SAP offices in Dresden, Germany

A Tale of Two SAPs

8 minute read
Virginia Backaitis avatar
A look behind SAP's recent restructuring and what it spells for the company moving forward.

Last week played out like a tale of two cities at SAP, especially for those who are employees or members of the large and engaged SAP community. For some it was the best of times, for others it was the worst of times. How you felt might have depended on if you were hobnobbing with the likes of Ashton Kutcher, Oprah Winfrey, Richard Branson, former President Barack Obama and others at the SAP Qualtrics X4 Experience Management Summit in Salt Lake City, or if you were showing up for work to discover that you had been restructured out of a job.

The timing probably wasn't intentional. After all, the agenda for the conference and the celebrity bookings were made long before last November when SAP announced it was buying experience management (XM) platform provider Qualtrics for $8 billion. As for the layoffs, SAP made investors aware they were coming during its quarterly earnings call on Jan. 29 when it revealed it would be taking a nearly $1 billion restructuring charge that would affect the jobs of 4,400 employees. (Meanwhile, the software maker is doing just fine from a financial perspective.)

Who the Restructuring Affected

While conference attendees were tweeting advice that Richard Branson delivered from the Qualtrics X4 keynote stage: "Rarely fire people," and "Give people a second chance," others, such as SAP community stalwarts Thomas Jung and Rich Heilman, were taking to LinkedIn and Twitter to announce their jobs had been eliminated. Not long after, SAP employees from around the world took to The Layoff to vent and try to find a pattern as to who was laid off. Data from the site — which is by no means inclusive — suggests that developers and engineers in areas like ABAP, HANA, UI, JAM, big data and mobile were especially hard hit, though some individuals who work at SAP Ariba and SAP Success Factors also lost their jobs.

"SAP's Engineering Culture died this week. Full stop. Period," someone wrote on The Layoff.

screen grab of Thomas Jung Tweet announcing he was laid off by SAP

SAP executives, in areas like technology, engineering, product management and more were not immune, though many parted company with SAP before last week. Bernd Leukert, a now former member of the executive board of SAP SE products and innovation, for example, gave a keynote at SAP's Tech Ed conference in Las Vegas last October. Now he is gone. So is former SAP CTO Bjorn Goerke who didn't announce his departure, but can be found literally running in some of the world's most beautiful places and treating his followers to poetry on Twitter. Ken Tsai, who had global product marketing responsibilities for SAP's Platform-as-a-Service and end-to-end data management solutions such as SAP HANA, SAP Data Hub, SAP Vora, is now the vice president of Adobe's Experience platform.

Related Article: 6 Things to Know About SAP's $8B Qualtrics Acquisition

SAP's Statement

CMSWire contacted SAP for information on the layoffs. The company offered this statement:

"SAP is constantly changing to adapt to market and customer needs. As part of this ongoing transformation, SAP has decided to undertake a company-wide restructuring program in 2019 across all board areas. This will allow us to invest in key growth areas while implementing required changes in other areas to ensure they are prepared for the future. SAP currently estimates that globally approximately 4,400 employees across all board areas will leave the company under the restructuring program. SAP is committed to treating employees with utmost respect and conversations with impacted employees are currently taking place in countries outside of the European Economic Area (Non-EEA) and will start in the EEA countries in Q2. It is important to say that this restructuring program, like similar programs before, is not about shrinking the company. Indeed, in 2019 we expect to grow to more than 100,000 colleagues around the world. Just like we are committed to treating employees with utmost respect we are committed to keeping promises to our customers and continuously delivering the best-in-class service they are used to."

Related Article: 9 Takeaways From SAP's Sapphire Now

Trying to Find Meaning

So, what does all of this mean to the SAP Community of employees, partners and customers? First, it should be noted that SAP is simply doing what all big technology companies periodically do: they take a good hard look at their business, refocus, reorganize and streamline operations, according to Josh Greenbaum, principal analyst at Enterprise Applications Consulting.

“SAP has realized that it needs to shift their strategy and their priorities,” Greenbaum told CMSWire, noting that one area of impact is SAP HANA and its team. "SAP is not going to own the biggest or best database," he said, which is the case, despite the fact that HANA is an "excellent product, very successful, and no doubt a pioneering, real-time database."

Rich Heilman tweet explaining he was laid off by SAP

"But HANA is no longer differentiated," he said, noting that entrepreneurs and developers can find similar technologies on AWS, Azure and other clouds. (SAP HANA ranks 20th in popularity according to DB-engines.) Greenbaum pointed out, however, that although HANA is key to SAP's cloud platform, it is no longer vying to become the dominant database on the market. "SAP is not going after that strategy anymore." His sentiment was echoed by other analysts.

SAP itself, has not said anything like that, but if you believe that organizational charts, job postings and layoffs tell the story, that seems to be the case. Consider this bit of insight from The Layoff.

"Bjorn is removed and all his product teams are slaughtered: ABAP, HANA, UI, JAM, big data, mobile and many more. I do not think it just Neo, but services on any cloud. Also heard there are more services to be cut!

If you are still working on SAP technologies, I dare say to keep your skills sharpened to get a job outside. Look at the HANA and ABAP folks they have thrown under the bus. Every product leader knows it takes new ideas a long time to catch on. It takes serious ambition to succeed in the market! But there is no product leader at the top — either sales, operations or finance — not one of them products!!"

SAP CEO Bill McDermott could be the new product leader at the top. This is something Constellation Research vice president and principal analyst Holger Mueller joked about in this blog post. If McDermott can get the job done, customers may not miss a beat, but even for the best CEO, that's a tough rope to tow.

Learning Opportunities

Many of SAP's most treasured ABAP developers received their pink slips in the last week. This is something the SAP community on Twitter finds especially disturbing. But analysts point out that ABAP, a proprietary computer language used for programming the SAP Application server, was cutting edge when it was built in the 1980s for the client-server world, whereas today's developers would rather code in Java.

That is not to say that anyone's ABAP or HANA skills are useless. Consider that more than 425,000 companies in more than 180 countries use SAP, most of those have not yet moved their SAP ERP systems to the cloud. If SAP no longer needs all of its ABAP and HANA talent, there are plenty of jobs and/or consulting assignments to be had. In the US alone, lists 1,183 jobs available for ABAP developers and 3,157 for HANA developers. LinkedIn lists 1,975 ABAP jobs and 3,755 HANA roles.

Of course, those figures may not help members of the SAP community feel much better right away. It is tough watching anyone who is accomplished, dedicated to their employer and respected by their peers get axed.

At companies like Amazon, which has been publicly likened to a sweat shop, and Oracle, which some see as the evil empire, being laid off isn't shocking. But, "SAP is seen as the benevolent empire, so there's a sense of betrayal in the air," Greenbaum told CMSWire.

Thorsten Franz tweet: "It was always a dream of mine to work at SAP ... Tonight I bury that dream."

That being said, SAP's employee, partner and customer community is already showing up to help with job leads and ideas about what to do and learn next. 

Related Article: Will Open Data Initiative From Adobe, Microsoft, SAP Break Down Silos?

The Best of Times for Qualtrics + SAP

McDermott could not be any more bullish on the synergies between Qualtrics and SAP. He has called Qualtrics the "jewel in the crown of SAP" in interviews with CNBC, Fortune Magazine and others. The way SAP's CEO sees it, well over half of the world's transactions cross a SAP system, so if you combine Qualtrics' customer sentiment data and analytics with operational data from SAP, you can own the customer experience by facilitating better experiences, higher retention and faster growth.

"This is a magical moment SAP is trying to achieve," said Greenbaum, explaining that insights from Qualtrics hold the potential of informing SAP SaaS applications like Ariba, Concur, Fieldglass, Hybris, C/4 HANA and SuccessFactors and improving customer, employee, supplier and consumer experiences. “SAP’s glory would be to present a seamless experience and leapfrog the competition.”

His is a sentiment that every analyst CMSWire spoke to shares. Laid-off SAP employees, on the other hand, may not share the rosy prognostication.

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