SAP to streamline hardware infrastructure in drive to lift margins

FILE PHOTO: The logo of German software group SAP is pictured at its headquarters in Walldorf, Germany, May 12, 2016. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - German business software group SAP plans to streamline its hardware infrastructure while holding research development costs steady, an executive said on Tuesday.

The measures, announced at SAP’s capital markets day, are aimed at helping Europe’s most valuable technology firm fulfil its promise of expanding profit margins by 5 percentage points through 2023.

Luka Mucic, finance chief, said SAP will reduce the number of so-called stacks, or infrastructure such as servers and components that SAP has accumulated through multiple acquisitions.

The budget for research and development will remain steady at 14% of revenue, he said.

The company will also cut management costs and the number of its suppliers.

The capital markets day was the first major outing for new co-CEOs Jennifer Morgan and Christian Klein. The duo have taken over from long-time boss Bill McDermott, who is leaving to head up ServiceNow

McDermott launched the efficiency drive to expand profit margins.

(This story corrects headline, paragraphs 1 and 3 to say SAP is streamlining infrastructure, not cutting research centres, changes dateline to Frankfurt instead of London)

Reporting by Ilona Wissenbach; Writing by Tom Sims