SAP faces pressure as Cloud technology team leaves

Bjoern Goerke, chief technology officer and head of SAP’s cloud platform business, along with programming gurus Thomas Jung and Rich Heilman, have resigned from the business software major.
SAP customersGermany-based SAP announced in January it would lay off 4,400 staff. SAP chief financial officer Luka Mucic described the organizational restructuring as a fitness program for the business technology firm, Reuters reported.

“The existing business must be supported with the necessary know-how,” said Marco Lenck, chairman of the German-speaking SAP User Group (DSAG) which represents 3,500 companies.

“We are seeing that a lot of people with know-how are leaving the company. That’s a trend that should not become too extensive.”

SAP CEO Bill McDermott aims more than 3x Cloud revenue by 2023. SAP reported €20.622

billion revenue from Cloud & Software business in 2018 vs €19.549 billion in 2017. SAP aims for more than €35 billion in total revenue by 2023 as compared with €24.708 billion in 2018.

McDermott, 57, has promised to treble the size of the cloud business by 2023, bringing total revenues at SAP to 35 billion euros ($40 billion), as it competes with the likes of Oracle and founder Marc Benioff wants to achieve sales of up to $28 billion in 2023.

US-based reported full fiscal year 2019 revenue of $13.28 billion, an increase of 26 percent.

SAP announced in November the acquisition of Qualtrics, a U.S. technology firm that tracks consumer sentiment online, for €7 billion. This will assist SAP to enhance revenue growth – at a lower rate.

SAP earlier said Qualtrics expects full-year 2018 revenue to exceed $400 million and projects a growth rate of 40 percent plus, not including potential synergies of being part of SAP.

SAP is expecting to hike headcount to 100,000 plus by the end of this year from 96,500 at the end of last year. This is despite the job cut announced earlier.

SAP said the restructuring will allow the software company to invest in key growth areas while implementing required changes in other areas to ensure they are prepared for the future.

Dennis Howlett, a veteran consultant and co-founder of tech website Diginomica, said SAP was letting go of exceptional talent to compensate for shortcomings in its own cloud strategy.

The restructuring sends a message to SAP’s clients that they need to take seriously a 2025 end of life deadline for migrating users from legacy products to its latest, cloud-compatible S/4HANA platform.

German users are pushing back: “We will fight to ensure that we continue to receive support after 2025,” said Lenck of the DSAG.