SAP buys SuccessFactors – a few random thoughts

I heard the news of SAP buying SuccessFactors while in the cab to PHX airport for a last minute business trip to India. And I am typing this from the plane – the first of four that will take me to Kolkata. On my way back from India, I will get to attend the SAP influencer summit in Boston, MA. And I think I will have to throw away all the questions I had for SAP so far, and ask some on its focus on cloud. Too bad that GoGo internet is not working for me in this flight, else I wanted to contact a few people I trust to get some additional input. I guess I will post this from Denver airport before the next flight takes off.

HCM has historically not been a core focus area for me, and is probably the only part of the core Business Suite modules I have not played with hands-on. But over the last couple of years, HCM has been constantly getting on my radar, and I even put it in my top trends in SAP consulting opportunities for 2012 in my SCN blog.

The first thought that ran through my mind when I heard the news was “The founders of Workday must be partying hard”. I think SAP buying Workday sets them up nicely for bigger valuation. I know the company keeps saying they are not for sale – but then what else do you expect them to say? . Either they will have an extremely good IPO, or they will get acquired at a high premium by another company. May be SFDC will buy them? or Oracle?

SAP’s leadership team has a big job to do now – decide quickly how to integrate this new acquisition into existing architecture, and how to rationalize the portfolio. There are two major considerations in my mind – there is the platform play compared to ByDesign, and there is the solution play compared to CareerOnDemand, Business Suite etc. And of course, I assume Vishal Sikka will want to make this work on HANA, BI 4.0 and SUP too, with probably SUP being the more important one for now. I don’t think ByD or CareerOD will survive due to overlap.

Actually, I think the bigger worry for SAP is ironically their own talent management for cloud. They could not keep Wookey. All that talk about him moving out for family reasons don’t ring true anymore once he joined SFDC. So what about Lars who will come in now – will he stick around long enough? And even more important – what about the excellent team in place now for OD in SAP? Will they stick around long term and re-engineer everything new to whatever is the new platform? Will SuccessFactors team integrate well with legacy SAP? More than anything else – that is what would probably dictate success and failure for SAP in cloud.

Communication to customers and partners is key. This is where I think SAP needs the most focus in short term. They need to figure out their roadmap at the earliest, and start talking to customers and others in the ecosystem. After the experience with BOBJ and Sybase, I think SAP would know how to do this effectively. I did like one thing – I saw plenty of tweets from existing cloud team at SAP saying they are thrilled. I am looking forward to talking to them soon to get some details.

What about customers? I am going to India now for some customer meetings. I do intend to ask them what they feel about SAP’s cloud strategy now. In my opinion, customers of SFSF should expect SAP reps opening up many opportunities to buy more solutions. I am not equally sure of the converse. Existing SAP customers I guess will be in a “wait and watch” mode. SFSF reps might offer better deals now to close out – but I am in two minds on whether this is good or bad to jump into. And the reason is – I don’t know what SAP will do in terms of rationalization. Once we know the roadmap more clearly, I do expect SAP to have big time cross selling opportunities, and customers to have many solutions from one shop.

Bundled sales is the name of the game for SAP to get to the 20B plan for 2015. So far, Bill McDermott has been extremely bullish on pipeline for HANA, mobility and now also on SFSF. If that holds – I expect him to up his plans to something more than 20B, and even declare a bigger EPS plan for 2015. 2012 will be a very interesting year in SAP land. Can’t wait to see what else will happen. Parting thought – will there be few more M&A deals in 2011 in Enterprise Software? I guess there will be.


Published by Vijay Vijayasankar

Son/Husband/Dad/Dog Lover/Engineer. Follow me on twitter @vijayasankarv. These blogs are all my personal views - and not in way related to my employer or past employers

3 thoughts on “SAP buys SuccessFactors – a few random thoughts

  1. Hi Vijay,

    While I certainly agree on the solution play (IMO CareerOnDemand is dead now), I don’t get why this would the end of Business ByDesign. First, I’m not sure it is platform against platform (I think they can co-exist), and second, SuccessFactors offers HCM-targeted functionality complementary to e.g. the end-to-end functionality of ByDesign. So where SuccessFactors’ software is right for LOB, ByDesign is (and will stay) relevant for those businesses (SME mainly) that need/want the complete portfolio. Very different customer base. As a consequence, I don’t see SAP leaving the ByDesign platform. So maybe you could elaborate on why you don’t think ByD will survive. Thanks 😉

    Cheers, Fred


    1. Hi Fred
      As the OD journey continues for SAP, there will be some convergence. Solutions that will come in future will be expected to talk to the previous ones. If they are built on two different platforms, SAP will have to duplicate a tonne of stuff at framework level and that might not be cost effective. So I would guess one or the other will fade away. Given SFSF has more instal base than ByD now, I think it will be the surviving platform. “Platform” is a vague term too – and I could be 100% off base..just my 2 cents as usual 🙂


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