"In good companies, CEOs recognise the power of the people they have and the power that HR can bring to the table. If the CEO doesn’t respect what HR can bring to the table and sees it as a transactional function, well, we can try to bridge the gap. We try to ‘up-level’ HR to the board."
So Doug Dennerline, president of Software-as-a-Service-based human capital management provider, SuccessFactors, says. It’s an old, familiar dilemma, of course, and one that hasn’t been satisfactorily addressed by the older generation of HCM applications such as PeopleSoft, points out HRZone’s Stuart Lauchlan.
But with new entrants to the market such as SuccessFactors and Workday as well as Oracle focusing on its own next generation HCM application efforts, the potential for technology to empower HR people within the business is firmly back on the agenda.
Dennerline has his own vision of the future SuccessFactor customer. "We’re talking about a business person who’s in HR rather than an HR person who’s asked to present to the board," he suggests.
"The favourite question that we ask HR people is: ‘can you answer the questions that your CEO asks you about all your people?’ Many of them have to say that they just don’t have the business intelligence needed to give them the information that they require,” Dennerline says.
"We also have to sell to the CIO and the CFO. It’s not just about building a better working environment," he adds. "We’ve seen a lot of disruption about the role of the CIO over the years.”
While years ago, such employees were IT managers and “lived in the basement”, they now report to the CEO or the CFO. “Over the years, they have built up complex infrastructures and are now being asked by the people who work inside that infrastructure to make their experience a better one," Dennerline says.
The CFO sell is built more around the firm’s business execution strategy, which takes it beyond the pure HCM market targeted by the likes of Workday and into analytics and – as the name suggests – business process execution.
Better marketing
That’s inevitably a more complex message to sell than core HCM alone, but Dennerline reckons that the firm is getting its pitch across. "We have been working hard to get the business execution message out there. People are understanding it better," he argues, although he concedes that the company’s marketing has been in need of some honing. "In the past we have under-performed in marketing," he says.
Beefing up the marketing will be down to Kara Wilson, newly joined from Cisco as chief marketing officer and formerly a veteran of HCM applications pioneer, PeopleSoft.
It’s only week one for Wilson when HRZone meets her, so she’s up to her neck in induction processes, meeting the sales teams and familiarising herself with the company. But she already has ideas in place about what’s needed.
"We can do things better. We are ready to rock. It’s a case of us bringing on big company excellence and some more process," she suggests. "We have great customers who are willing to speak on our behalf – we have the largest SaaS customer of any company in any industry!”
“Salesforce.com CEO Marc Benioff has done a great job in utilising his customers and their stories to sell his ideas to the market. We have everything that Salesforce.com has and more – we just need to tell more stories," she adds.
That’s not to say that there haven’t been some successful sales and marketing efforts, of course. You don’t get to grow at the rate that SuccessFactors has or clock up the kind of customer base it has attracted without some decent sales and marketing.
But the messaging inevitably has to evolve. "One of the most compelling ways through the door is still the financial argument," says Dennerline. "We have an ROI tool that can show how much money you can save, based on a McKinsey study that was done a few years ago. Then it starts to become a business value conversation."
That McKinsey study has been an excellent sales tool for SuccessFactors, but it may be getting a tad long in the tooth now. Dennerline agrees that it’s time to look at updating the collateral, adding that the next six months will see a lot of focus placed on the company’s sales and go-to-market strategies.
Go-to-market strategy
"Over the next six months, we’re going to be hiring a lot of sales reps. We are going hard-to-the-hoop on sales people," he explains.
The firm is also constantly evaluating the effectiveness of its go-to-market strategy. “We are rethinking how we bring all the products to market. We have been very modular in approach in the past, so we are looking at how we can make it more of a suite approach that makes it easier to sell. We still have to price it for the market, but customers have been asking for this more and more," Dennerline says.
Over the past few years, SuccessFactors has made a number of key acquisitions such as social collaboration firm, CubeTree, and e-learning firm, Plateau. These have, of course, extended its core offering with complementary functionality in the same way that SaaS-based customer relationship management firm, Salesforce.com, expanded its’.
But Salesforce.com has admitted that its acquisitions led to an unusual marketing slip up when the firm boasted of having seven clouds in its portfolio – a potentially unwieldy number that many market watchers became slightly uneasy about and which led to a degree of back-peddling.
So how does SuccessFactors avoid the impression of being a picker-up of ill-considered trifles, however functionally useful they may be within their own niches?
Integration of CubeTree, for example, seems to have taken longer than was planned? "We continue to have a build/buy/partner approach," explains Dennerline. "With CubeTree, we have probably taken longer than we should, but we have formulated a strategy about how we will go to market with this. It’s all about a collaborative approach.”
The idea is that HR can set up a CubeTree group for people who are interviewing for a position, for example, and create a mobile application to enable a large group of people to give the thumbs up or thumbs down, he adds.
So will it take the same amount of time to bring Plateau fully in to the SuccessFactors fold? "Plateau is built on the same technology stack as we are so we’re looking at an easier integration than if it was built on [Microsoft’s application development platform] .Net, for example," argues Dennerline. "It will be around 18 months before it’s fully integrated to look and feel like one product. That said, we have done some integration for a couple of customers already."
Playing with the big boys
Integration of mission-critical applications such as HCM has in the past often been the province of third party services giants such as Accenture, Capgemini and IBM.
As SaaS applications have entered the mainstream and enterprise customers have bought into the concept, so a services opportunity has presented itself to those self-same firms that made so much money out of implementing PeopleSoft or SAP and has brought them to the table seeking similar partnerships with the likes of SuccessFactors.
For its part, SuccessFactors had a high-profile flirtation with IBM a few years ago. That relationship appears to have cooled off dramatically ("A long road to a small house," says Dennerline enigmatically), but a partnership with Accenture is going from strength to strength.
"We are getting really serious about going to partners and working with them as well as scaling our own professional services," Dennerline says.
But so far, Accenture has proved a great help. “We set up a joint venture in India with them and that’s working beautifully to deliver low-cost support for some of our core customers,” he explains. “The people we are working with at Accenture are those in their core HR practice who have entrees into customers we can’t get into on our own."
Services companies are having to rethink their own practices, Dennerline suggests. "Big services firms are seeing other practices shrinking in revenue. They’ve seen what happened to [CRM application vendor] Siebel when Salesforce.com came along [it was bought out by Oracle] and they won’t make that mistake”, he says. “They are saying ‘we need to be in core HR and we need to be in SaaS’ and they’re thinking about how that impacts on their traditional installations.
But Dennerline believes that there is money to be made from disruption and that cloud/SaaS is all about disruption. “There was a great underestimation on our part about how much we put an organisation through when they make the move from running a bad instance of SAP onto our offering, he admits. “Services firms get money in the Cloud from professional services but also from strategic consulting."
It’s clearly an interesting time for SuccessFactors as it builds on its core HCM customer base and aims to move beyond it in order to consolidate its efforts in defining the business execution space. The firm has also now reached a size where it needs to make that critical – and often tricky – transition from being a rapidly expanding start-up into becoming a fully-fledged enterprise supplier.
