SAP’s announcement that it acquired SuccessFactors for about $3.4 billion certainly made the weekend a less leisurely one for all of the HR technology analysts and experts who have been commenting, blogging and tweeting their thoughts ever since.
According to CIO magazine, the acquisition was announced Saturday and is set to be completed in the first quarter of next year. After it closes, SuccessFactors CEO Lars Dalgaard will run the company as a separate division. He has also been tapped to lead SAP’s overall cloud business.”
All told, Dalgaard could have his hands full rationalizing this passel of technologies and products into a cohesive story, but he seems to have a good chance.
“It’s a big job,” said analyst Ray Wang, CEO of Constellation Research. “[But] Lars comes with cloud DNA. Before, the old executives were bridging the old world with the new world. This should help a lot.”
Josh Bersin, of Bersin& Associates, writes that the deal is a major shift in the talent management market, but says it leaves lots of questions, including about integration.
“In the conference call,” he writes, “the point was made that ‘the two product sets are already integrated.’ This is absolutely not true.”
The deal will impact more than the two companies and their customers, Bersin writes. It will have an effect on other technology companies as well.
“While I think this acquisition still has many questions to answer, large vendors will now see this as ‘the beginning of the end’ of the era of independent talent management vendors – setting off a chain reaction of other acquisitions. I believe this market is still very young and has a long way to go – but the bigger vendors may just feel it’s ready for consolidation.”
According to Yvette Cameron of Constellation Research:
The collaborative nature of this acquisition bodes well for SAP and SuccessFactors customers, so far. Questions remain as to what will happen to the planned roadmaps on both sides, the speed with which SuccessFactors solutions will benefit from SAP’s assets such as Business Objects and extensive mobile platform, how SAP will effectively deliver SaaS-based HR and Payroll for its SuccessFactors clients, and whether or not SAP will maintain the levels of innovation and investment shown by SuccessFactors over the years. Another important yet perhaps less obvious risk is that of the two competing cultures. Lars Dalgaard has built a culture at SuccessFactors that is dramatically different from the German-sensibilities-driven culture permeating all of SAP, even SAP Americas, Inc. Whether or not the differences can be withstood remains to be seen.
Scott Sanders, head of account management for Kapta Systems, writes:
No one can question the strategic nature of this deal, on paper the numbers makes sense for SAP because of SuccessFactors forecasted revenue growth. The Saas model works, there is no denying the financial facts, but how is the user experience going to affect the integration of these two companies? SAP has long been considered the most functional ERP on the market, however its cumbersome User Interface has been its primary competitive drawback. One could argue that Workday exists today due to the billions of dollars Dave Duffield and PeopleSoft made in the 90’s selling against SAP’s difficult User Interface.
What is the single biggest complaint of SuccessFactors users today? Their User Interface. This is the obstacle the SAP and SFSF integration team will face in the coming months and years as they merge the SFSF product and client base into the SAP family.
Michael Krigman on IT Project Failures, also has a nice round-up of comments on the acquisition.