SAP and Qualtrics: Closing the Experience Gap

Recently SAP announced its intent to acquire Qualtrics International Inc. (Qualtrics), the global pioneer of experience management (XM) software. Since the announcement I have met with various analysts, investors, and employees to explain why I believe this is a real game changer.

Discussions that usually start with skepticism and misunderstanding, usually end with agreement and a new understanding filled with excitement for the possibilities. So, I would like to share my thoughts on this vision and bring you along a journey of possibilities, together we can envision new exciting ways to run tomorrow's business.

Benjamin Franklin once said, 'Don't put off until tomorrow what you can do today.' The SAP and Qualtrics union takes the meaning of this quote to a new level in the business world. In today's digital world, good and bad experiences can make or break a business. Sentiments spread instantly on social media - it can increase product demand and customer loyalty as fast as it can lower productivity or destroy the value of a brand. Addressing these sentiments cannot wait until feedback is collected, analyzed, and for a committee to determine the best course of action months, sometimes years later. In the experience economy, your advantage is how quickly you can respond to feedback and trends - positive or negative, success rides on one's ability to act on that insight with confidence and speed. The true value of the SAP and Qualtrics union comes from drawing insights when connecting these sentiments to the correlating business transactions and taking action- continuously and in real time.

The Value of Tying the XO Data Knot

Let's talk about why the SAP and Qualtrics is a game changer in the industry.

Qualtrics collects more than a billion records of experience data (X-data) from all different sources - social media, surveys, web, in-app, pictures, video, IoT, etc. - on customer, product, employee, and brands. X-data captures the human sentiment at key moments, it provides a richer, immediate, and more salient understanding of the quality of an experience - it helps us understand the why. On the other hand, 77 percent of the world's transactions touch an SAP system; these transactions, which we call operational data (O-data), tells us what is going on and what just happened in a customer's business. At present, there is no company that brings these two worlds together. This is what we call the experience gap.

Let's take the example of a mass media and entertainment company that uses Qualtrics to understand its customers holistically. This company is constantly capturing customer feedback and gaining insights from guests at their parks, hotels, and restaurants, through a variety of digital channels such as wearables, social media, and surveys. In the back office this company may use various business solutions for travel, sales and marketing, procurement, and human resource management for smooth operation of their business. Today, there is no connection between the customer feedback collected and these business solutions.

SAP and Qualtrics: Each company brings a unique contribution to this union. Qualtrics brings the listening component of customer feedback with X-data, while SAP brings the ability to act on this X- data by taking action from within our business solutions. The magic of this union happens when we gain insight on how the sentiments (X-data) correlate to specific business transactions (O-data), so that we can take the appropriate action from within our business solutions to address the sentiments. In our example above, if we can connect a customer's bad experience at a hotel's checkout to a staffing issue, we can systematically identify and take action to add more staff at a specific time of the day or require more training and certification for the front desk employees. Making the connection - between a bad customer experience to a sub-optimal employee engagement and connecting to the operational system workflow to systematically identify and execute the corrective action in real time - is the true opportunity.

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In a retail example, O-data can tell you the number of number of shoppers, purchases, and returns -thewhat. In our example, 66 percent of the retail transactions were returns, but the data cannot tell you about the experience and why there are so many returns. Was it because of product defects, checkout experience, staff knowledge, packaging issues, delivery delays? When you connect X-data to your products, you begin to connect the customer sentiment to the reason behind returns, you can detect patterns and you can focus on fixing the pain points. These real-time patterns can lead you to make immediate changes to your production, manufacturing, supply chain or engineering processes. X-data can be used to course correct or double down based on real time insights. By more quickly assessing and acting on how customers feel about their products or services, we can better manage supply chains, networks, employees and core processes. This has never been possible before. With X-data we will be able to predict and deliver experiences expected by customers at every touchpoint-exploring, buying, owning, and returning.

Qualtrics brings us a non-intrusive, differentiating way of recognizing trends through various channels. The immediate benefit is the XM Platform that comprises of a research core, statistical models, and libraries which gives us a broad spectrum of functionality. This is not a survey tool but a comprehensive engagement platform for the enterprise. Surveys are characterized for the historic nature where actions are disconnected over time; with Qualtrics we can bring real time feedback from multiple channels directly to the source that can fix it, be it engineers or the production line.

Reality: To be honest, this is not a trivial problem to solve. But at SAP, we believe our greatest challenges are also our greatest opportunities and who better to tackle this challenge than SAP and Qualtrics together.

Qualtrics, SAP, and the Intelligent Enterprise

At SAP we define an intelligent enterprise as one that can effectively leverage the overwhelming volume of data that is accessible, can draw truly meaningful insights, and continuously adapts. Intelligent enterprises operate with visibility, focus, and agility to achieve game-changing outcomes. They do more with less and empower employees through process automation. They deliver a best-in-class customer experience, by proactively responding to customer expectations. And they invent new business models, and revenue streams.

Intelligent Enterprise and Empathy: Qualtrics adds empathy to SAP's intelligent suite, it is a key strategic component in delivering the Intelligent Enterprise. The addition of Qualtrics as our engagement platform in the Intelligent Enterprise framework will enable real time customer sentiments to flow through our systems, and the intelligent connections will extend across all SAP solutions.

This is just the beginning as we reimagine customer, employee, product and brand experiences from an application perspective. Employee life-work experiences will come together, customer insights will be front and center in the digital boardroom, and immediate feedback from buyers and suppliers will improve our procurement solution.

A Whole New World

We are opening a whole new market of opportunity, a new engagement platform that makes intelligent connections of XO-data and triggers actions that lead to improved experiences - creating a virtuous cycle of learning and continuous feedback. I cannot reiterate enough, that the value is in making the intelligent correlation between sentiments and business transactions. Combining XO data into one single view with an intelligent engagement platform tuned to the need of the end users (e.g., market researchers) will transform the way we think about CRM in the future.

The ability to close the gap between customer insights and tactical actions is a key differentiator among brands and technology providers. Qualtrics' quantifiable empathy allows for a holistic understanding of customer experiences through data-driven insights that will have more direct, measurable effects on tactical operations.

Business growth in the new experience economy is driven by customer-centricity. When you understand what is in people's minds, we can take those experiences and make a magical mix that brings unique value to them. While we dot all the i's and cross all the t's of this acquisition, we are dreaming of new scenarios that can come from the perfect XO union. Ideas welcomed!

Abdul Razack is head of Cloud Technology and Architecture at SAP.