Stuart Lauchlan presents a round-up of the news and issues to come out of this year’s SuccessConnect conference held in San Francisco, and interviews SuccessFactors CEO Lars Dalgaard about his plans to revolutionise the future of work.

To date, most attention in the software as a service (SaaS) space has been focused on customer management and sales force automation companies, such as Salesforce.com and NetSuite. But the largest SaaS implementations in the world – some of them scaling up to as many as 300,000 users – actually come from the HR space.

San Francisco-based SuccessFactors recently played host to some 300 companies who have deployed its portfolio of on-demand employee performance management offerings. The scene at the Westin St Francis Hotel, where the SuccessConnect conference was held, was at times akin to an evangelical rally with CEO Lars Dalgaard as the preacher and customers lining up to deliver their testimonies to the benefits of the SaaS model.

Perhaps the comparison is appropriate as SaaS is to some degree a matter of belief and faith in a new deployment and delivery method for software applications. But it’s one that’s gaining considerable traction among companies as Dalgaard was quick to point out.

“We were founded on a simple principle,” he said in his keynote address. “I used to work for Unilever and at one point, Unilever was acquiring more companies than any other in the world. I could see on the front line that it was not getting enough out of its people. They really had issues in getting stuff out of their systems. I couldn’t understand why it was so difficult for them to have a dialogue with someone in the company and set really clear goals for them, tell them how much they would be paid, what their compensation would be and basically treat each of them like an individual.

“When I did this with people I would get 60% over-performance from my teams. I would build little applications that enabled me to do this with employees all around the world and I began to realise that this was something that other firms could use.”

Revolutionary workforce

Dalgaard’s mission statement is spelled out in the strapline for the conference: ‘Revolutionising the future of work… one employee at a time!’

“How many companies are there out there who have employees who just check in and do what they have to do to collect a pay cheque?” he asked. “It’s maddening on a human level that we have people who go to work and hate what it is that they do. Who is responsible for that situation? The employees are to a degree and the employers certainly are. If you are in a situation where half your workforce is not engaged with what they are doing and does not know why they’re doing it, then you have a problem.”

Dalgaard cites personal experience of the inadequacy of many firms’ HR processes and practices. “When I left one company that I worked at, I went to say thanks when I was leaving for another job,” he recalled. “I went to see the director of HR who said to me: ‘You can’t leave!’. I said I already had left. He said they had to keep me. He pulled out a key and opened a closet. He got a ring binder and showed me how I would be CEO within three years. That was the first time I’d seen it and I had left.

“That was the old way of doing talent management. The CEO and the management team had a false sense of expectation that they had done their work. They knew what the plan was for me, but I didn’t – and I was leaving.”

SuccessFactors is notable for having a stark corporate mantra: ‘No assholes!’. It’s something that Dalgaard is passionate about and which he insists is reflected in the corporate culture, to the extent that new employees are required to sign a contract committing to not being assholes.

“It’s all about respect for the individual,” he explains. “I want no assholes, no jerks. The contract says that people will not talk behind other people’s backs. No politics! Politics is the biggest stifler of performance.”

There are other principles that SuccessFactors insists upon. “We follow Kaizen principles, we strive for continuous improvement,” says Dalgaard. “We are never happy with what we’ve done. We want customers to tell us how badly we’ve done if we have. We are committed to building a long term relationship with the company. We need to have measurable customer success. That’s the way to get successful long term customers.

“We also want to have a long-term strong cash annuity business which means that we will lose money in the first year with a customer. But we want to be successful and we want customers to be successful. If customers continue to renew with us, then they become profitable for us.”

Listening in

Listening to the customers is also vital, he advocates. “When we began, we were 50 people,” he recalls. “If a customer had a problem, we would all crouch around a speaker phone and listen in to solve the problem. Now we have 3.7 million users at 2,000 companies around the world so we can’t all get in front of the phone anymore. So we created the One Voice programme so that customers can have direct dialogue with product managers responsible for their particular products.”

There was no shortage of satisfied customers, converts to the SaaS cause. “We started out three years ago and continue to expand,” says Diana DeWit, senior vice president of HR at medical diagnostics firm Gen-Probe.

“We use SuccessFactors for goal setting and performance management which allowed us to automate and improve existing processes. But the implementation of compensation management modules is what has proved to be transformational for us. It’s changed the company from a culture of entitlement to one of genuine pay-for-performance. And all of our employees buy into it. Before we used SuccessFactors, all of our employees used to receive a flat bonus at the end of the year regardless of their performance, but now we can distinguish between high and low performers which makes it easier to motivate people as well as saving us money.”

The accessibility of a SaaS solution helps employees as well as employers. “A couple of months ago I was an HR admin,” explains Heidi Anderson, HRIS Business Analyst at energy and utility firm Itron. “We deployed SuccessFactors and there was a competition to win an iPod if you put in your career profile entry. I put in my qualifications and resume and so on. I didn’t win the iPod, but once I had entered all the information about myself the system found an ideal open position for me at our Washington headquarters. The manager there was able to see that I matched up to their requirements and I was offered a promotion. The system holds more than just your resume; it’s a whole profile of you, your career and your goals. It enables you to enter a dialogue with your managers that probably just wouldn’t have come about otherwise. It makes everyone’s work a lot easier.”

Dalgaard’s proclaimed revolutionary intent appears to be finding favour with companies around the globe with European growth seen as a major opportunity for the next year or so. There are already major customers here, such as Nokia Siemens Networks, which is rolling out integration, alignment and compensation in 97 countries and CadburySchweppes where SuccessFactors is being used to drive alignment for 11,000 employees in 10 languages in business units across Europe, Asia Pac and the US.

In fact the firm sees such potential in Europe that later this year a European version of SuccessConnect will be staged to bring the revolution closer to home. “Now we’re ready,” reckons Dalgaard.