SuccessFactors: Growth And Innovation Continues

Harvard Business Review research shows that 70-90% of corporate acquisitions fail [1], often driven by an unclear strategy, lack of culture alignment, or poor execution on business integration. When SAP announced the acquisition of SuccessFactors in December of 2011, one could have expected a similarly disappointing result.

Well, over the last five and a half years, nothing could be further from the truth.  

According to data released by SuccessFactors in the last 60 days, the company now has more than 47 million users on the platform, more than 6,200 client accounts, and the core HR business is growing at 51% year over year.

While the early days of the SuccessFactors-SAP integration were a bit unclear, today the company is growing rapidly, and under the leadership of Mike Ettling, SuccessFactors has started to innovate in ways that lead the fast-growing, highly competitive human capital software market.

While the product set is highly complex (SuccessFactors is designed to manage all people processes across all industries), the company has leading functionality in nearly all areas of HR: from recruiting to performance management to learning. And this includes tools to manage hourly and contingent workers, payroll in more than 37 countries, extensive analytics, and a complete mobile platform. (And a marketplace of partner applications as well.)

Bringing all these products together has taken investment and focused effort. The the product set includes learning management technology from Plateau, social learning tools from Jambok, analytics software from InfoHRM, contingent workforce management tools from Fieldglass, and payroll and ERP functionality from core HCM applications developed by SAP. Over the years these acquisitions have been integrated in many ways: through the user interface, by harmonizing back-end systems, and replatforming to HANA, SAP’s strategic database and technology stack.

(It is now common for all major HR software providers to grow through acquisition, so virtually every vendor has multiple product sets engineered to work together behind the scenes. In fact the discipline of back-end and front-end integration is now core to ERP and HCM marketplace success.)

The world of HR, talent, and people management is always changing, forcing HR software companies to continuously innovate. In this category SuccessFactors has been able to stay ahead of the market in many ways.

  1. SuccessFactors is the first ERP/HCM vendor to deliver a next-generation continuous performance management solution.SuccessFactors Continuous Performance Management, which embodies most of the new features of continuous feedback and agile goal management, now has more than 250 customers and is in a position to potentially lead this enormous new market segment, now dominated by startups. SuccessFactors’ roadmap for new features in this area is impressive: we can expect the company to continue to lead in this segment as it expands into feedback, engagement, and team management.
  2. SuccessFactors has pioneered the use of chatbots and cognitive interfaces, through the launch of “Conversational HR.” I have now seen HR software that interacts with users through chatbots, and the potential is enormous. SuccessFactors users can now have conversations with the software through Slack, Siri, Cortana, Amazon Alexa, Google Gsuite and others, dramatically improving productivity. Imagine an interaction like this.

Employee: “I would like to take vacation next Thursday.”
Software: “You have a meeting with Steven on Thursday afternoon.”
Employee: “Can you cancel that meeting?”
Software: “Yes meeting is cancelled, should I ask your manager for approval?”
Employee: “Yes please”
Software: “Manager approved, vacation approved.”

When I first heard about “chatbot integration with HR” I was skeptical, but after seeing demos from several vendors I am now convinced. The applications for this technology are expansive.

Imagine a conversational system that recommends learning, proposes new job opportunities, or tells an employee they are travelling too much and should possibly take some time off. While Watson from IBM has some of this functionality available in separate products, SuccessFactors is now building this into the core HR suite. And it will probably not be long until you can talk to these systems through your mobile phone or other AI-based voice device.

  1. SuccessFactors developed innovative analytics and AI tools to help with diversity, bias, and inclusion.For over a year SuccessFactors has been delivering tools that help companies remove bias from job descriptions, run reports that show bias in hiring and promotion, and new tools to help remove bias from talent reviews and calibration sessions. SAP’s heritage as a leader in diversity and inclusion shows up here: the company is delivering a set of tools HR and business leaders now see as increasingly critical to their challenges in the areas of bias and diversity.

(Our new research on D&I shows that while 70%+ of companies believe they have a truly inclusive culture, only 11% actually do based on their practices. Measurement systems and tools which hold people accountable are among the most powerful aids in this important area.)

  1. SuccessFactors learning continues to innovate and grow. The L&D marketplace, which is over a $140 billion market in itself [2], is undergoing tremendous disruption. (Read The Ten Disruptions in L&D for more detail).  In addition to offering one of the first video learning solutions, SuccessFactors just released a set of tools to help companies sell and deliver learning to their customers, resellers, and partners (Learning Marketplace). This focus on “extended enterprise learning” again shows SuccessFactors’ ability to innovate and deepen its functionality in each area of HR, and also gives the company a bigger market to address.
  2. Continued Evolution of User Experience.SAP also has a strategic alliance with Apple, enabling the two companies to work together on new user interfaces designed for IOS (on iPhone and iPad). The new user experience on Apple and Android devices appears to be best-of-breed, making HR software not only conversational but just easier to access on mobile devices. The company now has a new career-jobsite builder and a variety of new custom tools to build self-service portals and self-service tools, one of the most important new growth areas for HR.

Digital HR Software Is Not Easy To Build

The HR software marketplace is enormously large, complex, and varied in nature. Our research indicates that there are several thousand software companies selling various tools for recruitment, employee management, engagement, compensation, learning, and other parts of HR. For any company like SAP to lead in this market takes investment, focus, and a continuous ability to change.

SAP understands that this is a long game ahead. Features like global payroll, continuous performance management, and scalable learning management take years to build and demand global feature sets, many language and global translation features, and an architecture the enables them to scale and operate with near real-time speed.

SAP and SuccessFactors have proven their ability to execute and innovate, and we can expect more to come. While others continue to innovate and execute as well, I believe SAP deserves credit for both managing the integration of SuccessFactors with tremendous success and continuing to innovate to help drive the world of HR and management software forward.


[2] Bersin by Deloitte core HR systems research, 2016 and 2017