SAP looks to cut costs in economic downturn

SAP has switched to a cost-cutting mode after announcing last week that its revenue for the quarter would fall short of its guidance as a result of a sudden drop in orders at the end of September, reports the Wall Street Journal.

Cost-saving measures that the business software company will institute were outlined in an e-mail co-CEOs Henning Kagermann and Leo Apotheker sent to staff last week. A copy of the e-mail was obtained by the newspaper's Business Technology Blog.

The party line in the tech industry is that businesses will keep spending on tech because it makes them more efficient. This, in turn will help them survive the downturn. We're not sure whether to file this under irony or hypocrisy, but SAP is, you guessed it, halting new spending on information technology. "We will review all planned investments in IT equipment, hardware, software, facilities, and company cars, as well as internal IT projects," the co-CEOs wrote in the email. "Do not order any new equipment at this time."

The e-mail captures the uncertainty at SAP ? uncertainty that is no doubt shared by other companies in the industry. "No one at this point can say how markets and customers will react in the coming months," the e-mail says. "In this turbulent economic environment, we will be giving added attention to sustaining our margin and earnings health."

In addition to halting its tech spending, SAP plans to freeze hiring, trim third-party expenses and cut travel costs.

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