SAP CEO Bill McDermott’s decision to buy Qualtrics before it went public for 8 billion dollars supposedly was a stroke of genius. He tried to make customers and Sapphire attendees believe that Qualtrics is the perfect addition to SAP’s CRM suite C/4 Hana – although it is only a lifebelt for SAP itself.
Ryan Smith, co-founder of Qualtrics, went on stage during Bill McDermott’s keynote to give a presentation on his company. Many Sapphire attendees were impressed. Even SAP’s Hasso Plattner praised the acquisition and had a lively chat with Jared Smith, Ryan’s brother and Qualtrics co-founder, on stage during his keynote.
Bill McDermott and Hasso Plattner both highlighted the importance and brilliance of the Qualtrics acquisitions during their respective keynotes and press conferences. However, both of them failed to tell Sapphire attendees that SAP’s annual report 2018 shows that SAP itself needs Qualtrics more than its community or its planned CRM suite.
Qualtrics is a system which lets you see your company through customers’ eyes. Its software analyzes numerous sets of data and interprets them regarding popularity, acceptance, satisfaction, loyalty, and so on. Marketing calls it experience management.
Customer acceptance low
SAP’s annual report 2018 shows that customers are not as satisfied with SAP as the company wants them to be. In 2017, 18 percent of customers said that they would recommend SAP. In 2018, this percentage was negative. This means that more customers said they definitely would not recommend SAP than customers that would.
Customers’ willingness to recommend systems is a sustainable and important benchmark for experts – which is why SAP put it in its annual report.
With Qualtrics, SAP wants to find out for itself how relevant this result is and what can be done about it. The 2017 and 2018 figures can only be compared to some extent as the calculation method has been adapted.
However, it is obvious that significantly fewer customers would recommend SAP now than two years ago.
Sapphire solutions
In his Sapphire keynote, Hasso Plattner highlighted the importance of a faster and more agile SAP. He believes that agility, shorter innovation cycles, and continuous release changes are the obvious solutions to SAP’s problems. With Qualtrics, he said, he wants to analyze pain points and get a realistic picture of what is going on.
However, Sapphire attendees were not exactly thrilled about the prospect of even more continuous release changes. Every change in an ERP or CRM system means more effort and costs for organizations.
Many SAP customers have other priorities than to update their ERP software every year. This is an issue that not only SAP knows intimately. Microsoft with Windows and Office is struggling with it as well.
It’s not that customers don’t have the budget for a new software release, because often, they do. What deters them from implementing new software releases is everything that follows. Employee training, testing, data management – a lot of effort for little payoff.
Release change chaos
It would mean chaos for customers if SAP forced them to adapt to a way too fast release change policy. This is not speculation, as an E-3 report on Hana shows.
More than two years after the announcement of Hana 2 at SAP TechEd Barcelona, more than 70 percent of SAP’s own Hana servers are still on version 1. SAP is currently operating about ten different Hana versions (service packages).
Forget about Qualtrics for now – Bill McDermott and Hasso Plattner should start cleaning up SAP’s Hana mess before they do anything else.
Who keeps Sapphire promises, anyway?
In his Sapphire keynote, Hasso Plattner hinted at customers’ obvious opposition to accept release changes in their data centers. His solution: SAP Public Cloud! Problem: recent surveys show that SAP customers also don’t really like that offer, either.
They are not opposed to public cloud offers per se. They just like Amazon, Google, and Microsoft better.
On the last day of Sapphire 2019, Bill McDermott highlighted his cloud program Embrace, which was already introduced at SAP Fkom earlier this year. With Embrace, Bill McDermott admits defeat. He might have realized that SAP’s cloud offer can only ever be an alternative to AWS, Google Cloud Platform, and Azure.
With the announcement at Sapphire, Embrace is now SAP’s official cloud strategy. With his recommendation of SAP Public Cloud, Hasso Plattner might contradict it, however.
This is the second part of a mini-series focusing on Sapphire 2019. If you would like to read the first one, click here. If you would like to read the next one, click here.
Excellent analysis. Thank you.