SAP is back on the acquisition trail with the acquisition of 16-year-old Qualtrics, the Provo, Utah, based survey vendor. But surveys are such a 20th century category, so survey vendors are becoming experience vendors – measuring – customer, product, employee and more experiences in the form of surveys. SAP now brings together it's operational data (that sounds so 20th century as well, so SAP calls it O-Data) with the experience data (X-Data) to help CXOs make better decisions in the digital economy. SAP is picking up Qualtrics while the vendor was on a roadshow for its IPO, which always requires some premium.



But let's dissect the press release in our traditional style (it can be found here):



WALLDORF, Germany, PROVO, Utah, SEATTLE, Wash. — SAP SE (NYSE: SAP) and Qualtrics International Inc. (Qualtrics) today announced they have entered into a definitive agreement under which SAP SE intends to acquire Qualtrics, the global pioneer of the experience management (XM) software category that enables organizations to thrive in today's experience economy.

MyPOV – Nice summary of what is happening.


Together, SAP and Qualtrics to accelerate the new XM category by combining experience data and operational data to power the experience economy

MyPOV – SAP argues the high multiple for Qualtrics is justified, as it acquires a new category leader, that traditional enterprise software vendors (like SAP) have not been part of.


Creates a highly differentiated offering for businesses to deliver superior customer, employee, product, and brand experiences

MyPOV – These are the four key applications areas for Qualtrics.


Ryan Smith to continue to lead Qualtrics; Qualtrics to maintain dual headquarters in Provo, Utah, and Seattle, Wash.

MyPOV – An important organizational update. Good to keep existing leadership and operating locations in place… but Smith will report to Robert Enslin, the leader of the SAP cloud business (and now leader of the 5+1 = 6 sisters – SAP Ariba, Concur, Fieldglass, Hybris, SuccessFactors and now Qualtrics).


Under the terms of the agreement, SAP will acquire all outstanding shares of Qualtrics for US$8 billion in cash. SAP has secured financing in the amount of €7 billion to cover purchase price and acquisition-related costs. The purchase price includes unvested employee incentive compensation and cash on the balance sheet at close. Subject to customary closing conditions and attainment of regulatory clearances, the acquisition is expected to close in the first half of 2019. The Boards of Directors of SAP and Qualtrics have approved the transaction. Qualtrics' shareholders have also approved the transaction.

MyPOV – Interesting SAP goes for an all cash purchase but leaving this to the financial analysts to comment.





SAP CEO Bill McDermott said: "We continually seek out transformational opportunities – today's announcement is exactly that. Together, SAP and Qualtrics represent a new paradigm, similar to market-making shifts in personal operating systems, smart devices and social networks. SAP already touches 77 percent of the world's transactions. When you combine our operational data with Qualtrics' experience data, we will accelerate the XM category with an end-to-end solution with immediate global scale. For Qualtrics, this introduces a dynamic new partner with the belief, passion and scale to bring experience management to millions of customers around the world."

MyPOV – Good description of the opportunity. Use Qualtrics to create synergies with the rest of the SAP portfolio. McDermott predicts that Experience Management will be bigger than CRM. Agreed there are many synergies for SAP of combining the portfolios and scaling Qualtrics on a vertical level.





McDermott added: "The combination of Qualtrics and SAP reaffirms experience management as the groundbreaking new frontier for the technology industry. SAP and Qualtrics are seizing this opportunity as like-minded innovators, united in mission, strategy and culture. We share the belief that every human voice holds value, every experience matters and that the best-run businesses can make the world run better. We can't wait to stand beside Ryan and his amazing colleagues for the next chapters in the experience management story. The best for Qualtrics and SAP is yet to come!"

MyPOV – Good quote by McDermott, in the usual optimistic and transformational tone and sprit.


Ryan Smith, CEO of Qualtrics, said: "Our mission is to help organizations deliver the experiences that turn their customers into fanatics, employees into ambassadors, products into obsessions and brands into religions. Supported by a global team of over 95,000, SAP will help us scale faster and achieve our mission on a broader stage. This will put the XM Platform everywhere overnight. We could not be more excited to join forces with Bill and the SP team in this once-in-a-generation opportunity to power the experience economy."

MyPOV – Good quote by Smith, basically sharing the game plan. Qualtrics software is ready, but its business model is not global (yet) and SAP will take it global. McDermott said on the call that Leonardo and HANA will become part of Qualtrics (that confirms the same strategy currently applied to the architecture of the other 5 sisters).

SAP and Qualtrics Will Together Deliver the Transformative Potential of Experience Data (X-Data) Combined with Operational Data (O-Data)


XM focuses on obtaining and tapping the value of outside-in customer, employee, product and brand feedback. Combining Qualtrics' experience data and insights with SAP's unparalleled operational data will enable customers to better manage supply chains, networks, employees and core processes. Together, SAP and Qualtrics will deliver a unique end-to-end experience and operational management system to power organizations.

MyPOV – Another intentional / aspirational statement, that repeat what was already said.



SAP Will Accelerate Qualtrics' Growth and Further Its Mission by Offering Global Scale, Reach and Resources

Leveraging SAP's more than 413,000 customers and global salesforce of around 15,000, Qualtrics will be able to scale rapidly around the world. SAP has a strong track record of accelerating growth for the innovative companies it acquires, as exemplified by the rapid success of SAP's recent acquisitions.

MyPOV – Good focus on what SAP will bring to Qualtrics. Global scale. Qualtrics goes global. SAP combines data for better success in the digital transformed economy.





Qualtrics expects full-year 2018 revenue to exceed US$400 million and projects a forward growth rate of greater than 40 percent, not including potential synergies of being part of SAP.

MyPOV – One of the key attractions of SAP for Qualtrics – acquire a pure cloud business that is growing fast. Putting a growth engine into SAP cloud revenues.


Following the closing of the transaction, Qualtrics is expected to maintain its leadership, personnel, branding and culture, operating as an entity within SAP's Cloud Business Group. Ryan Smith will continue to lead Qualtrics, and Qualtrics is expected to continue to maintain dual headquarters in Provo, Utah, and Seattle, Washington.

MyPOV – Here is the key statement of Qualtrics / Smith reporting to Rob Enslin…. Effectively creating (as above explained) the 6th sister.  


Implications, Implications…

Implications for SAP customers

Likely no immediate impact for SAP customer and no immediate action items. SAP customers should start the conversation with the vendor on roadmap and future benefits. Depending on the answers and timelines, alternate survey tool implementations may be considered to go on hold. But a hold in this early phase can prove to be costly, when weighed against the overall project benefits. Actively plan for a 'blue sky' session with your team on what it may be worth to influence on, what to do first and what later.

Implications for Qualtrics customers

While SAP is saying clearly that Qualtrics will operate separately – as one of the now 6 cloud business reporting into Enslin, Qualtrics customers need to make sure their enterprise can remain successful on Qualtrics. As always with acquisitions the customers of the acquired party need to seek immediate re-assurance on important roadmap items, not only from Qualtrics, but more importantly from SAP. Only when an acquirer knows where the porcelain is in the shelves, they can make a desired planned effort not to brake it. In the longer run, CxOs need to think of what benefits can be derived from the SAP ownership – think financial stability, reach, support and services. It's different to be the 3B or so small battleship, then dealing with the same battleship as part of a large fleet of vessels. Understand the course, investment plans and new roadmaps asap. The potential delay on future capabilities due to re-platforming on SAP CP and SAP HANA also has to be considered, as well as the readiness to run these technologies in house.

Implications for partners

For SAP partners there is a new expansion of services revenues. For Qualtrics partners it is key to understand the SAP partner landscape asap and make a all if they want to double down and go all in for SAP or retreat out of the larger SAP ecosystem.

Implications for competitors

For SAP competitors this is an area to watch and understand their own roadmaps on how to bring together survey and ERP Data. There are plenty of innovative survey companies out there, whose valuations have now likely jumped a bit. Make vs Buy decisions will also be key, as survey software is not a super substantial and long running platform, architecture and product investment.

For Qualtrics competitors it's good news – as there is a high chance there will be potentially more acquisitions in the space… but it needs to be a healthy business, with a working platform. With SAP owning Qualtrics, they survey business had become more global. On the good news side, Qualtrics product development speed is likely to slow down, as the product will change to the SAP Cloud Platform, SAP HANA etc. nothing that eve accelerates functional delivery speed.



SAP CEO Bill McDermott always like to talk about bold moves, and this is certainly a bold move by SAP. The earnings multiple is high, but likely the price one has to pay to snag of a soon to be IPO. Bringing survey and ERP today has been always a manual, 3rd party application process for enterprises. Owning more of that and delivering more value for CXOs is a good ambition for SAP. Qualtrics brings synergies to many of the SAP cloud business, with brand, customer surveys aiding C/4HANA, employee surveys SAP SuccessFactors and product surveys helping ERP and PLM users. The concept of the digital open door that Qualtrics has championed is powerful and deserves to be maintained in SAP's go to market.

On the concern side, SAP cannot forget that a lot of experience and real-world digital exhaust happens outside of surveys. Survey bias is real and for truly being an experience management leader, SAP needs to get much better at capturing this information and making sense of t. SAP's long-standing aversion to all things Hadoop / Big Data does not help in this respect. SAP / Qualtrics customers will also have to take a critical eye what the re-platform to SAP will cost in terms of speed of functional delivery.

But overall, a bold move by SAP. Prepping its cloud revenue stream and potentially being able to create a new software category for the enterprise with Experience  Management.