3500 jobs have been lost in Germany. It's highly likely that layoffs will continue throughout 2025 and beyond while the current leadership remains in place. Their apparent sole strategy for maintaining share value seems to be workforce reduction.

Probably any talk of an Ariba restructure came out of this news.

If you are in a Customer support role for one of the Cloud Companies ( Ariba, Success Factors, Concur....) and are based in the US, time to start looking at your options ASAP.

All levels of Customer Support will be discontinued out of high cost locations - this will be handled in India, China, or LATAM.

CK and the "Iceman" are running the company solely on the basis of cost reduction, as in employee cost reduction. This might last for a very short while but as many other companies who followed this route learned the hard way that the lose of talent combined with record low morale are the quickest route to disaster as can be had.

CK and DA saw how favorably the market reacted early this year with the previous layoff and see now that the stock is trading at record highs, they will shed more HC to boost the stock price to higher levels.

Given the amount of shares each of these two have, just think how much they will benefit from cutting more heads.