SAP buys Qualtrics for $8 billion, aims to combine experience, operations data

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SAP said it will buy Qualtrics International for $8 billion in cash as it tries to blend experience management with its operational data.

With the move, SAP acquires a company that has a survey platform and focuses on both customer and employee experiences. Qualtrics product suite covers everything from customer analytics to retention to employee engagement and exit interviews. The data from Qualtrics is compiled in dashboards to quantify experiences.

The appeal for SAP is relatively obvious. SAP has operational data and touches other areas such as HR, CRM and ERP that will complement experience data.

In a statement, SAP CEO Bill McDermott said his company touches 77 percent of the world’s transactions. Qualtrics experience data will round out the data set. The ultimate goal for SAP is to have enough data touch points to create unique algorithms for various industries and scenarios.

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Ryan Smith, CEO of Qualtrics, will continue to lead the company. He said SAP’s heft will expand the experience management category and Qualtrics XM Platform.

In a blog post, SAP’s Robert Enslin, president of the cloud business group, said:

The next evolution of enterprise applications has begun with a real-time connection between the (experience) data in the system of action and the (operations) data within the system of record. Our ability to apply intelligence and machine learning atop these co-joined data sets unleashes the unprecedented power of the new experience economy.

Think about ways that companies try to understand their customers or employees. Most tools show broad feedback but lack precision and speed.

Qualtrics was projecting 2018 revenue of more than $400 million with a growth rate of 40 percent. Qualtrics software integrates with various data players including Marketo, Adobe and Salesforce.

Qualtrics core pitch revolves around monitoring experience across multiple fronts to generate value. In its IPO filing, the company noted that “experience management capabilities need to be available to everyone throughout an organization, from C-level executives who are accountable for results down to those on the front lines best positioned to respond to feedback.”

The flywheel goes like this:

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Qualtrics also added that the experience management space is relatively new, but SurveyMonkey and Aon Hewitt are competitors in certain areas.

For the nine months ended Sept. 30, Qualtrics reported revenue of $289.6 million with net income of $1.5 million.

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