SAP Cutting Jobs as Co-CEO McDermott Hastens Software Shift

May 14, 2014 3:06 am ET

(Updates with stock trading in penultimate paragraph.)

May 14 (Bloomberg) -- SAP AG, the biggest maker of business applications, is planning its first widespread job cuts in more than four years as the company shifts to delivering more software online.

The German technology company is eliminating jobs across divisions as it seeks to move faster and deliver more of its products as online cloud-computing services instead of software that runs in customers’ data centers, said Jim Dever, a spokesman for SAP.

“This is a broad, company-wide effort to make SAP more effective,” Dever said in an e-mailed statement.

The cuts, which are under way, wouldn’t number in the high thousands and wouldn’t result in SAP exiting lines of business, said a person with knowledge of the matter, who asked not to be identified because the information is private. Some of the jobs are back office positions supporting acquired companies, the person said.

SAP will end the year with more employees than its current headcount of about 67,000, Dever said.

SAP hasn’t had large-scale job cuts since former Chief Executive Officer Leo Apotheker eliminated 3,000 positions in 2009 and 2010. The workforce reduction underscores how SAP is grappling with a business transition, with co-CEO Bill McDermott scheduled to become the company’s sole CEO next week and technology head Vishal Sikka leaving the company earlier this month. At the same time, SAP is dealing with competition from Oracle Corp., Salesforce.com Inc., and Workday Inc.

SAP, based in Walldorf, Germany, last month reported first- quarter earnings that missed analysts’ estimates. The shares have fallen 10 percent this year through yesterday. They slipped 0.2 percent to 55.91 euros at 9:04 a.m. in Frankfurt today, giving the company a market value of 68.7 billion euros ($94 billion).

The Wall Street Journal reported SAP’s job cuts earlier yesterday.