SAP\u2019s acquisition of a majority stake in customer experience (CX) software firm Qualtrics back in 2018 for $8 billion was never a match made in heaven. Both companies remained incongruous to each other\u2019s progress before Qualtrics was sold to Silver Lake and CPP Investments earlier this week, according to experts and analysts.\n\n\u201cEven though Qualtrics is still a market leader and a strong product, it just didn\u2019t fit very well with SAP\u2019s strategy,\u201d said Hyoun Park, principal analyst at research firm Amalgam Insights. \u201cSAP was struggling to integrate Qualtrics sales into its existing environment. It turns out that Qualtrics is not an easy solution to integrate into the standard SAP platform sale as the core Qualtrics audience is removed from the typical enterprise application platform buyers.\u201d\n\nQualtrics\u2019 integration into SAP became even more difficult after the pandemic, according to Omdia principal analyst Mila D\u2019Antonio.\n\n\u201cQualtrics is oriented from the contact center and is in a crowded market. I suspect many Qualtrics customers had non-SAP vendors already in place and weren\u2019t interested in displacing them,\u201d D\u2019Antonio said.\n\nQualtrics and SAP were never a culture fit\n\nSAP could have avoided acquiring Qualtrics back in 2018 for an $8 billion price tag despite the CX market showing signs of growth and opportunity since the two firms were never a natural fit, according to analysts.\n\n\u201cWhile there was no doubt that CX mattered tremendously, there were a lot of questions about why SAP needed to buy Qualtrics versus retain them as an ecosystem partner along with numerous other popular CX products customers might use,\u201d said Liz Herbert, principal analyst at market research firm Forrester. \u201cLikewise, Qualtrics\u2019 ability to partner with SAP\u2019s competitors became in jeopardy once they were part of SAP.\u201d\n\nThe other issue, according to Constellation Research\u2019s principal analyst Liz Miller, was that these firms were also not a \u201cculture fit.\u201d\n\n\u201cI think everyone could see that this was not a terrific cultural fit for either organization. This is especially true now that the senior leadership at Qualtrics has blended that \u2018mountain cool\u2019 vibe of their founding culture with a new business focus enabled by leaders who spend decades at Microsoft,\u201d Miller said. \n\nSAP to focus on its core products\n\nSAP\u2019s decision to sell the entirety of its stake in Qualtrics is a result of the company\u2019s strategy pivot to focus on its core offerings, mainly S\/4HANA.\n\n\u201cThe new criticality for SAP is more focused on harnessing the data that the organization is already capable of aggregating and better connecting that \u2018back office\u2019 data from systems like ERP to those \u2018front line\u2019 technology tools across sales, service, marketing and commerce,\u201d said Miller.\n\n\u201cThe acquisition of Qualtrics presented a distraction from SAP's multi-billion-euro ERP business which was in the early days of a major shift from the old ECC product to the new S\/4HANA product at that time,\u201d Herbert said.\n\nFor SAP, Qualtrics was not the only acquisition in the CX space. It has also acquired other CX firms over the past few years, including Emarsys, Gigya, and Callidus. The company is now expected to focus more on these businesses as part of its CX products strategy, according to analysts. \n\n\u201cThe sell-off of Qualtrics will allow SAP to focus on innovating Emarsys and its broader CX portfolio and integrating those systems with SAP\u2019s enterprise resource planning,\u201d D\u2019Antonio said. \u201cSuch focus would indicate a go-to-market strategy aimed at sales, marketing, and e-commerce, rather than the contact center.\u201d\n\nWhat does SAP's sale of its Qualtrics stake sale mean for CIOs?\n\nSAP\u2019s sale of its stake in Qualtrics is more likely to usher in more innovative CX products in the company\u2019s portfolio and have less to no impact on CIOs or enterprises, analysts said.\n\n\u201cThe Qualtrics operation was largely separate from SAP, anyways. If anything, this acquisition should help accelerate Qualtrics product innovation again as now there is no parent company with a conflicting vision against Qualtrics\u2019 role as a surveying, interaction, and experience data collection solution,\u201d said Park.\n\nCIOs are unlikely to feel much effect, according to Bob Parker, senior vice president at market research firm IDC. \n\n\u201cPost the ownership change, it should be easier for CIOs to integrate the survey tools across the experience related applications (customer, employee, and product) they have in their portfolio along with analytic capabilities that are specific to experience management such as complex conjoint analysis,\u201d Parker said.\n\nHowever, heavy Qualtrics users are likely to see an increase in connections, APIs and ecosystem partner integrations as the company actively builds out its marketplace and ecosystem beyond SAP, Constellation Research\u2019s Miller said.\n\nWhat does the new deal mean for Qualtrics?\n\nSAP\u2019s sale of its Qualtrics stake comes at the right time for both organizations as they can double down on their core products while leveraging the connections they forged during their time together, analysts said.\n\n\u201cThe leadership doesn\u2019t see any change for Qualtrics\u2019 strategy as a result of the acquisition. In fact, they are more focused on their core growth with the XM (experience management) platform by offering a unified strategy across customer support, customer success, and scaling go-to-market through a partner-first strategy,\u201d said Sudhir Rajagopal, research director at IDC.\n\nIn addition, CX remains a critical investment area for companies across industries and this should be a growth opportunity for Qualtrics after SAP\u2019s divestiture, according to analysts. \u00a0\n\n\u201cBased on the customers I spoke with, there are still a lot of them who still only use their survey functionality, there is a great amount of growth still to unlock in their current customer base,\u201d said Lou Reinemann, research director at IDC. \n\nQualtrics has room to expand its data usage to support machine learning and contextual analytics use cases, Park said. The company is already working toward adding machine learning and AI-powered tools to its product portfolio.\n\nLast week, Qualtrics unveiled Frontline Care \u2014 an omnichannel analytics and AI-powered tool, designed to help customer-facing employees understand customers\u2019 needs.\n\n\u201cThis is notable, as enabling deep, real-time customer insights is the key to solving the omnichannel dilemma and improving CX,\u201d Omdia\u2019s D\u2019Antonio said.