Last week SAP surprised everyone with a bold move to launch Qualtrics public through an initial public offering (IPO). This was the plan of Qualtrics in October 2018, but then SAP bought Qualtrics’experience management platform for $8 billion in November of 2018. SAP says now they believe the IPO will help Qualtrics increase its autonomy and customer base.
SAP CEO Christian Klein said. “As Ryan Smith, Zig Serafin and I worked together, we decided that an IPO would provide the greatest opportunity for Qualtrics to grow the Experience Management category, serve its customers, explore its own acquisition strategy and continue building the best talent. …”
What will change?
I don’t believe much will change. SAP still remains a majority owner of Qualtrics and the transaction is not expected to have an impact on SAP’s 2020 or “longer-term” financial targets.
SAP will still have the legal right to sell Qualtrics licenses to their SAP client base and they will keep investing in integrating Qualtrics to their CX portfolio. And, SAP will still have access to the Qualtrics client base to target them with their SAP CX products.
For Qualtrics this will make their lives much easier; still benefitting from SAP’s customer base while having more independence to attract and compensate talent, make its own acquisitions, and pursue customers and partners outside the SAP ecosystem like Salesforce and Adobe.
Keep the talent
If you have met or heard Ryan Smith, you may understand that he is the main driver of the Qualtrics growth. It is crucial to keep him leading the company, together with all the talent under his wings.
I believe the cultural environment of Qualtrics is more attractive to acquire new talent for the company.
While SAP will own a majority of the stock, Qualtrics will operate independently and have its own board. Therefore it can acquire other firms and make decisions separately from SAP.
We have seen from the past that Qualtrics is working with many startups and new technologies to improve the solution. And they plan on keep doing that. The SAP due diligence processes would jeopardize that collaboration with startups and acquisitions of new companies that bring new technology.
SAP is a strong believer in the Experience Economy and will continue its huge investments in the Customer Experience portfolio. As the biggest shareholder in Qualtrics SAP will continue its effort in integrating Experience Management into its CX products. SAP is fully committed to Experience Management and the Qualtrics XM Platform as a key element of its intelligent enterprise strategy. SAP will remain Qualtrics’ closest and most important co-innovation and go-to-market partner.
SAP will continue its go-to-market strategy of adding Qualtrics (and Customer Data Cloud) to any proposal, saying you need to understand the needs of your customer to improve your Commerce, Marketing, or Service. And SAP will continue to target the Qualtrics client base to sell the SAP CX solutions.
The Experience Management market will grow exponentially in the coming years. And SAP will grow with it. But I believe that Qualtrics on its own is growing faster and stronger!