Daily Management Review

Customer Sentiment Tracker Qualtrics To Be Acquired By SAP For $8 Billion


Customer Sentiment Tracker Qualtrics To Be Acquired By SAP For $8 Billion
The US based firm that specialises in surveying consumers online - Qualtrics International Inc is set to be acquired by Germany's SAP for a deal worth $8 billion in cash. The US-based company is expected to get listed and the deal was partly driven by that consideration.
This deal supports the strategy of the SAP's Chief Executive Bill McDermott’s change in business strategy of expansion and diversification of the company into the area of Customer Relationship Management (CRM). SAP’s core business is helping its clients in running their finance, logistics and human resources. This announced deal is the largest for the German firm since it acquired Concur – the travel and expense management company in 2014 for $8.3 billion.
Qualtrics is engaged in the business of gathering consumer, employee, products and brand data and feedback for more than 9,000 companies globally and analyses them to provide insights in real time to companies and firms which is being increasingly used for online purposes of marketing and sale and customer engagement.
McDermott said that its competitors are still reliant on crunching backward-looking figures such as those for customer churn and therefore this deal would provide SAP an edge over its rivals.
"The legacy players who carried their '90s technology into the 21st century just got clobbered," he told reporters on a conference call.
McDermott added in an interview that the Qualtrics deal would mar a completion for SAP’s software portfolio and would help the German firm to increase its share in cloud-based subscription software.
Salesforce and Oracle Corp are among the largest competitors of SAP.
This deal is being viewed as a big surprise for Qualtrics because the 16 year old US company is all set to issue a smaller initial public offering of stock. It is believed that an IPO would have valued the company at least at $6 billion, said Qualtrics CEO Ryan Smith in an interview. Smith is the owner of about 40 per cent of the company along with his brother and father.
"We were going to be one day worth $20 billion or $30 billion, like a ServiceNow Inc or a Workday Inc," Smith said. "We were under no financial pressure to do anything.
The company will continue to be headquartered in Provo, Utah, and in Seattle and Smith will retain his position in the new entity.
It is expected that the deal would be completed in the first half of 2019 pending approval from the boards of both companies.
The deal would also be an opportunity for SAP to include the 'experience' data that the Qualtrics XM Platform gathers with the 'operational' data that the German company already gathers. SAP says that about 77 per cent of all the revenue transactions of the world touches one of its systems.