SuccessFactors CEO Lars Dalgaard emerged bullish and beaming from his keynote address at the SuccessConnect conference in San Francisco as well he might on the back of announcing the world's biggest Cloud applications deployment to date.
“We've demonstrated that we can scale,” says Dalgaard of the massive deal with German electronics giant Siemens AG, which sees 420,000 people across 80 countries, and speaking 20 languages, added to the global SuccessFactors user base.
Dalgaard hails the contract as “the largest single deployment of an enterprise application in history” in terms of user numbers. The deal was won against competition from more than 30 vendors, he says. “I'm trying not to make too many people sound like losers, but so many people had failed them [Siemens AG],” he said.
Frankenstein solution
As a diversified multinational whose core business lies outside the normal scope of e-business, Siemens has traditionally been an on-premise, SAP house, so the deal is a significant milestone for the Cloud Computing space.
The value of the deal has not been disclosed, but SuccessFactors has claimed that, as it stands, it will account for less than five percent of revenues. This suggests either that Siemens has negotiated tough terms in exchange for opening a large corporate door to SuccessFactors, or that the talent management company is driving increasing revenues from consultancy.
Paul Albright, SuccessFactors CMO and general manager SMB explained that SuccessFactors replaces the “Frankenstein solution” of seven on-premise applications that Siemens had been running independently, and said that this was good for SuccessFactors as “SAP is in Germany too”.
Dalgaard smiles at the idea of putting more than a toe on the ERP giant's home soil. “They've destroyed a massive company by not figuring it out,” he says of SAP's on/off relationship with Cloud Computing and Software as a Service.
The SAP user experience is “horrible,” he adds, echoing similar remarks made in at last year's Dreamforce event by Salesforce.com CEO Marc Benioff. “The market is going to go to Salesforce.com and us,” Dalgaard continues. “SAP talking about Cloud Computing is like General Motors saying they're going to build a biofuel car.”
Dalgaard went on to say that he believes this is merely the first step in an ongoing journey with Siemens, and that he would like to “sweep away” all of its new customer's legacy, on-premise ERP systems. Earlier, however, CMO Albright was at pains to point out that SuccessFactors intended to “complement the company's past investments”.
Six years on
The SuccessFactors client base now totals nearly five million across 180 countries and 60 industries. So how has the firm's own legacy changed six years years on from Dalgaard's founding vision, after he rose up through the executive ranks of such corporates as Unilever and Novartis? “I would have thought we'd have built a complete ERP system by now,” he says. “I would also have said we'd do no consultancy.”
So is SuccessFactors building a complete ERP suite? Dalgaard refuses to be drawn in further detail on the subject, perhaps because it may be, or perhaps because leaving the question open was sufficient.
The consultancy issue is significant to SuccessFactors, however, partly because no 'Accenture of The Cloud' (to use NetSuite CEO Zach Nelson's phrase) has yet emerged. Dalgaard believes that even companies such as IBM are “not even ten, but fifteen years behind” understanding Cloud-based business, although SuccessFactors has ongoing relationships with McKinsey and other consulting organisations.
“For every dollar you spend on ERP, you spend three on services,” says Dalgaard, who accepts that his company has – unexpectedly, it seems – built itself a growing advisory reputation as an evangelist for good management practice. In most enterprises, he says, “95% of employees have no idea what the organisation's strategy is, and yet employees account for 70% of operational expenditure.”
But while part of the problem is organisational, he believes, but it does not end there. “It has a lot to do with managers,” he said. “There is an industrial malaise where people have resigned from the idea of leadership. Some companies have grown to be almost these industrial diseases. Sometimes you need a nuclear tugboat to break through all the ice that has accumulated [around them] and we are that tugboat.
“Not the messiah”
At the SuccessConnect event, the company also debuted its Employee Central module, which brings layers of social-networking style functionality to HR, organisational strategy and talent management.
The concept of opening up large enterprises to peer review and a new, more collaborative, knowledge-sharing way of working surely remains a challenge to many types of business, however. Security is one issue, while the obstacle of an entrenched management and/or organisational culture is another: what Dalgaard calls “the crown jewels” of some businesses.
Dalgaard accepts that the latter remains an obstacle for some types of organisation (“A bank might say 'all our goals are secret'. Well, ok, let's start from that point.”), but denied that security is a consideration for Cloud customers any more. It's a view that stands in marked contrast with the views of some security analysts, including those who specialise in Cloud-based business.
But Dalgaard is not someone who shies away from controversial views or from being outspoken. But at the end of the day he sees SuccessFactors mission statement in relatively simple terms. “What the hell, I'm not the messiah, but I feel we can change the way people work and execute in their businesses,” he says.
By Chris Middleton in San Francisco
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