Six months ago, SAP announced its plan to spend $8 billion to acquire experience-management unicorn Qualtrics, a company whose revenue was 1/50th of SAP’s.
Today, SAP has rebranded itself as “the experience company powered by the Intelligent Enterprise.” This is a remarkable adjustment from its traditional “intelligent enterprise” promise—and an unmistakable sign of just how powerful the Qualtrics acquisition will be for SAP.
While many factors have been at play in driving this profound transformation, there’s no question that the prime mover behind what Qualtrics has achieved and why SAP’s betting the company on experience management is Qualtrics founder and CEO Ryan Smith.
So when I had a chance to chat with Smith in front of the cameras at SAP’s recent Sapphire Now event in Orlando, we talked in some depth about why SAP, why not an IPO, and how experience management and intelligent enterprise fit together. You can watch the whole 15-minute interview on the Cloud Wars YouTube channel, and in a moment I’ll share some of the highlights from our conversation.
The SAP-Qualtrics Acquisition’s Ripple Effect
But before doing that, a few thoughts on why this acquisition is so momentous for not only SAP and Qualtrics but also for the entire enterprise-software industry:
- This is a huge bet by SAP—and, in my opinion, a very good one. If SAP’s right—and I believe they are—then this pivot to experience management will resonate throughout the entire enterprise-software industry and every other major applications vendor will have to react to it in some way.
- SAP’s decision to shift away from its long-time position of “intelligent enterprise” to “the experience company powered by the intelligent enterprise” isn’t just a word-game or some marketing fluff. This is a passionate commitment from the very top of the company—including CEO Bill McDermott and founder and chairman Hasso Plattner—to dramatically transform SAP for the future.
- The move comes at a time when businesses of every kind are pouring more focus and energy and resources into the creation of great customer experiences. So the global marketplace appears ready and eager for experience-driven insights.
- The enterprise-software world is ripe for change. While the long-standing pillars of ERP, HCM and CRM were fine for the past 20 years and will no doubt thrive for years to come, the emergent world of digital business is putting the customer at the center of everything. New tools are required for that new orientation.
Against that backdrop, please enjoy these compelling excerpts from Smith—and again, please check out the video version of our 15-minute conversation.
Ryan Smith on the Power of Joining a Dynamic Global Organization
“I think there’s this notion that when you get into a large organization, everything’s going to slow down. That’s what everyone wants to say, but for the first time in tech history, we’re seeing the large organizations out-execute all of the smaller organizations.
I can go through with Amazon, and go all the way through and watch how large organizations are out executing. That’s been the case with Qualtrics, and that’s how it’s going to be, because we’ve said that’s how it’s going to be. You’ve got myself, my brother and the team absolutely fired up to go do this.
“We wanted to do this with SAP. You know, we had the beautiful choice, and a lot of fortunate options of going public. When this opportunity came up, just from the first meeting we had with Bill and the team, it was just a missing component. They needed us. We needed them. We made a decision that we’re going to go do this together, and we couldn’t be more excited.”
“Every single thing that we said we were going to do in November, we have done.”
“I think what’s most fascinating, and I have a lot of friends who have been through this with other companies. They’re founders, and they’ve kind of gone through part of the acquisition process. Every single thing that we said we were going to do in November, we have done, and even more, which is pretty amazing because most of my friends have already broken down and different things have happened.
“I’m just looking at this future that we have and what we’re going to go create together, and that’s what’s exciting. And SAP is a global company. We were an international company with 20 offices. This is global, and that’s exciting.”
Ryan Smith on Accelerating the Impact of Experience Management
“I was dreaming every single day I sat in that basement for five years, for the day when we could have a day like today, and the conversations that we’re having today with the executives that we’re having today. Our engineers have been building products to be able to get into the hands of the folks that we met with today. They don’t want to build products that no one use. They want to build products that are going to impact the best brands in the world at the C level.
“And then to have the companies come to us, saying, ‘We need this. This was brilliant. We need to be experience-driven. This is what we’re seeing.’ ”
With SAP, Making More Decisions and Better Decisions More Quickly
“To be able to have instant scale in South America and to go global in a way, whether it’s in Germany, whether it’s in France, in China, and Canada. It’s absolutely amazing, because when we go into a city, when we want to open up an office, our biggest decision is which building that SAP has do we want to work out of. That’s absolutely awesome because it takes a lot of the decision making out of the equation, where if we would have been an early-stage public company, we would have had to do everything in a linear fashion, and everything would have been a massive trade-off decision.
“It’s pretty amazing how the thought of people saying, ‘This is going to slow down,’ they don’t know what they’re talking about because we’re making more decisions and quicker than we have ever made them in the past. So if people thought Qualtrics was a force before, what we’re seeing now is entirely different.”
Why Get Acquired if Nothing Changes?
“I think a lot of times when people are doing acquisitions, they want to be left alone entirely. Well if that’s the case, why would you ever do anything? I was alone for 17 years—I know what that life is like! No one needs to tell me that. So, we really wanted to get the best of SAP and the best of Qualtrics, and put it together and say, ‘This is it.’”
Check out the entire interview with Ryan Smith here, and my 11-minute interview with SAP CEO Bill McDermott here.
Disclosure: at the time of this writing, SAP was a client of Evans Strategic Communications LLC.
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