SAP confirms layoffs - 3,000 to go

SAP confirms layoffs - 3,000 to go

Summary: SAP to go on Slim-Fast? Can they make the apps as lean as the company?

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TOPICS: SAP, CXO, IT Employment
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SAP to go on Slim-Fast? Can they make the apps as lean as the company?

On Jan. 13, 2009, I ran a post about rumored layoffs at SAP and Oracle. I made a few calls to sources in those firms to verify/deny these rumors.

In SAP's case, I specifically spoke with one of their blogger relations people. This individual told me that the company had cut loose a few people in North America and that these cuts were due to overlaps resulting from the Business Objects acquisition.

Apparently, the rumor mill was much closer to reality. Forbes reported this week that:

"SAP is making the right steps to address the current environment," said Gerardus Vos, an analyst with Citigroup, who recommended investing in the software company. SAP said it would slash 3,000 jobs in the hope of saving 300-350 million euros ($397.5 million-$463.7 million) a year, adding to measures announced in October, following in the footsteps of American archrival Oracle (nasdaq: ORCL - news - people ). Oracle reportedly cut hundreds of jobs earlier this month.

Possibly, this SAP representative was unaware of the cuts to come or I was too early in asking for a verification. Other possibilities also crossed my mind.

No matter, 3000 people will be joining the ranks of the unemployed.

SAP will be a thinner, leaner firm but will these reductions result in any changes that benefit users of the software? That's quite doubtful. The code will be unchanged, service may get a bit disrupted in the short-term and yet SAP's margins will improve in the short-term. SAP will appease Wall Street and try to match Oracle's margin numbers but do these changes foretell great things for SAP users? Not necessarily.

When I attend a SAP press/analyst event next week, I will seek more details on these layoffs. I wonder what I'll hear then....

Topics: SAP, CXO, IT Employment

About

Brian is currently CEO of TechVentive, a strategy consultancy serving technology providers and other firms. He is also a research analyst with Vital Analysis.

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