SuccessFactors – SuccessConnect 2011

Montclair Advisors did a SaaS business profile in April 2009 and recently participated in the company’s SuccessConnect 2011 in San Francisco, where we were able to hear from key members of their management team about recent news and a business update.

New Branding

SuccessFactors had changed their focus about two years to be corporate performance management focused. Darryl Dickens their new chief marketing officer announced that although Business X is still the core positioning, they wanted to reach back out to the HR buyer. Their new tag line is now more HR friendly; ‘It’s time to love work again.’ (… and by the way, I like the new branding).

With the new branding SuccessFactors wanted to re-focus their messaging around being a proven, visionary Cloud-brand for HR and business performance solutions. This new branding means there is a new logo, website, and icon system.

Part of the strategy behind the re-branding has to do with the new products and capabilities now available across the SuccessFactors product portfolio including collaboration (CubeTree), learning (Plateau and Jambok), reporting and analytics (YouCalc and Infohrm) and HRMS like Employee Central. The new brand is a laminate designed to put a logical wrapper around the suite, which can help to rationalize product bundles, pricing and packaging.

Employee Central 2.0

As customers have grown more comfortable with the Cloud, those who have older versions of PeopleSoft are now looking for alternative options for their core HR systems, and that is where Employee Central fits in. The Employee Central solution has been built for the BizX suite to integrate talent management, analytics, collaboration as well as employee services. Employee Central 2.0 was made GA in March 2011.

Most talent management providers have shied away from offering a system of HR system of record. SuccessFactors sees a real opportunity to integrate their offerings as well as a potentially large market for new Cloud-based HRIS offerings. As Workday offers not only core HR solutions but also talent management applications, both of these firms are chasing a growing replacement market in the SMB and enterprise markets.

Employee Central offers a basic system of record but stops short of a full HR and payroll system. SuccessFactors has decided to partner for payroll with Patersons, Ceridian and Meta4.

Plateau

The biggest news was that SuccessFactors purchased SaaS-based talent management provider Plateau Systems in April 2011 for $290 million in cash and stock. This was the largest acquisition to-date for SuccessFactors and marked the first time that the company had purchased a talent management application instead of an add-on technology. Plateau has a large and satisfied customer-base of both commercial and federal accounts.

Doug Dennerline, SuccessFactors new president (ex-Salesforce.com) was very clear that they were planning on getting very close to Plateau’s customers and assure them that they will allow them to do what makes the most sense for their businesses. Unlike the other learning-related acquisition, Jambok, Plateau offered an enterprise-class Learning Management System with a world-class customer-base. Plateau not only adds revenues and customers but also provides an interesting SaaS architecture and platform that SuccessFactors may be able to leverage to service their their very largest customers.

With this business combination, SuccessFactors is now one of the largest HCM SaaS providers based on total revenues, customers and numbers of users.   After all of these acquisitions, it is clear that the company now has many different growth engines moving into 2012.   Based on our briefing with the very seasoned SuccessFactors management team, it will be interesting to see how they are able to integrate all of these offerings and manage all of these potential business opportunities.

Workday 13 Update

Workday provided a preview of the latest product update, Workday 13 at the end of April.  This appeared to be a major release of functionality across their entire ERP suite including Workday HCM, Workday Payroll, Workday Initiatives (Work Management), Workday Financial Management, Workday Spend Management as well as some new user experience capabilities.

This was the first update we have received in about two years so it was really impressive to see how much progress the company has made not only with their products but also with their overall business.  Here are some key facts:

• 200 customers and more than 130 of them are live
• Flextronics have over 100,000 employees using their systems
• Over 1,000,0000 employees are using their various products across their customer base
• Targeting an IPO for the second half of 2012
• Releasing about 3 updates per year, compared to 1 every 18+ months for their ERP competitors

Workday HCM

As I mentioned, the last time I saw a Workday product demonstration, they didn’t very much in the way of talent management functionality but that has really changed. They now have compensation planning, performance management, succession planning and competency management.  They have wrapped these capabilities in a robust in-line analytics and decision support framework.  This framework includes pre-packaged reports and some really slick user interfaces for workforce management.  This screen shot is of their 9-box interface for their succession planning product.  What I thought was really cool is how they have integrated their position management and organization charting capabilities right into this 9-box interface for their Talent Matrix.  These capabilities look very competitive to most of the other leading SaaS TMS players in the market.

For capabilities that they don’t currently have in the their talent management products like recruitment they will continue to partner with leading specialists like StepStone (now Lumesse) who acquired MrTed and Taleo.

For learning management they have built an intelligent interface into Plateau (recently acquired by SuccessFactors).

When they demonstrated the Workday 13 product, the one thing that popped out at me was the user experience and how engaging it was.  The user interface appeared to quite flexible, allowing the user to drill down, or across to access important information, as well as the use of compelling charts, graphs and dashboards.  I thought it was interesting to see how an object oriented architecture can really impact the overall usability of your SaaS products.

Workday Payroll

For an ERP system it is very useful to provide a payroll solution to tie into.  Workday’s product has been built from the ground up to be a SaaS-based payroll solution.  Workday Payroll was launched in 2009 and supports US based payroll requirements.  The news for Workday Payroll is a new partnership with OneSource VHR for payroll co-sourcing services such as payroll settlement, tax and garnishment administration.  These are common requirements for organizations with very large workforces.

Workday 13 still offers integrations into third-party payroll providers and payroll aggregators such as Patersons and ADP.

Workday Mobility

Seems like every HR software company is now offering a mobile application for users.  The news in this area was the announcement of limited availability of Workday for the iPad.  Again, one of Workday’s strengths is user interface design and this product is no exception.  The product is not intended for heavy transactional use but more for the executive or manager that wants to easily browse through talent profiles, monitor their Chatter-like personal Workday Workfeed or gain insight into their workforce by running a report or analytics.   The general availability for Workday for iPad is planned for Workday 14.

Overall, I thought that the Workday 13 release contained some useful improvements and the product is really impressive.  Given their 3 times a year release cycle, they will continue to innovate at a brisk pace which will be difficult for the traditional ERP competitors to keep up with.  Also, their laser focus on usability will also become a huge differentiator when looking at incumbent solutions, as long as Workday can deliver the necessary functionality and security that enterprises are going to continue to demand.

Patersons Global Payroll

Montclair Advisors had done a SaaS business profile of Patersons in April 2010 and we wanted to get an update from their new CEO, Andrew Pearson. Andrew was brought into the company shortly after our profile was completed and came from SaaS collaboration provider IntraLinks where he was the Managing Director of EMEA.

With the change in management, the company has re-focused its strategy primarily around providing a robust global payroll software and services platform. This has been the company’s strength over time and they felt that this approach would open up some new ways to partner with the leading SaaS Talent Management and HCM providers if they weren’t also offering competitive products. Patersons solutions tend to be a very agile and can fit into any organization’s environment based on their infrastructure requirements. In addition, to their software platform Patersons will continue to offer customers a managed services option for their payroll processing needs.

New Partnerships

The big news was Paterson’s new partnership with Workday and how they were planning on supporting several of their larger customers who were looking for global payroll capability. Workday is focusing more on building out their financials platform in the near term and less on extending their payroll solutions, so partnering with Patersons for their Logon2 global payroll platform makes a lot of sense. The plan is to offer Workday customers not only their HCM and Talent Management solutions but also an integrated global payroll solution that allows the customer to turn off competitive payroll solutions over time. Often these types of companies may have many different payroll providers by the countries or regions that they are doing business in and by consolidating onto a single platform over time, this approach can deliver value on many different levels. This partnership was announced in January 2011.

The other big announcement that occurred after my interview with Andrew was that SuccessFactors had formed a similar partnership with Patersons’ for global payroll. Patersons will join the SuccessFactors’ partner program as a Strategic SuccessCloud Partner to provide complementary global payroll services to SuccessFactors’ multi-national customer base. The Patersons product will also be integrated into SuccessFactors’ Employee Central product, which will allow customers to streamline their payroll administration especially for multi-national operations.

Strategy

This re-focused strategy has been working with the company experiencing strong growth in excess of 40% annual growth and currently support more than 160 countries. Patersons today is concentrating on offering core ‘gross-to-net’ capabilities to 15 countries and will continue to expand their payroll platform out to up to 50 high GDP states and regions over the next few years. The only other software firm that has this level of cover is SAP but they aren’t going to SaaS anytime in the near future.

The future vision for Patersons is to offer their customers and partners a fully integrated global solution that allows large firms control over their payroll, ability to comply with governmental regulations as well as to reduce the cost of administration. For many of their target customers, who have grown through M&A, they have multiple vendors and a lot of technology, this level of complexity is driving up costs, and Patersons can help to streamline their payroll processes using both software and managed services.

The re-focusing of the Patersons’ strategy to primarily offer a SaaS-based global payroll platform appears to be gaining momentum and it appears that they are a company to watch here in the second half of 2011.

Company:                   Patersons

Started:                       1996

Located:                      Salisbury, United Kingdom

Geography:                  Global

Market:                        On-Demand Global Payroll

Products:                    Click4HR, Free HR, and Global HR and Payroll

Key Customers:          Constellation Europe, Henderson Global Investors, Interdean International Relocation, Siemens

Website:                      Patersons

Blog:                           Patersons Blog

Twitter:                       @patersons

Recent News:

Patersons Announces New Partnership with Lawson

CEO Honored At Growing Business Awards | APA Article

Patersons Shakes Up the Market Again Adding ESS to Free HR Offering

Patersons Shakes Up The Market Again With ESS Added To Free HR Offering

I asked Karen Paterson, Patersons Chief Executive Officer a few questions about her business and her view of the SaaS market as we move into 2010.

Did you start out as a Software-as-a-Service company?

Yes

Why do your customers buy from Patersons?

Patersons ‘Software-as-a-Service’ payroll platform delivers payroll on one single database, one technology platform worldwide. This is the only multi-tenant, multiple country online payroll processing platform in the world. Clients also only have one global contract with Patersons. The leading-edge platform promotes scalability and we can cater for any size payroll anywhere in the world, whether a client has 1 employee in Kazakhstan to 10,000 employees in China. Patersons Logon2 solution is as feature rich as major ERP solutions. It also delivers instant Sarbanes Oxley and SAS70 compliance with its unique International Payroll Workflow, therefore making sure all local requirements are adhered to in a timely and accurate manner. Patersons comprehensive global consolidated reporting suite allows quick analysis of global client data.

SaaS is based on the concept of ‘Pay-as-you-go‘ on-demand and customers only pay for what they use and nothing more. The solution is regularly updated and developed to stay in the forefront of the industry. There is also no additional expense for customers when upgrades or updates are made to the solution, and as the system is delivered via the Internet, customers receive upgrades in real-time. Patersons technology is developed 100% in-house, therefore we do not have to pay third party fees.

What do you see as the key trend emerging in the SaaS industry?

There is a strong move from on-premise ERP to SaaS as a serious alternative global solution.  Many companies are looking for best-of-breed in a vertical industry rather than an ERP which generally gets 20% functional use of what has been paid for.  The mistrust of not hosting and relying on an outsourcer to provide an IT function is interesting and an indication that internal IT department have been failing the HR function.

What is your outlook for 2010?

2010 will be the Year of SaaS and the Cloud.  Coming out of recession companies are seeking single process outsourcing solutions and best of breed choices from software vendors.