SAP Restructures Work Force As Shift To Cloud Apps Accelerates

Last week, SAP disclosed a number of major changes among its management ranks. This week, the restructuring is moving into the company's broader work force.

Published reports say the company is planning widespread employee cutbacks as the Waldorf, Germany-based vendor accelerates its shift to selling cloud-based software based on the HANA platform.

An SAP spokesperson confirmed that a companywide work force reorganization is under way in order to make the company more agile and more effective as it evolves into a cloud software company. But he declined to offer more details or speculate about the number of employees involved. "This initiative is about simplifying SAP for the customer, not about job cuts," the spokesperson said.

[Related: SAP Creates New Channel Organization, Names New Channel Chief ]

Because SAP is shifting employees and hiring new ones with skills needed for the company's cloud computing focus, the spokesman said SAP plans on having more employees at the end of 2014 than it did at the start of the year.

A Reuters story said some of the jobs being eliminated are back-office support positions from acquired companies and the employee reorganization would not result in the company exiting any lines of business.

Bill McDermott is set to become SAP's sole CEO next week when Co-CEO Jim Hagemann Snabe leaves the company, as previously announced. Last week, the company announced a number of management changes, including the surprise departure of top development executive Vishal Sikka, and appointed Rodolpho Cardenuto as the company's new channel chief, reporting directly to McDermott.

The changes don't have an effect on SAP's day-to-day channel operations, said Kevin Gilroy, SAP senior vice president and general manager, global small and midsize enterprise segment and indirect channels, in an interview with CRN last week. He emphasized the benefits of having the channel organization report directly to CEO McDermott.

"Our strategy is still on-point," Gilroy said. But "now the channel has a seat at the table with the CEO, along with all the other routes to market." And he added that McDermott "understands the power of the channel." Gilroy said he was in the midst of briefing channel partners about the changes.

And channel partners seem receptive to those changes. "I think SAP is turning into a real sales company," said Brad Windecker, president of Orchestra Software, a Portland, Ore.-based solution provider and SAP channel partner. Orchestra resells SAP Business One, the vendor's small business application set that is now under the channel organization's management. "Business One is now at the board level," Windecker said.

"There has been a big gap in the senior management for the channel business since Eric Duffaut left SAP last summer," said Lars Landwehrkamp, CEO of SAP partner All for One Steeb, referring in an email to SAP's former channels and ecosystem executive. "Now they've filled the gap with a direct report to Bill McDermott.

SAP reported revenue of 3.7 billion Euros ($5.07 billion) in the company's first quarter ended March 31, up 3 percent from last year's first quarter. And as the company focuses more on cloud software for growth it will increasingly compete against companies like Salesforce.com, NetSuite and Workday, in addition to Oracle, SAP's traditional rival.

The changes come just weeks before Sapphire Now, SAP's annual customer and partner conference, kicks off June 3 in Orlando, Fla.

PUBLISHED MAY 14, 2014