Qualtrics will not save SAP

SAP CEO Bill McDermott never tired of praising himself for being able to acquire Qualtrics for SAP for USD 8 billion before a planned IPO.

What McDermott described as the perfect complement to the C/4 strategy is actually a lifebelt for SAP itself. Many Sapphire customers were impressed by the Qualtrics presentation by Ryan Smith during McDermott's keynote.

Professor Hasso Plattner was also pleased with the acquisition and had a lively chat with Jared Smith, Rayn's brother, during his keynote speech. Bill McDermott and Hasso Plattner emphasized the necessity and brilliance of the Qualtric acquisition both in their respective keynotes and in the subsequent press conferences.

But what they both concealed from the audience: The current SAP Annual Report 2018 clearly shows that SAP itself needs Qualtrics much more urgently than perhaps the SAP community and a nascent SAP CRM suite.

Qualtrics is a system that can hold up a mirror to you. The software analyzes a wide variety of data sources and evaluates them in terms of popularity, acceptance, satisfaction, loyalty, etc. Marketing calls it experience management. Marketing calls it experience management.

How existing customers perceived and accepted SAP last year can be found in the SAP Annual Report 2018: while almost 18% of existing customers surveyed in 2017 would have recommended SAP to others, this figure was negative last year.

In 2018, there were five percentage points more existing customers who would not recommend SAP under any circumstances than those who are committed to the global ERP market leader. Experts regard this "willingness to recommend" as a significant and sustainable value, which is why SAP officially includes this annual survey in its annual report.

In future, SAP intends to use the Qualtrics software to determine the extent to which this sentiment is relevant and what can be derived from it. The available figures from 2017 and 2018 are only partially comparable because the calculation method has been adapted.

However, it is clear that significantly fewer existing customers recommend SAP to others than two years ago. Hasso Plattner therefore emphasized in his Sapphier keynote that SAP must move faster and more flexibly in the future.

Agility, shorter innovation cycles and continuous version changes appear to the Chairman of the Supervisory Board to be the appropriate response to the current SAP crisis. He wants to get a realistic picture for himself and Bill McDermott with Qualtrics.

At Sapphire in Orlando, however, there was no enthusiasm in the audience for the increase in the "threatened" and continuous version changes. Every change to an ERP/CRM system means additional work for the organization.

Many existing SAP customers have completely different challenges than updating their ERP software every year. A phenomenon that is not only familiar to SAP, but also to Microsoft with Windows and Office.

This is not about the necessary budget for a new software release, but about the follow-up work such as training, testing and data management. The chaos that SAP can cause with a release policy that is too fast was reported exclusively by E-3 Magazine in a recent Hana report.

More than two years after the presentation of Hana 2 at SAP TechEd in Barcelona, 70 percent of all Hana servers in SAP's own data center are still running on version 1. Around ten different Hana versions (service packages) are currently in use at SAP itself at the same time. This is where Bill McDermott and Hasso Plattner should start cleaning up - and you don't need Qualtrics to do it.

In his Sapphire keynote, Plattner indicated that he knows that existing customers do not want release changes in their data centers. His recommendation: the SAP Public Cloud! However, current surveys show that existing SAP customers do not appreciate this offer either, preferring instead to go to the hyperscalers Amazon, Google and Microsoft. So on the last day of Sapphire, Bill McDermott presented the "Embrace" program on the big stage together with selected existing customers.

Internally, this "embrace" of hyperscalers was already presented at the SAP Field Kick-off Meeting (Fkom) in January of this year. Ultimately, it is the realization that SAP with its public cloud can at best be an alternative to AWS, Google Cloud Platform and Microsoft Azure.

Embrace is now public and is intended to drive McDermott's cloud-first strategy forward. It was not possible to verify in Orlando this year whether Plattner will move away from his recommendation for the SAP Public Cloud through Embrace.