Jan
28
2021
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After soaring above $23B, Qualtrics’ founder and CEO reflect on a stellar debut

Amidst all of the the sturm und drang of l’affaire GameStop, Qualtrics went public today.

After pricing its stock above its raised IPO range, the company received a warm welcome from public investors. After starting its trading life worth $41.85, Qualtrics closed the day worth $45.50, up some 51.67%.

Qualtrics did everything that it said it was going to.

The software company’s debut comes after a lengthy path to the public markets; Qualtrics sold to SAP on the eve of its first run at a public listing back in 2018. Now, SAP has completed spinning the company out, though the software giant remains the Utah unicorn’s largest shareholder.

That Qualtrics’ IPO might perform well was presaged in its pricing run, having prices far above its initial valuation estimates; there was evidence of strong demand even before its shares started to trade.

But did Qualtrics misprice, given its strong first-day performance? TechCrunch spoke with Qualtrics CEO Zig Serafin, and its founder and current executive chairman Ryan Smith about its public offering, hoping to learn a bit about what is next for the company.

Pricing, plans

Having spoken to myriad folks on IPO days, I’ve learned the best way to kick off is to ask about emotions. Most CEOs and other execs are tied up in what they can (and cannot) say. And they are well-trained by communications experts regarding what to repeat and emphasize. You can sometimes loosen them up a little, however, by asking them how they feel.

In response to that question, Serafin described a feeling of gratitude and Smith brought up the long game. Qualtrics, he said, had been told that it couldn’t bootstrap, that it couldn’t build in Utah, that SAP had overpaid, that SAP had messed up and so forth.

Jan
27
2021
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SAP is buying Berlin business process automation startup Signavio

Rumors have been flying this week that SAP was going to buy Berlin business process automation startup Signavio, and sure enough the company made it official today. The companies did not reveal the purchase price, but Bloomberg reported earlier this week that the deal could be worth $1.2 billion.

With Signavio SAP gets a cloud native business process management tool. SAP CFO Luka Mucic sees a world where understanding and automating businesses processes has become a key part of a company’s digital transformation efforts.

“I cannot overstress the importance for companies to be able to design, benchmark, improve and transform business processes across the enterprise to support new capabilities and business models,” he said in a statement.

While traditional enterprise BPA tools have existed for years, having a cloud native tool gives SAP a much more modern approach to attacking this problem, and being able to automate business processes via the cloud has become more important during the pandemic when many many employees are working entirely from home.

SAP also sees Signavio as a key missing piece in the company’s Business Process Intelligence unit. “The combination of business process intelligence from SAP and Signavio creates a leading end-to-end business process transformation suite to help our customers achieve the requirements needed to gain a competitive edge,” he said.

SAP has been making moves into process automation of late. In fact at SAP TechEd in December, the company announced SAP Intelligent Robotic Process Automation, its foray into the RPA space. This should fit in nicely alongside it.

Dr. Gero Decker, Savigno co-founder and CEO, sees SAP resources helping push the company beyond what it could have done on its own. “Considering the positioning of SAP, its geographical coverage and financial muscle, SAP is the biggest and best platform to bring process intelligence to every organization,” he said in a statement.

The increased resources and reach argument is one that just about every acquired company CEO makes, but being pulled into a company the size of SAP can be a double-edged sword. Yes, it has vast resources, but it also can be hard for an acquired company to find its place in such a large pond. How well they fit in and make that transition from startup to big company cog, will go a long way in determining the success of this transaction in the long run.

Signavio launched in 2009 in Berlin and has raised almost $230 million, according to Crunchbase data. Investors include Apax Digital and Summit Partners. The most recent investment was July 2019 Series C for $177 million, which came in at a $400 million valuation.

Customers include Comcast, Bosch, Liberty Mutual, and yes SAP. Perhaps it will be getting a discount now.

Jan
27
2021
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SAP launches ‘RISE with SAP,’ a concierge service for digital transformation

SAP today announced a new offering it calls ‘RISE with SAP,’ a solution that is meant to help the company’s customers go through their respective digital transformations and become what SAP calls ‘intelligent enterprises.’ RISE is a subscription service that combines a set of services and product offerings.

SAP’s head of product success Sven Denecken (and its COO for S/4Hana) described it as “the best concierge service you can get for your digital transformation” when I talked to him earlier this week. “We need to help our clients to embrace that change that they see currently,” he said. “Transformation is a journey. Every client wants to become that smarter, faster and that nimbler business, but they, of course, also see that they are faced with challenges today and in the future. This continuous transformation is what is happening to businesses. And we do know from working together with them, that actually they agree with those fundamentals. They want to be an intelligent enterprise. They want to adapt and change. But the key question is how to get there? And the key question they ask us is, please help us to get there.”

With RISE for SAP, businesses will get a single contact at SAP to help guide them through their journey, but also access to the SAP partner ecosystem.

The first step in this process, Denecken stressed, isn’t necessarily to bring in new technology, though that is also part of it, but to help businesses redesign and optimize their business processes and implement the best practices in their verticals — and then measure the outcome. “Business process redesign means that you analyze how your business processes perform. How can you get tailored recommendations? How can you benchmark against industry standards? And this helps you to set the tone and also to motivate your people — your IT, your business people — to adapt,” Denecken described. He also noted that in order for a digital transformation project to succeed, IT and business leaders and employees have to work together.

In part, that includes technology offerings and adopting robotic process automation (RPA), for example. As Denecken stressed, all of this builds on top of the work SAP has done with its customers over the years to define business processes and KPIs.

On the technical side, SAP is obviously offering its own services, including its Business Technology Platform, and cloud infrastructure, but it will also support customers on all of the large cloud providers. Also included in RISE is support for more than 2,200 APIs to integrate various on-premises, cloud and non-SAP systems, access to SAP’s low-code and no-code capabilities and, of course, its database and analytics offerings.

“Geopolitical tensions, environmental challenges and the ongoing pandemic are forcing businesses to deal with change faster than ever before,” said Christian Klein, SAP’s CEO, in today’s announcement. “Companies that can adapt their business processes quickly will thrive – and SAP can help them achieve this. This is what RISE with SAP is all about: It helps customers continuously unlock new ways of running businesses in the cloud to stay ahead of their industry.”

With this new offering, SAP is now providing its customers with a number of solutions that were previously available through its partner ecosystem. Denecken doesn’t see this as SAP competing with its own partners, though. Instead, he argues that this is very much a partner play and that this new solution will likely only bring more customers to its partners as well.

“Needless to say, this has been a negotiation with those partners,” he said. “Because yes, it’s sometimes topics that we now take over they [previously] did. But we are looking for scale here. The need in the market for digital transformation has just started. And this is where we see that this is definitely a big offering, together with partners. “

Jan
19
2021
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A first look at Qualtrics’ IPO pricing

Earlier today, Qualtrics dropped a new S-1 filing, this time detailing its proposed IPO pricing. That means we can now get a good look at how much the company may be worth when it goes public later this month.

The debut has been one TechCrunch has been looking forward to since the company announced that it would be spun out from its erstwhile corporate parent, SAP. In 2019, the Germany-based enterprise giant SAP snatched up Qualtrics for $8 billion just before it was to go public.

Qualtrics is either worth less than we would have guessed, or its first IPO range feels light.

That figure provides a good marker for how well SAP has done with the deal and how much value Qualtrics has generated in the intervening years. Keep in mind, however, that the value of software companies has risen greatly in the last few years, so the numbers we’ll see below benefit from a market-wide repricing of recurring revenue.

Qualtrics estimates that it may be worth $22 to $26 per share when it goes public. Is that a lot? Let’s find out.

Qualtrics’ first IPO range

First, scale. Qualtrics is selling just under 50 million shares in its public offering. As you can math out, at more than $20 per share, the company is looking to raise north of $1 billion.

After going public, Qualtrics anticipates having 510,170,610 shares outstanding, inclusive of its 7.4 million underwriter option. Using that simple share count, Qualtrics would be worth $11.2 billion to $13.3 billion.

Dec
08
2020
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SAP latest enterprise software giant to offer low code workflow

Low code workflow has become all the rage among enterprise tech giants and SAP joined the group of companies offering simplified workflow creation today when it announced SAP Cloud Platform Workflow Management, but it didn’t stop there.

It also announced SAP Ruum, a new departmental workflow tool and SAP Intelligent Robotic Process Automation, its entry into the RPA space. The company made the announcements at SAP TechEd, its annual educational conference that has gone virtual this year due to the pandemic.

Let’s start with the Cloud Platform Workflow Management tool. It enables people with little or no coding skills to build operational workflows. It includes predefined workflows like employee onboarding and can be used in combination with Qualtrics, the company it bought for $8 billion 2018, to include experience data.

As SAP CTO Juergen Mueller told me, the company sees these types of activities in a much larger context. In the hiring example, that means it’s more than simply the act of being hired and getting started. “We like to think in end-to-end processes, and the one fitting into the employee onboarding would be recruit to retire. So it would start at talent acquisition,” he said.

Hiring and employee onboarding is the first part of the larger process, but there are other workflows that develop out of that throughout the employee’s time at the company. “Basically this is a collection of different workflow steps that are happening with some in parallel, some in sequence,” he said.

If there are experience questions involved like which benefits you want, you could add Qualtrics questionnaires to that part of the workflow. It’s designed to be very flexible. As with all of these kinds of tools, you can drag and drop components and do some basic configuration and you’re good to go. In reality, the more complex these become, the more expertise would be required, but this type of tool is designed with non-technical end users in mind as a starting point.

SAP Ruum is a simplified version of Cloud Platform Workflow Management designed for building departmental processes, and if there is an automation element involved where you want to let the machine take care of some mundane, repeatable tasks, then the RPA solution comes into play. The latter tends to be more complex and require more IT involvement, but it enables companies to build automation into workflows where the machine pushes data along through the workflow and does at least some of the work for you.

The company joins Salesforce, which announced Einstein Workflow Automation last week at Dreamforce and Google Workflows, the tool the company introduced in August. There are many others out there from companies large and small including Okta, Slack and Airtable, which all have no-code workflow tools built in.

The SAP TechEd conference has been going on for 24 years, and usually takes place in three separate venues — Barcelona, Las Vegas and Bangalore —  throughout the year. This year, the company is running a single-combined virtual conference for free to all comers. It runs for 48 hours straight starting today with a worldwide audience of over 60,000 sign-ups as of yesterday.

Nov
05
2020
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Alibaba passes IBM in cloud infrastructure market with over $2B in revenue

When Alibaba entered the cloud infrastructure market in earnest in 2015 it had ambitious goals, and it has been growing steadily. Today, the Chinese e-commerce giant announced quarterly cloud revenue of $2.194 billion. With that number, it has passed IBM’s $1.65 billion revenue result (according to Synergy Research market share numbers), a significant milestone.

But while $2 billion is a large figure, it’s one worth keeping in perspective. For example, Amazon announced $11.6 billion in cloud infrastructure revenue for its most recent quarter, while Microsoft’s Azure came in second place with $5.9 billion.

Google Cloud has held onto third place, as it has for as long as we’ve been covering the cloud infrastructure market. In its most recent numbers, Synergy pegged Google at 9% market share, or approximately $2.9 billion in revenue.

While Alibaba is still a fair bit behind Google, today’s numbers puts the company firmly in fourth place now, well ahead of IBM . It’s doubtful it could catch Google anytime soon, especially as the company has become more focused under CEO Thomas Kurian, but it is still fairly remarkable that it managed to pass IBM, a stalwart of enterprise computing for decades, as a relative newcomer to the space.

The 60% growth represented a slight increase from the previous quarter’s 59%, but basically means it held steady, something that’s not easy to do as a company reaches a certain revenue plateau. In its earnings call today, Daniel Zhang, chairman and CEO at Alibaba Group, said that in China, which remains the company’s primary market, digital transformation driven by the pandemic was a primary factor in keeping growth steady.

“Cloud is a fast-growing business. If you look at our revenue breakdown, obviously, cloud is enjoying a very, very fast growth. And what we see is that all the industries are in the process of digital transformation. And moving to the cloud is a very important step for the industries,” Zhang said in the call.

He believes eventually that most business will be done in the cloud, and the growth could continue for the medium term, as there are still many companies that haven’t made the switch yet, but will do so over time.

John Dinsdale, an analyst at Synergy Research, says that while China remains its primary market, the company does have a presence outside the country too, and can afford to play the long game in terms of the current geopolitical situation with trade tensions between the U.S. and China.

“Alibaba has already made some strides outside of China and Hong Kong. While the scale is rather small compared with its Chinese operations, Alibaba has established a data center and cloud presence in a range of countries, including six more APAC countries, U.S., U.K. and UAE. Among these, it is the market leader in both Indonesia and Malaysia,” Dinsdale told TechCrunch.

In its most recent data released a couple of weeks ago, prior to today’s numbers, Synergy broke down the market this way: “Amazon 33%, Microsoft 18%, Google 9%, Alibaba 5%, IBM 5%, Salesforce 3%, Tencent 2%, Oracle 2%, NTT 1%, SAP 1% – to the nearest percentage point.”

Oct
28
2020
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Qualtrics CEO Ryan Smith is buying majority stake in the Utah Jazz for $1.6B

The Utah Jazz, an NBA basketball team based in Salt Lake City, announced today that Qualitrics CEO and co-founder Ryan Smith was buying a majority stake in the team along other properties. ESPN is reporting the deal is worth $1.6 billion.

Smith can afford it. He sold Qualtrics, which is based in Provo, Utah, in 2018 to SAP for $8 billion just before the startup was about to go public. Earlier this year, SAP announced plans to spin out Qualtrics as public company.

In addition to The Jazz, he’s also getting Vivint Arena, the National Basketball Association (NBA) G League team Salt Lake City Stars and management of the Triple-A baseball affiliate Salt Lake Bees. Smith is buying the properties from the Miller family, who have run them for over three decades.

Smith was over the moon about being able to buy into a franchise he has supported over the years. “My wife and I are absolutely humbled and excited about the opportunity to take the team forward far into the future – especially with the greatest fans in the NBA. The Utah Jazz, the state of Utah, and its capital city are the beneficiaries of the Millers’ tremendous love, generosity and investment. We look forward to building upon their lifelong work,” he said in a statement.

The deal is pending approval of the NBA Board Governors, but once that happens, Smith will have full decision making authority over the franchise.

Qualtrics, which makes customer survey tools, was founded in 2002 and raised over $400 million from firms like Accel, Insight Partners and Sequoia before selling the company two years ago to SAP.

Smith is not the first tech billionaire to buy a basketball team. He joins Mark Cuban, who bought the Dallas Mavericks in 1999 after selling Broadcast.com to Yahoo for $5.7 billion that same year. Former Microsoft CEO Steve Ballmer bought the Los Angeles Clippers in 2014 for $2 billion.

Oct
26
2020
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SAP shares fall sharply after COVID-19 cuts revenue, profit forecast at software giant

SAP announced its Q3 earnings yesterday, with its aggregate results down across the board. And after missing earnings expectations, the company also revised its 2021 outlook down. The combined bad news spooked investors, crashing its shares by more than 20% in pre-market trading, and the stock wasn’t showing any signs of improving in early trading.

The German software giant has lost tens of billions of dollars in market cap as a result.

The overall report was gloomy, with total revenues falling 4% to €6.54 billion, cloud and software revenue down 2% and operating profit down 12%. The only bright spot was its pure-cloud category, which grew 11%, to €1.98 billion.

SAP’s revenue result was around €310 million under expectations, though its per-share profit beat both adjusted and non-adjusted expectations.

While SAP’s big revenue miss might have been enough to send investors racing for the exits, its revised forecast doubled concerns. Even though the company said that its customers are accelerating their move to the cloud during the pandemic — something that TechCrunch has been tracking for some time now — SAP also said the pandemic is slowing sales and large projects.

Constellation Research analyst Holger Mueller says this is resulting in an unexpected revenue slow-down.

“What has happened at SAP is a cloud revenue delay as customers know that SAP is only investing into cloud products, and they have to migrate to those in the future. The news is that SAP customers are not migrating to the cloud during a pandemic,” Mueller told TechCrunch.

In a sign of the times, SAP spent a portion of its earnings results talking about 2025 results, a maneuver that failed to allay investor concerns that the pandemic was dramatically impacting SAP’s business today and in the coming year.

For 2020, SAP made the following cuts to its forecasts:

  • €8.0 – 8.2 billion non-IFRS cloud revenue at constant currencies (previously €8.3 – 8.7 billion)
  • €23.1 – 23.6 billion non-IFRS cloud and software revenue at constant currencies (previously €23.4 – 24.0 billion)
  • €27.2 – 27.8 billion non-IFRS total revenue at constant currencies (previously €27.8 – 28.5 billion)
  • €8.1 – 8.5 billion non-IFRS operating profit at constant currencies (previously €8.1 – 8.7 billion)

So, €300 million to €500 million in cloud revenue is now gone, along with €300 million to €400 million in cloud and software revenue, and €600 to €700 million in total revenue. That cut profit expectations by up to €200 million.

The company, however, is trying to put a happy face on the future projections, believing that as the impact of COVID begins to diminish, existing customers will eventually shift to the cloud and that will drive significant new revenues over the longer term. The trade-off is short-term pain for the next year or two.

“Over the next two years, we expect to see muted growth of revenue accompanied by a flat to slightly lower operating profit. After 2022 momentum will pick up considerably though. Initial headwinds of the accelerated cloud transition will start to turn into tailwinds for revenue and profit. […] That translates to accelerated revenue growth and double digit operating profit growth from 2023 onwards,” SAP CFO Luka Mucic said in a call with analysts this morning.

The question now becomes can they meet these projections, and if the longer-term approach during a pandemic will placate investors. As of this morning, they weren’t looking happy about it.

Oct
01
2020
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SAP continues to build out customer experience business with Emarsys acquisition

SAP seemed to be all in on customer experience when it acquired Qualtrics for $8 billion in 2018. It continued on that journey today when it announced it was acquiring Austrian cloud marketing company Emarsys for an undisclosed amount of money.

Emarsys, which raised over $55 million according to PitchBook data, gives SAP customer personalization technology. If you spoke to any marketing automation vendor over the last several years, the focus has been on using a variety of data and touch points to understand the customer better, and deliver more meaningful online experiences.

With the pandemic closing or limiting access to brick and mortar stores, personalization has taken a new urgency as customers are increasingly shopping online and companies need to meet them where they are.

With Emarsys, the company is getting an omnichannel marketing solution that they say is designed to deliver messages to customers wherever they are, including e-mail, mobile, social, SMS and the web, and deliver that at scale.

When SAP announced it was spinning out Qualtrics a couple of months ago, just 20 months after buying it, it left some question about whether SAP was fully committed to the customer experience business.

Brent Leary, founder and principal analyst at CRM Essentials, says that the acquisition shows that SAP is still very much in the game. “This illustrates that SAP is serious about CX and competing in a highly competitive space. Emarsys adds industry-specific customer engagement capabilities that should help SAP CX customers accelerate their efforts to provide their customers with the experiences they expect as their needs change over time,” Leary told TechCrunch.

As an ERP company at its core, SAP has traditionally focused on back-office kinds of operations. But Bob Stutz, president, SAP Customer Experience, sees this acquisition as a way to continue bringing back-office and front-office operations together.

“With Emarsys technology, SAP Customer Experience solutions can link commerce signals with the back office and activate the preferred channel of the customer with a relevant and consistently personalized message, allowing customers the freedom to choose their own engagement,” Stutz said in a statement.

The company, which is based in Austria, was founded back in 2000, when marketing was a very different world. It has built a customer base of 1,500 companies with 800 employees in 13 offices across the globe. All of this will become part of SAP, of course, and come under Stutz’s purview.

As with all transactions of this type it will be subject to regulatory approval, but the deal is expected to close this quarter.

Sep
16
2020
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ServiceNow updates its workflow automation platform

ServiceNow today announced the latest release of its workflow automation platform. With this, the company is emphasizing a number of new solutions for specific verticals, including for telcos and financial services organizations. This focus on verticals extends the company’s previous efforts to branch out beyond the core IT management capabilities that defined its business during its early years. The company is also adding new features for making companies more resilient in the face of crises, as well as new machine learning-based tools.

Dubbed the “Paris” release, this update also marks one of the first major releases for the company since former SAP CEO Bill McDermott became its president and CEO last November.

“We are in the business of operating on purpose,” McDermott said. “And that purpose is to make the world of work work better for people. And frankly, it’s all about people. That’s all CEOs talk about all around the world. This COVID environment has put the focus on people. In today’s world, how do you get people to achieve missions across the enterprise? […] Businesses are changing how they run to drive customer loyalty and employee engagement.”

He argues that at this point, “technology is no longer supporting the business, technology is the business,” but at the same time, the majority of companies aren’t prepared to meet whatever digital disruption comes their way. ServiceNow, of course, wants to position itself as the platform that can help these businesses.

“We are very fortunate at ServiceNow,” CJ Desai, ServiceNow’s chief product officer, said. “We are the critical platform for digital transformation, as our customers are thinking about transforming their companies.”

As far as the actual product updates, ServiceNow is launching a total of six new products. These include new business continuity management features with automated business impact analysis and tools for continuity plan development, as well as new hardware asset management for IT teams and legal service delivery for legal operations teams.

Image Credits: ServiceNow

With specialized solutions for financial services and telco users, the company is also now bringing together some of its existing solutions with more specialized services for these customers. As ServiceNow’s Dave Wright noted, this goes well beyond just putting together existing blocks.

“The first element is actually getting familiar with the business,” he explained. “So the technology, actually building the product, isn’t that hard. That’s relatively quick. But the uniqueness when you look at all of these workflows, it’s the connection of the operations to the customer service side. Telco is a great example. You’ve got the telco network operations side, making sure that all the operational equipment is active. And then you’ve got the business service side with customer service management, looking at how the customers are getting service. Now, the interesting thing is, because we’ve got both things sitting on one platform, we can link those together really easily.”

Image Credits: ServiceNow

On the machine learning side, ServiceNow made six acquisitions in the area in the last four years, Wright noted — and that is now starting to pay off. Specifically, the company is launching its new predictive intelligence workbench with this release. This new service makes it easier for process owners to detect issues, while also suggesting relevant tasks and content to agents, for example, and prioritizing incoming requests automatically. Using unsupervised learning, the system can also identify other kinds of patterns and with a number of pre-built templates, users can build their own solutions, too.

“The ServiceNow advantage has always been one architecture, one data model and one born-in-the-cloud platform that delivers workflows companies need and great experiences employees and customers expect,” said Desai. “The Now Platform Paris release provides smart experiences powered by AI, resilient operations, and the ability to optimize spend. Together, they will provide businesses with the agility they need to help them thrive in the COVID economy.”

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