“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 says Doug Dennerline, President of SuccessFactors. 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. But with new breed entrants to the market such as SuccessFactors and Workday as well as Oracle focusing its own next generation applications efforts around the HCM space, 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. The favourite question that we ask HR people is: can you answer the questions that you 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.”
He adds:
“We also have to sell to the CIO and the CFO. It's not just about building a better working environment. We've seen a lot of disruption about the role of the CIO over the years. Years ago they were IT managers and lived in the basement. Now they 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.”
The CFO sell is built more around the firm's Business Execution strategy which takes the firm beyond the pure HCM market targeted by the likes of Workday and into analytics and - as the name suggests - business process execution. That's inevitably a more complex message to sell than core HCM alone, but Dennerline reckons that the firm is getting its pitch across. He does however concede that the firm's marketing has been in need of some honing:
“We have been working hard to get the Business Execution message out there. People are understanding it better,In the past we have under-performed in marketing.”
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 BusinessCloud9 meets her, so she's up to her neck in induction processes, meeting the sales teams and familiarising herself with the company, but she 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. 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.”
That's not to say that there hasn't been some successful sales and marketing efforts of course. You don't get to grow at the rate SuccessFactors has or clock up the kind of customer base that the firm attracted without some decent sales and marketing. But the messaging inevitably has to evolve. Dennerline says:
“One of the most compelling way through the door is still the financial argument. 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 to updating collateral, adding that the next six months will see a lot of focus placed on the sales and go-to-market strategies for the company:
“Over the next six months, we are going to be hiring a lot of sales reps. We are going hard to the hoop on sales people. We continually look at our 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.”
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 expanded the core SuccessFactors offering with complementary functionality in the same way that Cloud customer management firm Salesforce.com has expanded its core offering in a similar way.
But Salesforce.com has admitted that its acquisitions did lead 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 become 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? Dennerline explains:
“We continue to have a build/buy/partner approach. 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. HR can set up a CubeTree group for people who are interviewing for a position, for example, and create an app on your mobile device that enables a large group of people to give the thumbs up or thumbs down.”
So will it take the same amount of time to bring Plateau fully in to the SuccessFactors fold? Dennerline argues:
“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 dot net, for example. 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.”
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 Cloud applications have entered the mainstream and enterprise-scale 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. Accenture is really helping us. 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. The people we are working with at Accenture are those in their core HR practice who have entrees into customer we can't get into on our own.”
Dennerline suggests:
“Services companies are having to rethink their own practices. 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. 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 installation. There is money to be made from disruption and Cloud is 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. 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 that to consolidate its efforts to define the Business Execution space. The firm has also reached a size where it needs to make that critical - and often tricky - transition from being seem as a rapidly expanding start-up into a fully fledged enterprise supplier. SuccessFactors has the enterprise customers to validate its claims to be a long term contender in this respect.
The trick now will be to ensure that the operational processes and structures are there to execute and support continued growth at a time when Oracle is finally waking up to the need to focus more effort on the enterprise HCM space in order to hold onto its PeopleSoft installed base and SAP is finally dipping its toes into the waters of the Cloud Computing market.
