News began to leak out yesterday concerning the long anticipated trimming of the SAP workforce.  An article in CIO.com indicates that an SAP spokesperson has confirmed that the company has now begun the process of layoffs, but no specific numbers were confirmed.  ” The cuts were not directed at any one particular discipline or area of our business” indicated this spokesperson. Indications are that the layoff number may be in excess of 3000 employees since SAP had previously communicated to the financial analysts that it plans to lower its worldwide headcount to 48,500. SAP had in excess of 51,500 worldwide employees at the end of 2008.

The fact that the cuts were spread across multiple areas indicates to me that SAP has taken a pragmatic and rational view of what the company needs to do to position itself for perhaps a new era of enterprise level applications buying activity. SAP was already bloated in staffing, and this trimming is actually long overdue This, in my view, may not be the last of these cutbacks, as SAP adjusts to a different business model.

The question for our community is what, if any would these cutbacks have on SAP’s supply chain management applications development or customer support.  My belief is that there would be very little impact.  . The area of supply chain management has been waning in strategic importance for SAP, as it searches for other growth markets.  Within the SAP SCM suite of applications, a lot has been accomplished to make these applications more attractive for SAP customers, but this work obviously needs to continue. To cite one example, SAP Supply Network Collaboration has in my view been an application with the potential for considerable value for customers, but SAP enhancements to this application come at a slow pace. SAP Advanced Planning and Optimization (APO) application has come a long way, but must be constantly modified to help customers to be more productive in the use of its functionality.  There are certainly other areas such as Sales and Operations Planning (S&OP) process support that need considerable more work.  There is also a rather large SAP user base in the governmental, military, and defense areas who depend on more robust functionality in supply chain management applications.

Hopefully, SAP will continue to invest in SAP Supply Chain Management, in spite of cutbacks.  A lot obviously remains to be done.

What’s your view?

(Full Disclosure: this author was a previous employee of SAP in the role of global product marketing manager for SAP Supply Chain Management.)

 Bob Ferrari