Can SAP give notice?

Who pays?

I'm a long-time existing SAP customer, so all the previous and current waves of layoffs affected me because I'm funding SAP's mess with my license fees. Ultimately, we financed the gold-plated severance packages of first-class employees. When SAP was still putting together generous severance packages, the best people wisely signed up, and far too many of them. No one says no to a nice severance package after two-thirds of their working life, if their SAP expertise is enough for an interesting life as an independent consultant. CFO Luka Mucic had to conjure up a special fund during this wave of layoffs a few years ago, because more employees than planned opted for the golden goodbye. Who pays? We, the existing SAP customers.

This year, the layoff of a planned 3,000 employees no longer seems to be taking place so generously, and communication and implementation are getting completely out of hand. Once again, we existing customers will have to bear the additional costs. Obviously, SAP can't do layoffs - but why? With Sabine Bendiek, there is a board member responsible for HCM tasks. But CEO Christian Klein delivered the bad news in person at the annual press conference, while a week earlier in Davos at the World Economic Summit he was still raving about the fabulous success of his SAP and did not yet see a wave of layoffs, as other IT companies were already doing at the time. A week later, everything was different, and it was not HR Director Bendiek who explained the tricky situation, but Klein himself, flanked only by CFO Luka Mucic.

At our SAP regulars' table, we tried to understand the situation: There was the CRM initiative C/4 Hana, with which the ERP world market leader even wanted to overtake Salesforce, and Professor Hasso Plattner explicitly praised the C/4 project. Together with Qualtrics, C/4 was supposed to become a CRM revolution and show Salesforce where the hammer was! Now Christian Klein has given notice to the CRM ambitions and 3000 employees. There are naturally divided opinions about IT staff layoffs at the major vendors since Elon Musk cut Twitter's headcount by 50 percent. It is likely that many IT manufacturers have allowed themselves to be carried away by excesses and innovations in recent years, which could not always be argued from a business point of view.

The SAP community and our association DSAG agree that the planned strengthening of the SAP ERP business, or rather the ERP core, is a positive signal. But does Christian Klein's SAP strategy still fit if essential CRM IT processes are no longer developed at the same speed as ERP? What does it 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?

Dismissing employees and applications in the CRM/Qualtrics area seems ill-considered to me when, at the same time, SAP sales is knocking on our door and offering IoT for integration into the ERP, including Digital Twin. The topics of Industry 4.0, IoT and Digital Twin are important and exciting for us, but my sisters and brothers at the regulars' table don't see them as SAP's core competence. However, Christian Klein seems to have taken a liking to these innovative topics and is investing without hesitation, as a report in E-3 Magazine in February of this year impressively testifies. We existing SAP customers will also have to pay for this investment in future-oriented topics such as Digital Twin. SAP should clean up its own portfolio at the edges, but not at the heart of ERP, CRM, SCM and MES.

There is probably an urgent need to clean up the SAP Group after the stormy years of an ex-SAP CEO Bill McDermott. Likewise, Christian Klein wants to put himself in a strong position before the new SAP CFO Dominik Asam replaces the deserving Luka Mucic. But my SAP regulars' table is unanimous: SAP cannot give notice - Christian Klein, Luka Mucic and Sabine Bendiek have failed here.