Two years ago electronics giant Siemens surprised the world by electing to replace fellow German firm SAP as its HCM and talent management software provider with Cloud HCM firm SuccessFactors.
It was a massive propaganda victory for the Cloud firm and resulted in what remains the largest Cloud Computing applications deployment in the world – 400,000 users in over 80 countries around the globe.
But this weekend, Siemens discovered that it is about to become an SAP HCM customer again, albeit at one step removed, when the software firm announced it is buying SuccessFactors for the tidy sum of $3.4 billon, a 52% mark up on its closing share price on Friday.
Doug Dennerline, President SuccessFactors, explained the rationale from SuccessFactors perspective when he told HRzone’s sister site BusinessCloud9 that the move speeds up the firm’s vision for the market: “The way we have been talking internally is that we have taken a ten year roadmap and collapsed into one or two years. This is an incredible opportunity. “
The deal will give SAP a major play in the Cloud HCM market through which pureplay Workday has been cutting a swathe, typically at the expense of Oracle which has responded with its own Fusion HCM next generation apps.
SuccessFactor’s HCM profile seems to be the foremost driver for the deal. “We will create and grow a Cloud powerhouse,” declared Sanjay Poonen, president, Global Solutions, SAP. “With this, we are already absolutely the HCM leader, both on premise and Cloud. Oracle has spent the past five years trying to fuse different things together. We have heard from customers that the upgrade then is disruptive. We think that we are going to be a very strong leader in this area.”
The deal is also a major move for SuccessFactors CEO Lars Dalgaard, who founded the firm in 2001 and took it public in 2007. The flamboyant Dane is now going to be in charge of SAP’s entire Cloud strategy. With SAP’s backing and funding, the potential is there for Dalgaard to command a global agenda.
Whether the fiery CEO can bend to the SAP corporate style is another matter. Dalgaard is notoriously individualistic and has shown scant regard for the enterprise establishment in the past, but the potential for great things is clearly there.
The deal also gives SAP access to SuccessFactors Jam social collaboration and learning software. There had been rumours circulating that SAP was about to make an acquisition in the social networking space which had led to speculation that a takeover of Jive was on the cards.
The deal inevitably sets tongues wagging again about which Cloud pureplay might be next to receive an offer it can’t refuse, with Taleo and Workday being mentioned by market analysts as attractive prospects. Dennerline agreed: “[Other pureplays] are going to have to work out what they want to do. This is a game changer.”
One Response
Is SAP’s acquisition of SuccessFactors good for HR SaaS?
Not really a huge surprise in the ever consolidating market for global HR and Talent Management systems, but what do readers think… is SAP’s acquisition of SuccessFactors good in general terms for HR systems that are provided as Software-as-a-Service (SaaS) and for Cloud based HR applications in general? It looks like a great opportunity for the SuccessFactors product by extending routes-to-market through the SAP base, but I also feel the deal will help boost the market and confidence for HR SaaS in general and therefore should help other HR SaaS suppliers too? What do other readers think?
Colin Whalen