It is not very common for Software as a Service (SaaS) companies to be taken over for amounts in the direction of ten billion dollars. Only when an IT supplier sees above-average added value for its own portfolio, will such an acquisition happen. At the end of last year, SAP completed a major acquisition, by purchasing Qualtrics for 8 billion dollars (7.2 billion euros). The operational data (O-data) from the SAP systems must converge more closely with the experience data (X-data) that Qualtrics possesses. The ERP giant is currently working on integrating the Qualtrics software into its portfolio in order to reap the benefits of a major acquisition.
With the acquisition of Qualtrics, SAP will have at its disposal a player specialising in Experience Management (XM). XM actually means that software monitors people’s interactions with companies, in order to determine what their experience with the company is. Qualtrics looks at four areas to determine the total experience of a company: customers, employees, products and the brand.
Both O-data and X-data talk about the four business units. Suppose, for example, that you want some input about the sales staff. The CRM system then picks up the operational data to show who the best salespeople are. By also looking at X-data, you’ll discover the motivation of these top salespeople and whether they want to stay with the company for a long time to come.
Therefore, Qualtrics’ Experience Management Platform collects all X-data from the four business units. This data can be found in many different places, both inside and outside the organization. The departments within the company provide X-data, social media such as LinkedIn and Twitter provide information about different experiences and the customer contact centre also receives a lot of X-data.
By monitoring and eventually connecting all the data, Qualtrics can come up with recommendations to improve the various experiences. As a result, the so-called ‘experience gap’ has to be closed. In other words, the gap between what a customer expects and what he actually gets.
X-data determines success in today’s economy
According to SAP and Qualtrics, the total experience of a company must be optimised if organisations are to remain relevant. However, optimizing the overall experience will take a lot of time, as many elements have to be taken into account. For example, potential customers find it very important what other users say. For example, they look at online reviews or see immediately on social media that there is negative reporting about the brand. By monitoring these issues, which are only a few parts of the total experience, it is possible to respond quickly to any negative publicity. In this way, a company can prevent further damage and/or improve its image.
For the importance of optimising all experiences, Qualtrics regularly refers to markets where disruption took place. The new SAP member states that it is often new companies that set disruption in motion, through a strong focus on the overall experience. It sees the taxi sector, which was very different ten years ago, as a good example. Nowadays, you can order rides with apps, which is generally considered to be more user-friendly than the traditional way of doing things. These taxi apps’ methods have, on the whole, substantially reduced the market share of traditional taxi services.
It seems that in an increasing number of sectors, the experience of a company is becoming central. This idea is also called the ‘experience economy’. Within this economy, X-data can be seen as the motor oil. It is precisely these X-data that SAP has deposited billions for.
Improving the quality of experience management
The data that Qualtrics brings with it must merge with the operational data of SAP in the coming period. Customers of the German software giant often have a lot of O-data in their possession, especially when they use multiple SAP systems. Whether it concerns an ERP installation or HRM software from SAP: all types of software from the company show what is happening within the business. Combining this ‘what’ of O-data with the X-data will increase the quality of experience management.
SAP wants to make sure that there is no misunderstanding about the intention it has with Qualtrics. The Experience Management Platform capacities and data must take on a prominent role within the SAP software, but Qualtrics will continue to function as a separate entity within the SAP Cloud Business Group. SAP subsidiaries like SuccesFactors and Ariba also fall under this section. After they were taken over by SAP, they were also given some freedom to focus on closer integration at the same time. Moreover, the position as a separate entity means that Qualtrics remains largely intact. Founder Ryan Smith will continue to lead Qualtrics, and there will be little or no changes in the workforce.
Merging roles within one strategy; design will become clearer
Qualtrics will continue to exist as a stand-alone product, but in order to get the most out of the software, other SAP systems will also have to be used. After all, Qualtrics will add something to every SAP software application. In concrete terms, this means, for example, that CRM package C/4HANA will have a tool that will tell you something about the satisfaction of a customer and what is needed to maximise that satisfaction.
In order to integrate this type of functionality in the entire SAP portfolio, the two companies need time. At the moment, they are thinking about how it should all look technically. For example, the architecture of certain systems could be adapted to merge data and functionalities, which is quite challenging. After all, everything has to run smoothly in the long run. As a result, it is still difficult to estimate when X-data and O-data will be completely merged.
Products and initiatives as a basis
SAP and Qualtrics have already realised that the in-memory database HANA has a major role to play within the close integration. The German software giant has been working for some time to make the database grow into the standard on which all SAP solutions used by a company run. One of the reasons for switching users to HANA is to make it easier for SAP products to exchange data. The Qualtrics X-data can then also be linked to this in the future, in order to facilitate the exchange.
In addition to sharing data as well as possible between SAP solutions, the company has also repeatedly expressed its commitment to open systems. These systems will have to contribute to the further technical steps, as the standard aim is a system architecture in which data is easy to extract. It will then not matter whether it is SAP itself or another IT supplier who wants to obtain the data.
SAP has already launched various initiatives and products for the realisation of open systems. These include the Open Data Initiative to create data standards together with affiliated parties, while the SAP Data Hub is a product for the collection of data from other systems.
An unexpected, but logical acquisition.
With that, there are already steps and ideas to get X-data and O-data merged. Once that process has been completed, SAP users will be given additional features that are welcome. This makes the adoption of Qualtrics quite logical. Although some SAP users were initially surprised that the company would spend billions for a company that many people did not even know, after seeing the potential possibilities, they still see it as an asset. X-data offers many new opportunities, especially when combined with O-data.
All in all, we can say that by attracting Qualtrics, SAP has acquired an interesting new asset in order to remain a relevant player in the software market. Experience management will play a major role in the portfolio, which will give SAP users new opportunities. It will only take a while before the final integration of Qualtrics in SAP products is completed. Nevertheless, we are curious to see what the end result will actually look like in the future.