SAP has announced its intent to acquire Qualtrics, but the reason may not be what you think. It’s not because either company needs to make a strategy change. It’s happening because it’s emotionally pleasing, SAP CEO Bill McDermott told customers at the recent SAP Select event in Barcelona.

“We’re acquiring Qualtrics so you can combine your customer’s experience data with SAP’s operational data to transform how you run your business,” he explained to a packed room during his ‘fireside chat.’

“Sometimes you need to make bold moves even if everything is going fine. A big idea is terrifying and exhilarating at the same time. You don’t do it because it’s easy; you do it because it’s hard,” he said, quoting John F. Kennedy on his reason for sending the first man to the moon in 1969. “When you make something better, that’s emotionally pleasing.”

SAP Select is where C-level executives get insight into SAP’s strategy. They like it because they can discuss challenges in executive forums, network with peers and influencers, and find inspiration to improve their impact on societies, economies, and the environment.

For McDermott, it’s an opportunity to remind customers that technology no longer supports the business; it is the business. It’s also an opportunity for him to reiterate his commitment to our customers, and that commitment starts with shaping SAP’s strategy to support and accelerate their vision.

Trust in SAP’s Strategy

“We all know trust is built in drops, but lost in buckets, and right now, there is a breakdown in trust in the world at every level,” he said, mentioning that business leaders and government officials regularly turn to SAP for guidance on dealing with the world’s challenges. He went on to explain SAP’s approach to building trust. “With the right people, systems, processes, and culture, we can deliver consistently, and that’s likely to build trust.”

Back in the nineties, CEOs like GE’s Jack Welsh preached the benefits of a tough management style. But their “my way or the highway” style doesn’t work today. McDermott believes every era needs change, and this era needs purpose-led vision. “Ours is to help you run better,” he told the group. “That’s authentic to what our software does and how we use our brand to improve the economy, society, and the environment.”

McDermott believes that companies that get cozy and comfortable grow old fast. Winners are constantly reaching for the next frontier with forward-thinking strategies. That’s why the Qualtrics acquisition is a win/win for everyone, especially customers.

XO is Not Just Hugs and Kisses

“We’re the Intelligent Enterprise company,” said McDermott. “We’ve got all the operational data in CRM, HR, and ERP. That’s the ‘O’ data that tells you what’s happening. What’s missing is the ‘X’ data that tells you why it’s happening.” That ‘X’ stands for experience, and that’s where Qualtrics comes in.”

SAP CEO Bill McDermott & Qualtrics CEO Ryan Smith – #XOData

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SAP CEO Bill McDermott & Qualtrics CEO Ryan Smith – #XOData

Video: McDermott and Qualtrics Founder Ryan Smith Explain the Deal to Capital Markets

“Together, SAP and Qualtrics represent a new paradigm, similar to market-making shifts in personal operating systems, smart devices, and social networks,” McDermott said.

For example, many retailers already know that their customers are willing to pay more for positive experiences. Simply put, making customers happy will be the ultimate driver for loyalty and differentiation. But companies must first be able to see their own business through the eyes of the customer, and then apply artificial intelligent (AI) to provide adaptive and intelligent industry processes to better serve the individual clients.

Treating Employees Like Customers

According to Ryan Smith, founder and CEO of Qualtrics, the real beauty of Qualtrics is that it doesn’t just collect data on customer experience. It’s equally useful for understanding how employees are experiencing your company, something that is a critical factor in today’s millennial world. McDermott agrees 100 percent.

“Your employees have to be your ambassadors. If you don’t care about your people, if your people aren’t inspired to represent your brand, you won’t succeed,” said SAP’s CEO, who has long been a proponent of hiring young people, giving them tough jobs, and letting them surprise you.

Qualtrics provides a live, ongoing feedback loop to ensure that employees are fully committed and aligned behind the company’s products, vision, and brand. And that’s emotionally pleasing.