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Day Two: Lars Dalgaard, CEO of SuccessFactors

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Every revolution needs a figurehead to lead the charge. There have been some powerful evangelical ‘rebels’ in the software industry. Oracle’s Larry Ellison was one of them, wiping out the old guard of the database industry to become the establishment of today, while Marc Benioff at Salesforce.com is emulating his old mentor by trying to pull off the same trick with the CRM and SFA markets.

To their ranks, we might usefully add Lars Dalgaard, CEO of human capital management (HCM) vendor SuccessFactors, whose ebullience and enthusiasm is on a par with the Benioffs and Ellisons of the world and who is pitching the Software as a Service (SaaS) revolution as the next step in the HCM and talent management industry. “Everyone is realising how important people are and how important it is to get as much out of them,” said Dalgaard. “This market has practically not even started. You will see applications come out that we can’t even imagine now.”

Danish-born Dalgaard set up SucessFactors after being frustrated at the succession planning procedures inside Novartis. “Just because management had put my career path on an org chart it was assumed that their work was done, but it was not communicated,” he recalls. “The founding principles of this company are to make customers as successful as possible. We started in 2001 in a recession in the US and when you start like that you build for bad weather. We wanted a company with ‘no assholes’. I didn’t want people who would leave a meeting and talk about what they wanted to talk about what they really wanted to say afterwards at the watercooler. I wanted a company with truth everywhere.

“Our competitors are vendors such as SAP and Oracle. We can partner with them though and we work with them. Some of things that maybe you hoped you could do when you bought SAP and Oracle, we can deliver. There is no organisation including Oracle that has as many people focused on product management in HCM. This application is almost ubiquitous, like email. You can communicate all the knowledge and information you care about for your career.

“We have 4 million users in 185 countries across 2,360 customers. We are operating in more than 60 industry sectors. We set 750 customers live in 2008. In most cases, software sits on a shelf and doesn’t get used; at SuccessFactor the software gets used. Salesforce.com has 4 customers more than 10,000 users. We have over a hundred. We have one retailer out of the US that has 300,000 users.”

Dalgaard was talking on Day 2 of the firm’s first European SuccessConnect event in Paris. It’s something of an appropriate ‘coming home’, he suggests. “I still think in Danish,” he jokes. “As a European, I actually think this product is more relevant for Europe. I started the company in the US because it is easier to do that over there. But people think more about people in European companies. In most European companies, unions play a role. This application accelerates that basic human interest that you see in European companies.”

That said, there have been some European issues to be addressed, particularly in the area of implementation resources on the ground to help customers with their deployments. “We have not invested early enough in Europe,” admits Dalgaard. “That was a mistake. No software company is really hiring now. But we are hiring two new professional services people in Europe. It shows that we’ve realised we made a mistake. We need to be much stronger on the ground than we have been. We are bringing on talent who know how to do this. But I fall on my sword – we definitely made a mistake on underinvesting on the implementation side in Europe.”

So while Dalgaard can evangelise a good message, can he deliver on his fine words? “Companies do ask what type of growth can you have with SuccessFactors. Can we prove this pays off?,” he says. “We spoke to 157 customers who have had the product for a while. What we see is SuccessFactors customers were not outgrowing competitors before, but do over time. And it’s faster and faster growth over time. These customers are very serious about this. There is the reduction of employee turnover an retain high performers and increase workforce engagement and productivity. Quintiles were losing 23-26% of employeess. After deploying SuccessFactors, they reduced churn to 16%. I met their COO three weeks ago in San Francisco and he said they are now down to 9% churn.”

Hanging over the SuccessConnect conference was the shadow of the economic meltdown. “It is our view this is not going to be a shallow and short recession. This is going to be a long recovery. HR leaders need to take a very proactive stance with their management team to show how they can make the most of the people they have,” argues Dalgaard. “The recession calls for a completely new way of managing. It feels uncomfortable to say that we have a Stack Ranker product that can rank top performers and low performers so that you can take out the low performers, but it’s realistic. That’s the type of product that is needed now. Winners are the ones who prepare for the worse and build contingency plans. How can you do that if you don’t know where your best people are? It’s harsh, it’s hard, it’s not a nice job to have, but wouldn’t you rather do something now and save jobs. I’ve been a CEO for 15 years and this is the type of decision you need to be making now.”

Find out more:

Exclusive podcast live from SuccessConnect – Rob Bernshteyn on the evolution of the SaaS revolution

Exclusive podcast live from SuccessConnect – HR challenges in today’s economic climate


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