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(1/14) Long excerpt from our HedgeyeTech Snapshot: Why $ORCL & $SAP Should Enter A Divestment Phase... Backstory (with some imagination): A lot of business strategy comes by accident. When former $SAP CEO Bill ‘I buy shiny toys’ McDermott acquired Qualtrics, $XM CEO Ryan Smith...
(2/14) was in the process of fulfilling his dream and taking the company public. A lot of 0s helped convince Ryan to give up his dreams and join $SAP, but we guess there may have also been a kind of gentleman’s whisper between the two. After all...
(3/14) McDermott is a salesman first & foremost. What kind of whisper? Oh, you know, something like ‘you could be CEO of $SAP one day’, or ‘I won’t be working here forever’, or, ‘the Germans like having an American CEO of $SAP, so why not someone from Utah?’ Those of you who...
(4/14) know McDermott know there is a nugget of truth in this imagined conversation. But then McDermott leaves, co-CEO Jen Morgan leaves, and suddenly Ryan is reporting to a boss who is younger than he is, more baby-faced, and not going anywhere for...
(5/14) a really, really, really long time. As Christian Klein plainly put it “after I became sole CEO, obviously Ryan was a bit concerned”. Now $XM is a public company once again, and the process of selling down a portion of the asset delivered an immediate and...
(6/14) awesome ROI for $SAP. It is easily Christian Klein’s biggest win since becoming CEO, but also a win for $XM employees and IPO shareholders. What did we all learn? That $SAP should consider...
(7/14) the IPOs of Concur, SuccessFactors, and Ariba as the next three companies with a path to IPO (SAP can separate Litmos Learning from Callidus ‘Configure, Price, and Quote’ and sell both to strategic buyers, but there should be no IPO there). $SAP has...
(8/14) a hard transition ahead. The company must reinvent the core business, shift it to the cloud with a long roadmap of increasing functionality and product, help customers transform, all while warding off better-prepared cloud software vendors of all shapes...
(9/14) and sizes. The best bet is to divest every single non-core software asset they have acquired in the last decade. Even Sybase could be considered. The process of divestment would raise the kinds of cash required to be invested in the $SAP funded...
(10/14) digital transformations of $SAP customers, with plenty left-over for a permanently rising dividend to offset the uncertainty of a cloud transformation period. And guess what? As of today, the stock market would eat these offerings up at healthy...
(11/14) valuations. Former growth darlings acquired by $SAP have all atrophied under brain drain, excess management layers, bureaucracy that stifles innovation, lagging compensation, little equity incentive, culture mandated from the top…etc. The employees...
(12/14) and managers of ‘The Spun’ could be reinvigorated, innovation rekindled, and the software world improved. It would also leave $SAP leaner, more focused, without 'baggage’ for the hard journey ahead, and maybe most important, with an enriched balance sheet that...
(13/14) can quite literally sponsor the cash transformation costs of $SAP core customers from on-premise to cloud, with the understanding that the cash investment from $SAP comes with a long-term yield of growing annual subscription revenue...
