Perspectives on the SuccessFactors and Softscape Lawsuit

On March 12, two of the leading talent management software vendors went to war.  SuccessFactors, a leading provider of performance management software,  filed a lawsuit against Softscape, a leading provider of integrated talent management software.

The lawsuit, and continuing press releases, claims that Softscape inappropriately logged into SuccessFactors’ internal systems, distributed false and misleading claims about SuccessFactors’ customers and products, and misused SuccessFactors’ name and logo in a presentation distributed to clients.

We have seen both the filing and the presentation in question.  I would characterize it as a very aggressive marketing move by Softscape with a combination of truth, exaggeration, inaccuracies, and salesmanship.  It was cleverly designed to be used by internal Softscape sales representatives but was also designed to look like a SuccessFactors-created document (not a very ethical thing to do).

As an analyst firm, we admire both companies tremendously.  They each have tremendous strengths in their products, their people, and their support.  They have vastly different heritages and strategies, and these differences have likely led to this dispute.

Some Perspectives

I spent almost 10 years of my career in a highly competitive software market – the database industry.  During my tenure as a product, business development, and marketing director at Sybase, I woke up almost every day worrying about one arch rival competitor, Oracle.  This relentless focus on our competitor had its good and bad sides.

On the positive, it helped us gauge the market and make sure that our value proposition was clear and distinct.  On the negative side, however, we found ourselves consumed with internal debates, discussions, and speculation about what was going on across the bay (both companies are in the San Francisco Bay Area).  In fact, our VP of Marketing purchased “The Art of War” by SunTsu for everyone to read, helping us learn how to “outflank” and “outposition” ourselves from our competition.

My perspective now, almost than 1o years later, is that this is not a good way to run a business.  While all companies (particularly software companies) serve markets with many competitors, no long-term sustainable business can develop great products and services with a single-minded focus on their competitors.  Rather, they must take this energy and enthusiasm and focus it on their customers, their market, and their desired position in that market.  While competitors are a wonderful source of ideas and energy (nothing like fear to get you going in the morning), overfocusing on them leads you away from your market, your customers, and your core value proposition.

SuccessFactors is clearly the “marketing leader” in performance and talent management software in the US today.  They are spending 2-3X any other company (and more than 1X revenues) in this area, so clearly they are very visible and present.  Our research indicates that SuccessFactors has more sales people than companies twice their size in revenues.

This strategy, that of trying to build a “first-mover advantage,” is just that, a strategy.  It may or may not succeed in the longrun.  Other companies, like Softscape, have a different approach.  Softscape has built its product over many years and offers a rich, complete, and well proven HR solution – which includes an HRMS as well as modules in every major talent management area.  The company is internally funded and has chosen to grow steadily through internal growth.  The company has invested heavily in consulting to help their clients “implement talent management” not just “implement HR software.”

While bashing the competition may be a common, visceral reaction of any company (and Softscape was clearly in this market long before SuccessFactors), my perspective is that it often takes the “bashing” company in the wrong direction.  Rather what I recommend every software company do is admire your competition.  Learn from them.  And make sure your information is accurate.  It is very easy to “guess” about what your competition is doing – when in reality they are probably having many of the same challenges you are. 

Our recommendation to buyers is to ignore this entire episode.  It is a common thing in hotly contested software markets and both companies are suffering by raising this to such a public level.  It may make good theater, but it does not help either company (or you) succeed.

Our recommendation to other software vendors is to try to avoid this type of focus.  Spend your waking hours talking with your customers and prospects, building offerings that meet their needs, and thinking continuously about your value proposition and how you can find new opportunities to add value.  If you do these things you will find your “niche” and your competitors will wake up one day saying “wow, I wish we had thought of that.”