Back in 2019, it was us customers who financed the gold-plated employees’ severance packages during SAP’s first wave of layoffs. Back when SAP was still offering generous severance packages, the best employees wisely signed up, and there were far more than SAP expected. No one would say no to a nice severance package after only working for two-thirds of their working life. Especially if they had enough SAP expertise under their belt to lead an interesting life as an independent consultant afterwards. CFO Luka Mucic had to conjure up a special fund during this wave of layoffs, because the amount of employees who opted for the golden goodbye far exceeded the company’s expectations. But who ended up paying for this decision? SAP customers.
This year, the conditions surrounding the layoff of around 3,000 employees seem less generous, and communication and implementation are getting completely out of hand. Once again, we customers will have to bear the additional costs. Obviously, SAP has not handled the layoffs well—but why is that? Sabine Bendiek is the SAP board member responsible for HCM tasks, but it was CEO Christian Klein who delivered the bad news at the annual press conference. Just a week earlier at the World Economic Summit in Davos, Switzerland, Klein raved about the SAP’s tremendous success. He did not forsee a wave of layoffs in the works, as other IT companies were doing at the time. A week later, everything had changed, and it wasn’t HR Director Bendiek who explained the tricky situation, but Klein himself, flanked only by CFO Luka Mucic.
My contemporaries and I tried to come to grips with the situation. The CRM initiative C/4 Hana was supposed to have been combined with Qualtrics to become a CRM revolution and show Salesforce who was boss! Now Christian Klein has laid off both SAP’s CRM ambitions and 3,000 employees. There are, of course, divided opinions regarding IT staff layoffs at major IT companies ever since Elon Musk cut Twitter’s workforce by 50 percent. It is likely that many IT manufacturers have allowed themselves to be carried away by excesses and innovations in recent years, but this cannot be justified from a business point of view.
The SAP community and the German-speaking user group (DSAG) agree that SAP’s plans to strengthen their ERP business, or rather the ERP core, is a positive sign. But will Christian Klein’s SAP strategy still work if essential CRM IT processes are no longer developed at the same speed as ERP? What does this mean for the lead-to-cash process, which is counted among the core processes, if essential components from the customer experience portfolio, including Qualtrics, lose priority?
Terminating employees and applications in the CRM/Qualtrics area seems ill-conceived to me when at the same time SAP’s sales department is knocking on our door and offering IoT for integration into ERP, including digital twin. Industry 4.0, IoT, and digital twin are important and exciting for us, but my peers and I do not see them as SAP’s core strengths. Christian Klein, however, seems to have taken a liking to these innovative topics and is investing in them without hesitation. We SAP customers will also have to pay for this investment into future-oriented topics. SAP should neaten up its portfolio around the edges, but not at the heart of ERP, CRM, SCM, and MES.
SAP is probably in dire need of reorganization after the stormy years of ex-SAP CEO Bill McDermott. Likewise, Christian Klein wants to put himself in a strong position before new SAP CFO Dominik Asam replaces the esteemed Luka Mucic.
Any questions, comments, or concerns? Feel free to let us know in a comment.