SAP looks to offload multi-channel messaging division during market meltdown

Options being explored for Digital Interconnect division

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Enterprise software vendor SAP may jettison its SMS platform to focus on core application business.

SAP Digital Interconnect provides APIs to support messaging across SMS and email to help organisations connecting with customers or other external parties. Although SAP claims it carries one billion messages daily, Bloomberg has reported that Europe’s largest software company is exploring near-term options that include flogging it.

SAP has declined the opportunity to comment.

The German firm is assessing market interest and seeing who might be potential buyers for the unit, despite the stock market downturn in the wake of the COVID-19 outbreak, claimed sources familiar with the story.

SAP Digital Interconnect dates back to the $5.8bn Sybase acquisition in 2010. Sybase had bought the technology, in the guise of Mobile 365, back in 2006 for more than $400m.

The business unit makes up to about $250m in revenue for SAP according to reports. The company might make several hundred million dollars in a sale.

SAP is likely to want to focus on its core enterprise application business, as it strives to convince customers to upgrade to its latest S/4HANA technology, which is a strategic goal for the business.

At the same time, SAP bought Qualtrics International for $8bn in 2019, its largest acquisition to date. Qualtrics is a specialist in CRM, customer experience and customer survey, and has its own multi-channel messaging platform. SAP may merely wish to avoid duplicating effort across the two businesses.

Oracle sells customers a cross-channel marketing platform that it says supports push, rich push, in-app, SMS and MMS messaging.

As a result of a drop in orders due to the novel coronavirus outbreak, SAP has reviewed its projected financial performance for the year 2020. Total revenue is now expected to be between €27.8bn and €28.5bn at constant currencies compared with €27.63bn in 2019. These are down from the previously stated estimates of €29.2bn to €29.7bn.

It's no surprise that SAP would want to sell off a division that it sees as not being part of its future, and one that may duplicate some technologies and effort with recently acquired Qualtrics. The question is: why now? Global stock markets have suffered huge losses since the pandemic took hold and, although they have recovered a little, investor confidence is still uncertain in the face of further lockdown disruption and economic headwinds. ®

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