SAP to buy digital adoption specialist WalkMe for $1.5 billion

SAP has agreed to buy WalkMe, a tool for offering workers personalized guidance on how to use software, for $1.5 billion in cash.

There’s clearly a lot at stake for SAP as its offer, announced Wednesday morning, was 45% over WalkMe’s closing share price on Tuesday night.

The companies expect the acquisition to close in the third quarter of 2024, provided that regulators and WalkMe’s shareholders approve the deal.

WalkMe, headquartered in Tel Aviv, Israel, sells a digital adoption platform (DAP) that enterprises can use to deliver relevant guidance and automation functions to workers, ensuring more consistent and efficient introduction of new software. With it, workflows can be executed more seamlessly across any number of applications, leading to greater acceptance of the underlying applications by users and thus increasing the added value that companies can achieve with the introduction of new software, SAP executives suggested.

SAP sees WalkMe as a complement to its offerings in the area of business transformation management, including previous acquisitions Signavio and LeanIX. The goal for SAP is to provide its customers with more support in their digital transformation.

“Applications, processes, data and people are the four key elements of a successful business transformation,” said Christian Klein, CEO and member of the Executive Board of SAP SE. “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.”

Dan Adika, CEO of WalkMe, described the acquisition by SAP as a significant milestone. The resources available in this way made it possible to improve its own product range and expand its reach in the market. “By leveraging SAP’s extensive ecosystem, we are poised to unlock substantial growth opportunities and deliver even greater value to our customers,” Adika said in a statement.

WalkMe’s digital adoption platform sits on top of other vendors’ applications, monitoring how they are used and providing recommendations. The platform recognizes where friction arises and offers the necessary support and automation so complete tasks regardless of the applications involved. The company says it has over 2,000 customers, including IBM, Nestlé, ThermoFisher Scientific, and the US Department of Defense.

Even after the acquisition, WalkMe will continue to fully support non-SAP applications, SAP management assured.

WalkMe recently announced a copilot for its AI-powered DAP. This uses context and the platform’s AI to suggest the best next step to users in workflows. The WalkMe copilot can run permanently and overlay applications, including any copilots from different vendors that companies use in their software landscapes. SAP hopes that the features of WalkMe in the introduction of new software will also further improve SAP’s copilot Joule and increase productivity for SAP customers.

For SAP, the main task at the moment is to convince its own customers to switch to the current ERP generation S/4HANA — preferably directly in the cloud with a corresponding Rise or Grow application management contract. With the methodology behind it, the migration should be simple and efficient. SAP’s goal is to enable user companies to implement innovations as quickly and conveniently as possible, for example in the field of AI, on the basis of a clean and stable ERP core.

WalkMe generated sales of just under $267 million in 2023, about nine percent more than in the previous year. The bottom line was a loss of $56.8 million, significantly less than in 2022, when WalkMe reported a deficit of $109.8 million.

In Everest Group’s research on the DAP market, WalkMe ranks far ahead. “WalkMe’s consistently strong results are underpinned by the company’s strong vision and roadmap, as well as continuous innovation,” said Sharath Hari, Vice President of Everest Group. With the help of AI, WalkMe is developing its DAP into an intelligent, unified layer for connecting, automating and simplifying interactions across software systems and workflows. “It’s this continuous innovation that contributes to the business value WalkMe aims to deliver to its customers.”