SAP Says HCM Is Dead—Can Qualtrics Transform it to HXM?

Fulfilling promises from a year ago when it acquired Qualtrics for $8 billion, SAP says its infusion of Qualtrics experience-management capabilities into its SuccessFactors HR suite marks the end of the HCM category and the rise of HXM.

“The days of transactional HCM are over,” said SAP co-CEO Jennifer Morgan at the company’s meeting last week with financial analysts.

In their first starring roles after taking over the top spot from former CEO Bill McDermott, Morgan and co-CEO Christian Klein laid out an ambitious growth strategy for SAP, the #4 company on the Cloud Wars Top 10.

“The traditional definition of HR has changed, and there’s a new category: Human Experience Management,” Morgan said. “It’s no longer simply about capturing and tracking employee events as they move through the life-cycle of employment.” Instead, she went on, the experience revolution that’s sweeping the business world for both customers and employees is creating an entirely new way of engaging with, retaining, grooming and ultimately delighting employees. 

“It’s really about anticipating and creating and managing great experiences across all of your employees’ life cycles,” Morgan continued. “People are demanding a very different experience at work, and employees are really setting the tone for the culture. 

“This is becoming the competitive differentiator.”

A New Rule for Enterprise Software: Put Customers First

In my view, it’s great to see a large and well-established company like SAP take a leadership role in redefining a long-standing category in enterprise applications. Too often, it’s been the upstarts that spark and drive the emerging trends, while the big and established companies then have to lurch to try to play catch-up.

On top of that, as we’ve discussed before here at Cloud Wars, the traditional 3-letter acronyms of enterprise software—HCM, CRM and ERP—were all created in a by-gone era to automate processes in ways that no one today would confuse with modern.

So I’m a big fan of the SAP move, in part because it’s a visionary first-mover play by a company that needs to take on the role of disruptor. But on an even grander scale, it’s also a very public recognition that business customers and not the tech industry (let alone industry-analyst firms) are driving the requirements of and category names for modern enterprise software.

Morgan emphasized the Qualtrics effect in this bold new approach for SAP in her opening remarks to the financial analysts. As she gave an overview of SAP’s cloud business, she put Qualtrics at the top of the agenda.

“Over the last 6 months, looking across our cloud businesses, I’ve really dug in to understand, where are the synergies and the combinations of micro-suites that I see forming across the different parts of our portfolio. And I’m going to touch on a few of those areas. 

“So let me start with Qualtrics,” Morgan said.

Jen Morgan to Analysts: Growth via Qualtrics is “Just Getting Started”

Noting that Qualtrics now has more than 11,000 customers and is experiencing “tremendous growth” as SAP takes Qualtrics into Japan and Korea, Morgan outlined how the experience-management capabilities of Qualtrics are turning the old world of HCM into the new category of HXM.

“Talent and succession and the topic of people is now top of mind in the boardroom and the C-suite every day. It goes hand in hand with digital transformation,” she said.

“Since May, together, we’ve acquired over 300 customers on the SuccessFactors-Qualtrics employee-experience platform. This is really critical to us. 

“What’s great is that the majority of our Qualtrics customers don’t yet have SuccessFactors. And the majority of our SuccessFactors customers don’t yet have Qualtrics. 

“That momentum has been created in just a few months. And while we’re just getting started with this new SuccessFactors business, we know it’s really going to benefit from these new conversations and new category.”

Across the globe, SuccessFactors is now localized for 98 countries for HR, and 45 countries for payroll.

Disclosure: at the time of this writing, SAP was a client of Cloud Wars Media LLC.