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SAP to cut research centres in drive to lift margins

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By Reuters
SAP to cut research centres 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   -   Copyright  Ralph Orlowski(Reuters)

LONDON (Reuters) – German business software group SAP <SAPG.DE> plans to reduce the number of research centres 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 research centres to five from 25 now. 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 <NOW.N>

McDermott launched the efficiency drive to expand profit margins.

(Reporting by Ilona Wissenbach; Writing by Tom Sims)