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Stuart Lauchlan

Head of Editorial At Sift Media

Read more about Stuart Lauchlan

Analysis: SAP and SuccessFactors – A marriage made in heaven?

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 A new transatlantic special relationship has formed since SuccessFactors and SAP finally became one – and HR directors must now wait to see what happens next.

SAP’s $3.4 billion purchase of SuccessFactors – a Software-as-a-Service firm that focuses on selling human capital management applications – had been extended beyond its offer deadline three times while various regulatory bits and pieces were dealt with.
 
But the marriage has now been finalised. In a letter to SuccessFactors’ customers, the firm’s ever-ebullient chief executive, Lars Dalgaard, declared: “SAP and SuccessFactors are now officially one team! …We’ll now be able to deliver innovations in 1- 2 years that were originally on our 10-year roadmap. This is an opportunity of a lifetime!”
 
OK, so that’s the celebrations over. Now for the down and dirty – how’s all this going to work in practice? The answer is that, from the outside, we don’t really know very much so far.
 
Many commentators have noted that German-based SAP’s corporate culture has traditionally been considered very different to the Silicon Valley vibe of SuccessFactors and questioned how good a fit the two would be.
 
Software industry commentator Dennis Howlett goes even further, however, arguing that, even within SAP itself, its German and US arms don’t seem to be part of the same culture.
 
Writing on tech website, ZDNet, Howlett quipped: “There are layers of personnel based in Walldorf who don’t acknowledge the existence of Palo Alto. The expression: ‘They’re dead to us,’ comes to mind. The SAP culture and ‘SAP way’ of doing things is certainly not going to change overnight.”
 
And while Dalgaard will be working on SAP’s wider cloud strategy, this week he reaffirmed the intention to keep SuccessFactors at arms-length. “SuccessFactors will remain an independent company and we have a tremendous opportunity to leverage the SAP resources to accelerate SuccessFactors’ business,” he told customers.
 
That said, the two companies will be moving closer together in certain areas as time progresses. For example, on the question of whether SuccessFactors’ customers will receive the same support, maintenance and service offerings as SAPs’, the party line is that SuccessFactors will “continue to offer support, maintenance and service offerings for all customers”.
 
Simple, but hard
 
But Dalgaard says: “Over the course of the next months, SuccessFactors and SAP will work together to align and harmonise their maintenance and service offerings to provide the best cloud support offerings in the industry. We will evaluate opportunities to leverage SAP resources over time to offer improved levels of support, where appropriate, as well as a single channel for support for joint customers.”
 
There is also no question of phasing out SuccessFactors’ products, Dalgaard adds. But because SAP has its own HR applications portfolio, there will clearly be some positioning work to be done at least.
 
“We already have many common customers with SAP who use both solutions. These customers have been running systems side-by-side and the integrations between products are proven,” Dalgaard argues.
 
In order to build on this situation, however, the aim is to create “standard integration packages between the two platforms, taking into account multiple integration requirements”, he says.
 
So all told, the message on Day One of the ‘New World’ was one of business-as-usual. “You’ll continue to log into the same system and everything will be set up the same once you’re logged in. SuccessFactors will keep its planned product release dates and we’ll continue to communicate with you about updates before they happen,” Dalgaard says.
 
Behind the scenes, however, the real work is about to kick off in earnest. As the cloud HCM applications market becomes an increasingly febrile and competitive place, the stakes are very high for all concerned and a battle royal between SAP and Oracle looks inevitable.
 
In many respects, getting to the stage where the deal closed has been the easy bit. Making it work in practice will be the real mark of success – both for SAP and SuccessFactors as companies, but also for Dalgaard as an individual who now has a hugely visible, global platform on which to stake his claim as one of the cloud computing industry’s genuine thought leaders.
 
Angela Eager, a research director at market research firm TechMarketView, says: “The remit is simple but hard – sort out SAP’s flailing cloud strategy. That’s a big important task because, without a credible cloud business, SAP’s future will be in jeopardy. Let’s hope Dalgaard gets the leeway he needs on strategy, pricing and consolidation of overlapping products.”
 
She notes that what happens next will be watched very closely and has major implications not only for the vendors of HCM software, but also for those that use it.
 
“The broader picture is that HR has overtaken CRM to become the new lead Software-as-a-Service application,” Eager concludes. “There are four big names up against each other -SAP/SuccessFactors and Oracle/Taleo, and SaaS-only providers, Salesforce.com and Workday. Like CRM, HR attracts large numbers of users so the fight for users and market share will be fierce.”
 
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Stuart Lauchlan

Head of Editorial At Sift Media

Read more from Stuart Lauchlan
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