SAP Plans Layoffs But Its Hardly Alone

SAP Plans Layoffs, But It's Hardly Alone

4 minute read
Virginia Backaitis avatar

For anyone who doubts SAP AG will be laying off employees, we have news. “It’s true,” said Jim Dever, vice president of corporate affairs at SAP.

He can't say how many workers will be involved. It’s not a simple process.

In Europe, for example, the rules around cutting heads are very different than in the US. Not only that, but examining what skill sets will be needed and are available in house isn’t an easy task.

The company won’t necessarily be exiting lines of business. Instead, it might cut jobs that may be redundant and reduce headcount gained during acquisitions of companies such as Sybase (2010), Success Factors (2011), Ariba (2012) and 13 others it purchased since January 2011. Note that the layoffs will occur across the company and that we are in no way implying that employees gained through acquisitions will be targeted.

Hypothetically Speaking

Take, for example (and it’s only an example), the case where an entire accounts payable team may have been brought in from a number of these companies. Some duplicate roles will undoubtedly exist.

And you don’t have to be an MBA to know cutting fat is always essential, especially now as the tech companies which dominated computing’s second platform (client/server) fight for relevance on the third.

After all, it’s harder for big companies to move as quickly as newer companies which were “born in the cloud.”

As IBM CEO Ginnie Rometty told the New York Times, speaking of her own challenges, “We are transforming this company for the next decade. That is not a one-year job, not when you're a hundred billion-dollar company."

Being lean, mean and agile is essential during the transition, not just for SAP and IBM, but also for EMC, which laid off an estimated 1,000 employees last quarter.

Other second platform companies like HP, Oracle and Cisco have done the same thing. While saying that they’ve all had to slim down and re-gear with new talent seems cold, many of them see it as key to their survival.

Learning Opportunities

Though EMC CEO Joe Tucci wasn’t talking about layoffs when he described the dilemma established companies are facing at the moment, he brought an important, historical point home:

As we moved from platform one (mainframe) to platform two (client-server) there [were] 21 companies with over a billion dollar market cap and the only one that made it successfully to platform two was IBM. Now as we’re now having the same transition from platform two to platform three … and the companies that are prominent on platform two [will] become much less so [we’ll see] new companies come to great prominence.”

The Road to Cloud Power

Now is the time when SAP will fight for its future — in other words, it’s transformation to a cloud power. It will do so under the guidance of Bill McDermott, who is expected to become the company’s sole CEO later this month.

What McDermott’s doing now is lining up his team and setting his strategy, which he’s likely to present to SAP’s board later in May.

It’s safe to assume that to execute, he’ll hire workers with new skill sets. We say this because Dever said that SAP would end the year with more employees than it has now.

And, if you’re a second platform worker, take advantage of one of the retraining opportunities that your severance package or unemployment office might provide specifically for skills transition. But make sure it’s on the third platform because, as we overheard an EMC federation executive tell a crowd at EMC World last week, “The only thing that’s  growing more slowly than computing’s second platform is the tobacco industry."

Title image by David P. Lewis / Shutterstock.