The SuccessFactors Acquisition
I didn't see that coming. It's a ballsy move from SAP which blew me away. SAP has not been good at acquiring companies in the past. I want to focus on what it means for products, but here are a couple of general thoughts:
- This is the biggest commitment SAP has ever shown to HCM since they built HR in the early 90s. $3.4bn for a company that does Talent Management. Wow.
- I didn't think it would happen, but if it did, I was expecting it to be Taleo. I would have loved to have been a fly on the wall for the due diligence process. On the other hand, Taleo is mostly recruiting.
- I'm happy to hear that SuccessFactors will be an "independent" company. Better to keep oil and water separate for now. I still wouldn't bet money on CEO Lars Dalgaard sticking around for more than 18 months. SAP culture and slow-moving machinery can takes its toll. I really hope we don't see a mass exodus of talent.
- Nakisa is screwed (well partly screwed). Why would SAP continue to use Nakisa when it doesn't own them and is not aligned with the rest of the On Demand platform? SAP may just leave it alone since it's an on premise solution that is already integrated and Nakisa do the maintenance and support. Only the integration is a technology burden to SAP. They would simply not co-develop and enhance with Nakisa.
- Career On Demand is dead. The performance management solution was scheduled for Q1 2012 release. SuccessFactors has a (good) product it already needs to support. The innovations from On Demand will be incorporated into future release of SuccessFactors.
- Any work done to date on an on demand recruiting solution will be channeled to the SuccessFactors product. The customer and partner feedback, mockups, and design work done to date will be leveraged to improve the SuccessFactors product. And currently, the SuccessFactors product looks like it has room for improvement.
- SuccessFactors Recruiting and Learning will be integrated into on premise SAP ERP HCM. SAP needs to have a very clear message to its ERP customers as to value differentiators of old SAP vs new SuccessFactors.
- It sounds like a channel mess from a sales commission perspective. Would SAP sales reps be incentivized to have on premise core HR customers integrate to on demand talent management solution? I think the simple answer is a lot of deals are lost because of implementation time, maintenance cost, and functionality. It's a simple matter of not losing core HR to Workday. This is a bigger problem for net-new deals.
- The CloudConnect infrastructure looks to be relevant for integrating existing third-party solutions to SuccessFactors, including services such as background and drug checks. I don't see a development platform that would enable the SAP ecosystem to build out new products from scratch. It will be interesting to see how SAP handles this if SuccessFactors is the new platform.
Let's get onto my favorite topic: SAP E-Recruiting (The same arguments go partly for other existing TM modules such as learning). This is my real interest:
- For recruiting not much has changed in terms of product future. Development resources had already been largely transitioned away from on premise E-Recruiting. Whereas before, clients would be waiting for the new shiny on-demand solution, now SuccessFactors recruiting is an option for clients that have on premise ERP HCM for their core HR.
- E-Recruiting was never a great fit for SMBs. The implementation and support requirements only pay off when you really need it to be SAP. It shouldn't be a default choice. It is ideal for large or complicated customers that find no single SaaS vendor that is an idea fit for their processes. SAP allows for enhancements to meet specific client and industry needs.
That is my brain dump for now. I look forward to reading what everyone else has to say in their blogs and LinkedIn comments. I'm still only starting to grasp the opportunities and risks here.
Cheers, Mark
I finally get exited again thinking of SAP's HR strategy and future, I was waiting and hoping for a bold move like this. In 2y from now we will have an integrated HR product suite and sooner a good sales pack to offer our customer, the future looks bright! I LIKE IT!
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Good to hear from you Rene. Let's see how long until we get a single platform, if ever. Integration is a fine start for me. Separate platforms is a technology debt for SAP, not the client.
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Hi Mark
Excellent article and I think your analysis is spot on. Here was my take on many of the key questions.
http://www.sdn.sap.com/irj/scn/weblogs?blog=/pub/wlg/27651
Looking forward to move blogs and great to see SAP as well as HR in the major spotlight.
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