SAP to Acquire WalkMe for $1.5 Billion
Ever since business transformation became buzzwords in the technology innovation space, companies in the Big Tech have spent big dollars to acquire businesses that complement their own strengths and adds customer value. The latest in this series is enterprise software giant SAP which forked out $1.5 billion to acquire WalkMe – a digital adoption platform.
The deal, which represents a $14-per-share offer to the Israeli company, sits well with two other acquisitions made by SAP in recent years. They paid $1,2 billion for Signavio, a business process automation company and LeanIX that specializes in enterprise architecture management. Both are German companies.
Adding to the business transformation management portfolio
The all-cash deal for WalkMe sits well with the earlier acquisitions. “The envisioned combination complements SAP’s Business Transformation Management portfolio around SAP Signavio and SAP LeanIX solutions to help customers on their transformation journeys,” says SAP in a blog post.
Walkme was founded in Israel in 2011 and offered solutions to simplify website navigation via real-time, on-screen guidance. However, since then they shifted HQ to San Francisco while adding more consumer and enterprise application features to their platform. They include guides that help users figure out new features or help HR onboard new employees.
The company provided balloon overlays and on-screen prompts in order to convert free users into paid ones as they pitched automation of processes that would have otherwise been a resource-intensive effort. The company also added end-user behaviour insights into its suite to push extra support tools at points where the user could exit the application.
Automation is the key for SAP and AI too
These features were the defining factors that SAP saw while deciding to spend big dollars on WalkMe that raised around $300 million prior to its 2021 IPO. At last count the company was valued around $600 million a year later but in recent times its market cap moved between $800 to $900 million. SAP’s offer came on top of a 25% spike in WalkMe’s stock prices.
Just in case you’re wondering whether WalkMe has an AI component, the answer is yes. They unveiled an AI-powered copilot that suggests the “best next step for any workflow anywhere” and as a result reported a 4% spike in revenues over the first quarter. Called WalkMeX, the copilot uses its existing contextual awareness technology.
From SAP’s point of view, it makes business sense to integrate this copilot with its own Joule that debuted last September. The WalkMe copilot can run permanently and overlay applications, including any copilots from different vendors that companies use in their software landscapes.
Getting the right tools for business transformation
“Applications, processes, data, and people are the four key elements of a successful business transformation,” says SAP CEO Christian Klein. “By acquiring WalkMe, we are doubling down on the support we provide our end users, helping them to quickly adopt new solutions and features to get the maximum value out of their IT investments,” Klein says in a statement.
Off late, SAP has been on a high with a strong financial performance that pushed its valuation to an all-time high of $230 billion this year. The company posted a 5% revenue increase year-over-year in the fourth quarter of 2023. The latest acquisition now presents it with a golden opportunity to nudge its customers a notch up on the transformation agenda.
Their task now is to enable user companies to implement innovations as quickly and conveniently as possible, with use of artificial intelligence where possible, with the foundations continuing to be in a stable ERP core. As for WalkMe, the company’s revenues stood at $263 million in 2023 with losses of $58.8 million – both numbers stacking up well when compared with 2022 figures.
The acquisition is expected to close in the third quarter of 2024 after the requisite approvals from shareholders as well as regulators.
