Money Makes You Blind - SAP Annual General Meeting 2019

If you reduce SAP to its own balance sheet figures and look at the company detached from the market environment, SAP shines as if freshly polished. For fiscal year 2018, shareholders will receive a dividend of 1.50 euros per share (previous year: 1.40). The total payout amounts to €1.79 billion. Shareholders ratified the actions of the Executive Board and Supervisory Board for fiscal 2018.

Those who focus only on the dividend and the share price may be satisfied with SAP. Those who look beyond that are confronted with many construction sites, problems and inconsistencies. SAP CEO McDermott is satisfied with his work. By his own admission, he has had the best executive board since he became boss.

McDermott would not or could not explain why Bernd Leukert and Rob Enslin left the SAP Executive Board this year and what they were guilty of. Unfortunately, no shareholder representative asked why the best possible SAP Executive Board was achieved without Leukert and Enslin in the first place.

Also, unfortunately, none of the action representatives asked why a second SAP Capital Markets Day in New York was frantically scheduled for this year out of nowhere. Traditionally, SAP holds an information event for the financial community in New York City in February. The fact is that SAP is under pressure in terms of contribution margin and profitability.

The real sensation of the AGM, however, was lost in the general shower of money and the currently very pleasing share price: Bill McDermott declared that Qualtrics will remain an independent company with its own management - apparently the SAP universe is too complex for shareholders to understand this bad news.

Flashback: Sapphire last year in Orlando, McDermott launches the new product C/4. It is supposed to be an answer to the very successful Salesforce and not just another CRM program, but a CRM suite that combines all customer relationship functions in an end-to-end scenario.

The basis of C/4 would be the company's own CRM extended by the e-commerce system Hybris and the pricing and sales software Callidus Cloud - that was McDermott's presentation at Sapphire 2018. Qualtrics was acquired at the end of last year and was supposed to be the last missing building block for a unique CRM suite. Board member Christian Klein is responsible for the integration.

After Professor Plattner stated this year at Sapphire that one could also build "bridges" to Qualtrics, and a week later Bill McDermott confirmed at the AGM in Mannheim that Qualtrics including management will remain independent, the danger for Salesforce of suddenly being confronted with a comprehensive CRM suite from the house of SAP seems very small!

However, from today's perspective, it is doubtful that Qualtrics as an independent company will ever recoup the purchase price of seven billion for SAP - perhaps the second SAP Capital Markets Day this year in New York City will provide an answer?