SAP to buy customer sentiment tracker Qualtrics for US$8 billion

FRANKFURT: Germany’s SAP said it was buying Qualtrics International Inc for US$ 8 billion in cash, pre- empting a planned stock market listing by the USbased company that specializes in surveying consumers online.

The agreed deal, SAP’s biggest since it bought travel and expense management firm Concur in 2014 for US$ 8.3 billion, backs chief executive Bill McDermott’s expansion into Customer Relationship Management (CRM) from its core of helping firms run their finance, logistics and human resources.

Qualtrics collects feedback and data on customers, employees, products and brands for 9,000 businesses worldwide, providing real-time insights that are vital in an increasingly digital world.

McDermott said that would give SAP an edge over competitors that he said still relied on crunching backward-looking figures such as those for customer churn.

“The legacy players who carried their ‘90s technology into the 21st century just got clobbered,” he told reporters on a conference call.

Qualtrics completes its software portfolio and increases its share in cloud-based subscription software, McDermott added in an interview.

SAP’s competitors include Salesforce and Oracle Corp.

For Qualtrics, the deal marks a dramatic outcome just days before the 16-year- old company was due to launch a smaller initial public offering of stock.

Qualtrics CEO Ryan Smith, who owns about 40 per cent of the company with his brother and father, said in an interview he thought an IPO would have valued the company at least at US$ 6 billion.

“We were going to be one day worth US$ 20 billion or US$ 30 billion, like a ServiceNow Inc or a Workday Inc,” Smith said. “We were under no financial pressure to do anything.

Smith will stay on in the job and the company will retain its dual headquarters in Provo, Utah, and in Seattle.

The deal, which has been approved by the boards of both companies, is expected to close in the first half of 2019.

SAP sees an opportunity in combining its ‘operational’ data – the company says 77 per cent of the world’s transaction revenue touches one of its systems – with the ‘experience’ data the Qualtrics XM Platform gathers.

The two executives met a few months back and quickly struck up a friendship – McDermott said he showed up for lunch at Smith’s home in a suit and dress shoes, and the two ended up playing basketball in the yard.

“We hit it off right off the bat,” said McDermott, a 57-year-old New Yorker who has headed SAP since 2010.

The SAP boss said previously he was only looking at ‘ tuck-in’ acquisitions. — Reuters