SAP has decided to redirect its resources toward artificial intelligence in a drastic way: limiting new hires and suspending internal travel not related to AI. The measure, communicated internally to employees, seeks to finance the AI-based transformation that the company considers critical for its future. According to the internal email, only selected profiles will be hired, mainly in AI areas, and internal travel will be restricted to those linked to AI project development. Additionally, the company is evaluating reducing other expenses with suppliers, according to Bloomberg.

Financial Discipline in the Age of AI

A SAP spokesperson confirmed to CIO: “SAP continuously reviews its investments to ensure resources are concentrated in areas that will generate long-term value and innovation for customers. As part of this approach, we are prioritizing investments in AI-related capabilities, talent, and technologies, while applying greater discipline in hiring, external spending, and internal travel. Customer-facing activities and critical AI initiatives continue to receive full support.”

This strategy adds to other recent moves by SAP to accelerate its AI bet, such as reassigning oversight of AI development teams directly to CEO Christian Klein, and creating the Customer Value Group led by Thomas Saueressig. The company has also pushed its digital assistant Joule, though results so far have been mixed.

The Dilemma of Customer Value

Terra Higginson, principal research director at Info-Tech Research Group, notes that while SAP needs to drive AI adoption to support its strategy, “customers still need to see a clearer value proposition before committing more budget or operational attention.” According to Higginson, SAP faces pressures similar to other software companies: SaaS valuations below previous highs, high AI development and scaling costs, and uncertain commercial returns. “This is not a time for overspending. SAP needs to be very disciplined in its investments and focus on areas that provide clear competitive differentiation. Joule, so far, has been disappointing, and yet I hear SAP is pushing users to activate it. That creates real tension.”

Workforce Transformation: Beyond Cuts

AI is also behind SAP's efforts to avoid mass layoffs like those in its 2024 restructuring. According to The New York Times, the company encourages its employees to create “more valuable jobs” by leveraging new technologies. Christian Klein expects the workforce will not necessarily be smaller, but very different. In fact, he acknowledges he is not sure that people will still be programming software in two or three years. This reflects a broader industry trend, where implementing generative AI in workflows is redefining roles.

Jason Andersen, vice president and principal analyst at Moor Insights & Strategy, explains that AI is already changing daily tasks. For example, many software engineers spend more time on security and testing, as AI frees them from some programming. However, he warns: “This rebalancing of work is the great challenge that has not yet been resolved. It is the missing link in this whole story about the future of work.” Andersen identifies three factors that hinder the transition: AI remains an individual productivity tool, not favoring teamwork; new capabilities can be used for innovation or just cost-cutting; and structural employment changes take years or decades. Even so, he believes SAP and other companies must move in this direction to remain competitive. “In the short term, many companies will have to reduce certain activities to move forward, which offers little comfort to those affected.”

Implications for the Business Ecosystem

SAP's decision to prioritize AI over other areas sends a clear signal to the market. For IT professionals, this means AI skills will be increasingly in demand, while other profiles may be affected by the reorganization. Companies like Microsoft are also making billion-dollar bets on AI, confirming that the industry is in a phase of strategic reorientation. In this context, the evolution of CI/CD processes for LLMs becomes crucial to maintain efficiency.

For SAP customers, the key question is whether these investments will translate into tangible value. Meanwhile, the company continues with its plan, convinced that financial discipline and focus on AI are the right path. As Andersen notes, “in the short term, many companies will have to reduce certain activities to move forward.”

Original source: ComputerWorld. Analysis and adaptation by ForgeNEX.