SAP just announced its intent to spin off Qualtrics — the $8 billion dollar purchase it made less than two years ago. This move goes against much of what was said when the acquisition took place, when it was stated that the two companies were bringing together two powerful systems, one operational and one experiential. So what’s going on?
This move primarily benefits Qualtrics, potentially giving it the best of two worlds. Even after being spun out, Qualtrics will continue to derive value from being associated with SAP. For example, there have been plenty of incidents where a relationship with SAP enabled Qualtrics to get a seat at the table and win business that it would not normally have gotten.
The spin-out also gives Qualtrics more control, enabling it to move faster. This could be beneficial when it comes to acquisitions. The vendor already has a robust partner ecosystem for its customers to take advantage of (at an additional cost), but it may look to expand its own features through acquisitions and reduce its reliance on partners. For example, Qualtrics competitor Medallia, which went public in July 2019, continues to add to its product portfolio, acquiring companies such as crowdsourcing tool Crowdicity, video research and feedback technology LivingLens, and speech technology vendor Voci, to name a few. In contrast, Qualtrics’ last technology acquisition came in 2018, when it bought Delighted.
The timing of this move comes on the heels of announcements by both Microsoft and Salesforce, which are also making moves into the customer and employee feedback space. Because it is already one of the biggest and best-known players in the space, a spun-out Qualtrics will be better positioned to build on its head start over these giants.
What about current Qualtrics customers? The acquisition by SAP was not particularly popular among them. At best, most of them were indifferent. So far, the biggest concern we’re hearing is that, ironically, this move does not mean that SAP will no longer be in the picture.