International Management Case SAP and Qualtrics

INTERNATIONAL MANAGEMENT CASE SAP and Qualtrics

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This is a comprehensive mini-case analysis that utilizes most of the concepts you learned in this course. Please read this case and answer the questions at the bottom. Please write your case analysis is proper report format with cover page, section titles, standard 1” margins, APA style, at least three references cited within the paper, and a reference page. This case analysis should be 2.5 pages, single spaced, 12 pt. Times New Roman font and you are allowed to work with a partner (one other person) if you like. Qualtrics’ Strategy to Shape the Future of the Employee Experience When you’re the go-to experience management company for the lion’s share of Fortune 500 companies, how much higher can you climb? Quite a bit, as it turns out. Over the past 15 years, Qualtrics has made a name for itself, expanding the definition of what a company’s relationship between its customers and employees can be. This year, Qualtrics made a quantum leap in the market share via its acquisition by commerce giant SAP to the tune of $8 billion. The German juggernaut has prided itself on latching on to burgeoning tech companies for nearly three decades. This 70th and latest jewel in its corporate crown is, by all accounts, a plum one. The question on the lips of everyone in tech this year has been simple: Why did SAP pay a king’s ransom to acquire Qualtrics and will it be worth it? Before diving into what the strategy should be for Qualtrics, as they have become an insta-global company, let’s look at the two companies.

SAP SAP is an enterprise software company founded in 1972. An acronym short for “Systems, Applications, & Products in Data Processing,” SAP’s influence has extended to nearly every corner of the globe from its headquarters in Walldorf, Germany. Boasting over 425,000 employees in 180 countries, SAP has risen from its humble origins as an enterprise of former IBM employees who were told to give up on the project that would become SAP’s flagship software. By 1973, SAP released a financial accounting program—the first of many products in their lineup—and the basis of the software module system that would come to be called SAP R/1. This system remained the basis of their software offering until the development of SAP R/2, which would remain essentially unchanged until the release of SAP R/3 in 1992. A current financial powerhouse, SAP began trading publicly in 1988 on the Frankfurt and Stuttgart stock exchanges. At that point, SAP had migrated from mainframe computing to client/server services. Recognizing the Internet’s enormous potential, mySAP.com brought the company to the twenty-first century. Perhaps the greatest shift in SAP’s focus began in 2012, when the company began acquiring cloud product-based companies, spending billions to compete with rival Oracle. In 2014, SAP reunited with its former parents at IBM in a partnership to develop and provide cloud technology. A partnership with Microsoft further emphasized SAP’s collaborative view of its future. At present, SAP software affects over three-quarters of all transactions conducted around the globe. The 2017 acquisition of Qualtrics only served to underline their vision of fingers in all the world’s pies.

Qualtrics Qualtrics is an experience management company founded in 2002. Headquartered in Provo, Utah, Qualtrics has made a global name for itself, providing a subscription-based software program that companies can use to monitor customer, employee, brand, and product experience. While it initially landed on the map thanks to its flagship survey platform, Qualtrics has, in recent years, dedicated much of its talent and resources to developing a full suite of feedback products designed with the express purpose of capturing the most complete experience information available, commonly referred to as X-data. In its 17 years of operations, Qualtrics has raised over $400 million in capital. The company’s first big financial gambit of 2018, involved a bid to go public, filing an IPO to the tune of $200 million. However, before these plans were finalized, SAP made Qualtrics an offer they couldn’t refuse—$8 billion and autonomy to maintain the company culture that Qualtrics had been known for. As the global pioneer of experience management (XM) software, Qualtrics is helping companies move into the experience economy.

Experience Economy The experience economy describes the next economy following the agrarian economy where growing food was king, the industrial economy where products were king, and the more recent service economy where human services were king. In the experience economy, businesses orchestrate memorable events for their customers, and that memory or “experience” itself becomes the product. Today, customers and employees desire experiences more than products and even services. An experience occurs when a company uses services and goods to engage individual customers in a way that creates a memorable event. Sometimes these experiences can be as bizarre as hotels where guests sleep on blocks of ice or inside prison cells or restaurants that serve stir-fried scorpions or coconut tree grubs or race events where participants crawl through muddy pools of water littered with electric wires or swim across rivers with alligators. While some of these experiences may seem to be for only those young and impulsive adrenaline junkies, they are desired by people from all walks of life. People want these experiences because they are “collectible,” not necessarily pleasurable. As stated by Anat Keinan at Harvard Business School, “[People] want to collect as many memorable experiences as possible to build their experiential resume.” Indeed, in the end, people are beginning to seek experiences they can remember over high-value products and even time-saving services. Experiences can provide more sustenance to what is becoming a more leisurely existence, that can help to define who they are. The most recent place for this experience economy to hit is in the workplace. Employees, like customers, want to feel they are getting valued for their work. Value is not just money but includes things like flexibility, office environments where people can talk openly, get feedback and feel like they are contributing to something that will make a difference to society. The employee experience isn’t just about making sure employees have the resources and managerial oversight needed to do their jobs; it is more about helping the employees to have continual experiences at work that provide more sustenance, that help define them. This includes providing meaningful mentorship, lifestyle benefits, and knowing the individual needs of people. By knowing their needs, companies can provide a menu of benefits that take into account what is most meaningful to each person—flexible hours, quality teams, open office space, time at work to unwind and recharge, opportunities to give back to the community, employee wellness, gym memberships, meal plans, and better ways to stay connected with others in the organization.

Qualtrics and SAP Combine Forces Companies not able to engage with and track the employee experience are doomed. This is where Qualtrics and SAP join forces. Qualtrics makes experience software that allows companies to capture experience data of employees and SAP services many of the world’s employees. One of the biggest challenges companies face is knowing how their employees are responding to something like a new HR program or a redesigned website. What did they like about it and what didn’t they like? This is not as simple as sending a survey out. Qualtrics provides a platform for companies to collect data easily, report and analyze the data in real time, and then publish the data to managers so they can immediately act on the information. By combining Qualtrics’ platform for understanding employee experiences with SAP’s operational platform that helps track a company’s success factors, Qualtrics and SAP can now start offering a solution for the employee experience immediately. As stated by Ryan Smith, CEO of Qualtrics: “Our mission is to help organizations deliver the experiences that turn their customers into fanatics, employees into ambassadors, products into obsessions and brands into religions. Supported by a global team of over 95,000, SAP will help us scale faster and achieve our mission on a broader stage. This will put the XM Platform everywhere overnight.” And as Bill McDermott, CEO of SAP, stated: “SAP already touches 77 percent of the world’s transactions. When you combine our operational data with Qualtrics’ experience data, we will accelerate the XM category with an end-to-end solution with immediate global scale. For Qualtrics, this introduces a dynamic new partner with the belief, passion and scale to bring experience management to millions of customers around the world.”Going Forward With the new global platform that SAP provides, Qualtrics has some big decisions to make going forward. What type of strategy should it adopt as it expands globally? Right now, Qualtrics does not offer many opportunities for product localization. Apart from adjusting the language and minor functionalities, the Qualtrics product looks the same most anywhere. In light of this, Ryan is worried. How can Qualtrics maintain its strong common platform while customizing the product to different countries and customers? Case Discussion Questions

1. Which parts of Qualtrics’ value chain need to adapt to the different local environments? Which parts should stay standardized? Explain why in detail.

2. Which international strategy (global strategy (p. 205-206), multidomestic strategy

(p. 206), or transnational strategy (p. 207-208) do you suggest for Qualtrics going forward? Explain why in detail.

3. Based on your answer above, how important was culture and interdependence played a part on your decision? Please discuss this in detail utilizing terms and concepts learned from the textbook this semester. Explain why in detail.