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Stuart Lauchlan

Head of Editorial At Sift Media

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CEO Insight: SuccessFactors’ Lars Dalgaard on new owner, SAP

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For the last couple of years, SuccessFactors‘ chief executive Lars Dalgaard has used a slide in his presentations that picks out the headlines in German newspapers reporting when his firm won a major Software-as-a-Service-based human capital management contract at Siemens out from under the corporate nose of SAP.
 
It’s a slide that we can assume won’t be getting much more of an airing in the future now that SAP has closed  the deal to acquire SuccessFactors, a merger that came out of the blue last December and seems to have set in motion a chain reaction that has put HCM on the frontline of the cloud applications battleground.
 
But how must Siemens have felt when, after rejecting SAP in favour of SuccessFactors, the former goes and buys the latter and they’re back to square one?
 
“It’s a pretty damn good question,” laughs Dalgaard during an exclusive interview with HRZone.  “Actually they were ecstatic. It was seen as an ideal outcome for them as long as we stayed independent. SAP was their key vendor and Siemens is very serious about the cloud. SAP picked the same vendor – us – that their customer – Siemens – did. So they were really excited.”
 
Every time HRZone has met with Dalgaard over the years, we’ve been struck by many things about him. He is clearly charismatic, he is bluntly outspoken and he is enormously passionate about what he does. He’s also been ferociously independent and protective of SuccessFactors as a pureplay company, which is one reason why the SAP deal came as such a surprise.
 
But then there’s also one other characteristic about Dalgaard that anyone who’s met him knows: he’s splendidly unpredictable. But is that enough to explain why he’s come around to sharing his life and his company with a former arch-rival? What can he have been thinking?
 
When we speak, it’s the day after Dalgaard has been teaching a class at Stanford Business School in California, another example of one of his passions as he sees it as a chance to engage with other business thinkers. It’s also, he says, a chance to reflect on one’s own decisions and actions as students ask you questions.
 
“They asked me this as well, so I’ve had a lot of chance to think about it,” he says when asked about the rationale behind the merger. “My answer hasn’t really changed: the path that this puts us on is to accelerate our company’s future by maybe ten years. That’s a lot – ten years in the people’s lives, in our customers lives, in our lives. We have a paradigm shift in the speed with which we can deliver what we want to deliver.”
 
There is also, we suspect, another rather more personal answer as well and the truth of that probably lies in the comments made by Dalgaard’s co-founder to the same Stanford class: “Here’s the real answer: Lars is just intrigued by the challenge of how hard it is”. It’s an assessment from which Dalgaard himself does not demur.
 

‘Doing things that don’t exist yet’
 
So just how hard is it going to be? There have been a few churlish commentators who’ve suggested that the cultural clash between the European (for which read, Germanic) organisational culture of SAP would not be an easy fit with the more laid-back California-vibe of SuccessFactors, where the corporate motto – devised by Dalgaard himself – was ‘No Assholes’. It’s difficult to imagine such a mantra being mouthed by some of the old guard at SAP.
 
But there’s been one surprise for Dalgaard in all this. “The surprise upside is…I like working with these guys,” he admits, his voice perhaps betraying the fact that he knows that some people will find this difficult to believe.
 
“It is too simple to call SAP a German company. About 1,200 of the SAP people are in the US – that’s more than the rest of the cloud apps industry combined – so it’s hard to call them German," Dalgaard says. "A lot of the people you talk to see them as US company or as an Asian company, where they also have a big presence. And you know, they have one co-CEO who’s Danish, one who’s American. So I think they’re an international company, not a German company.”
 
But while there will be co-existence, there were, it seems, some conditions that Dalgaard was adamant had to be in place.
 
These include SuccessFactors continuing to operate as a separate business – the formal title is now SuccessFactors, an SAP Company –  so the only difference that existing customers should notice is that there is more resource. "We operate in the same way as before,” he insists.
 
Since the SAP/SuccessFactors deal was first announced, Oracle has also told the markets that it is taking over Taleo, while pureplay Workday is still hovering on the verge of one of the most anticipated initial public offerings in Silicon Valley.
 
Even Salesforce.com has extended out of what Dalgaard would doubtless call its sales force automation niche to dabble in HCM through its own takeover of Canadian firm Rypple.
 
So is HCM the new Cloud battleground as many commentators would have us believe? And if so, will HRDs finally be given the kind of systems to support them that they deserve?
 
“HRDs have earned these systems themselves,” insists Dalgaard. “They were the heroes, they took the decisions. But yes, industry will have to spend more time on [HCM]. HR is a completely dinosaur expression, but there will be more organisations who will look at People Apps as an opportunity now. That will be a definite benefit.”
 
And the benefit for Dalgaard himself comes from more challenges and the resources behind him to achieve them. “For me, it’s not so much about the money, it’s just exciting to live an exciting life,” he concludes. “It’s not fun to do the same things we’ve done before. I love doing things that don’t exist yet.”
 
 
The road ahead –what it means for HR directors in practical terms
 
It’s early days yet, but some meat has been put on the bones of what to expect from the combined SAP/SuccessFactors.  There’s more information to come later in the year at various SAP and SuccessFactors customer events, but for now what is known is:
 
  • SuccessFactors Employee Central solution is the “go-forward core human resources offering in the cloud”
  • SAP will continue to offer the SAP ERP Human Capital Management solution on premise for core HR, now with regulatory support for 51 countries around the globe. This will continue to have new functionality added
  • For talent management, SuccessFactors Performance Management, SuccessFactors Compensation Management, SuccessFactors Recruiting and SuccessFactors Learning Management with social learning from SuccessFactors Jam will be the go-forward solutions
  • Talent management components from SAP ERP HCM will be continued with “selected innovations for the next decade”.
  • Analytics will be an “important focus area” including SuccessFactors Workforce Analytics, SuccessFactors Workforce Planning, the SAP HANA platform and elements of the SAP BusinessObjects portfolio. SuccessFactors Workforce Analytics will be put on SAP HANA.
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Stuart Lauchlan

Head of Editorial At Sift Media

Read more from Stuart Lauchlan
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