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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
New capabilities include compliance functionality related to the new US healthcare regulations which will touch benefits, employee data as well as compensation. These HCR regulatory changes also have a major impact on workforce cost so Workday is also delivering functionality related to better managing salary data for benchmarking, compensation and overall manager decision support.
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.
Mercer HR Outsourcing and Consulting Briefing
Mercer provided an update on their HR outsourcing, talent management and consulting products and services for 2011. Mercer is a major player in the overall Human Capital Management and Health and Benefits markets with total revenues at $3.5 billion, 27,000 customers, and over 4 million employees using their solutions. Here is a quick take on some of the interesting things that they are up to.
Mercer Outsourcing
Mercer’s global outsourcing leadership provided an update on their business that includes their Total Benefits and point solutions outsourcing offerings. The company has made an important shift from the broader HRO market to focus more on their strength around Total Benefits Outsourcing or TBO. Mercer’s outsourcing clients make up 80% of the US Fortune 500, so they are very strong at the high-end of the market.
In a recent announcement Mercer is now partnering with SAP in Germany for their pension administration. This partnership will allow SAP to deliver a robust pension solution to their large German and multi-national customers including organizations like Dow, Rockwood Holdings and J.P Morgan.
Mercer has made a major investment in building out a very high quality offshore processing center in India, their Global Operations and Shared Services center over the past 2-3 years. The key to making this offshore capability work is that Mercer isn’t just outsourcing benefits work to a partner, the GOSS employees are Mercer employees and part of their core delivery teams. Today this service center handles only back office and delivery functions, at a much lower cost than could be achieved from US-based resources. This positions the company to offer lower cost TBO solutions to mid-market sized organizations. Mercer also doesn’t offshore their call center or employee-facing functions to India at this time, due to possible concerns from their customers, these functions are still handled by US employees.
Mercer’s Americas operations provided an overview of their business which is primarily based on their TBO platform. Mercer’s Health and Benefits business capabilities include defined contribution, defined benefits, health and benefits and absence management. Their TBO business typically services clients with at least 7,500 employees and more than 80% of their new clients are leaving existing benefits engagements with other industry providers. Unlike competitors, Mercer’s Americas TBO business has very high customer retention rates, in excess of 95%.
Human Capital Connect
Recently launched their integrated Performance and Rewards solution built on top of PeopleclickAuthoria’s SaaS-based talent management platform. This solution has been infused with Mercer’s rewards best practices as well as a link to their ePRISM compensation management technology. Mercer clients and prospects like the idea of leveraging the company’s extensive embedded intellectual capital, integrated into a leading a TMS SaaS platform to help them deliver faster and better HR transformations.
The initial uptake on the offering has been a little slower than they planned but are now seeing stronger momentum and should be able to announce some new wins in the second half of this year.
Mercer WIN
Mercer’s Information Products team previewed their upcoming product called the Workforce Information Network that is a new rewards analytics platform that accesses Mercer’s vast warehouse of compensation and job family information. Mercer has compiled comprehensive data from more than 20 million employees and 8,000 organizations globally.
The Mercer WIN offering is now in beta, with 50 charter clients, and the company is planning to expand the offering to service up to 10,000 users by the end of 2011. The plan for 2012 is to broaden the available data sources to include survey data from other providers along with other Mercer data, that will them to deliver libraries of benchmarks for pricing, reporting and survey submissions. These tools will allow their clients to deliver more competitive pay programs segmented by regions and against their peer groups. Over time this data can be shared among other Mercer offerings including ePRISM and with the Human Capital Connect product set.
This potentially is a very interesting subscription service based on a large data asset that Mercer has been sitting on, that could be made available to all of the company’s clients over the next few years.
Company: SuccessFactors
Started: 2001
Located: San Mateo, California
Geography: Global
Market: On-Demand Performance and Talent Management
Products: Goal Management
Business Performance Accelerators
Key Customers: Advo, Allianz SE, Cadbury Schweppes, Hilton, Kimberly-Clark, Gen-Probe, PETCO, and Rexel
Website: SuccessFactors
Blog: Performance and Talent Management Blog
Podcast: People Performance Radio – US Edition
Recent News:
Orange Deploys SuccessFactors to 13,000 Employees in the UK
I asked Lars Dalgaard, SuccessFactors’ Chief Executive Officer a few questions about his business and his view of the SaaS market in 2009.
Did you start out as a Software-as-a-Service company?
Absolutely. Since the beginning, we built SuccessFactors as an on-demand platform in the cloud from the ground up. The underlying technology platform is called the SuccessFactors Web Component Engine, and it’s the basis for all SuccessFactors’ applications. The Web Component Engine was built on a multi-tenant architecture with a single-code base incorporating expertise gained from working with more than 2,600 customers worldwide. The platform includes a set of reusable technology components such as a business process template designer, workflow engine and data permission model. It’s the foundation of SuccessFactors’ Performance and Talent Management Suite and enables us to quickly innovate and create new applications to drive business performance for our customers.
Why do your customers buy from SuccessFactors?
By using the latest research, the smartest technology, and the most secure systems on the planet, SuccessFactors works every day to help companies achieve tangible and measurable results, lower costs, and align their organizations.
Since day one, SuccessFactors has been focused on customer success and our on-demand platform helps us do this quickly – getting customer-driven product evolution and frequent enhancements up-and-running when they need it. We also deliver innovative, customer-driven new features on an iterative monthly basis, allowing customers to continuously increase the value they receive from us.
By listening to what our customers want and then taking action immediately to deliver what they need, we’re providing the ultimate level of customer service while providing fun, easy-to-use, user-centric software that creates real business value for our customers and encourages better adoption companywide.
What do you see as the key trend emerging in the SaaS industry?
• It’s going to accelerate. Hard economic times force innovation and companies are keeping a close eye on the bottom line, so this is going to speed up the pace that companies adopt lower cost of deployment SaaS offerings, delivered via Cloud Computing
• SaaS and Cloud Computing will continue to innovate and be easier to use. We are going to see more companies making SaaS as easy to use as Google, Amazon and a slew of other consumer applications and Web sites. Driving adoption and everyday usage will continue to be very important.
• Customer service is HUGE. Today companies care most about doing more with less and keeping their existing customers DELIGHTED. They had to do this before but now it’s critical – they can’t afford to lose customers. We interact and work closely with our customers on a daily basis – a paradigm shift from the legacy, on premise software sales model of selling multi-million dollar license deals and then reengaging the customer five years later. Companies with lots of customers and smart strategies are pouring everything into keeping customers DELIGHTED and the SaaS model makes the product more relevant, flexible, and scalable to the customers’ needs.
What is your outlook for 2009?
Our customers are putting increased focus on their top talent and high performers to make sure these people are motivated and engaged – a critical strategy during today’s economic downturn. SuccessFactors is giving them the tools to really hone in on who’s doing great work, while also providing the clarity to help them make tough business decisions. The War for talent has not ended. A company’s top performers are still being targeted by competition.
There has been a lot of discussion about the strength and resilience of the SaaS model during uncertain economic times. We get that. But what is more crucial is that companies really need to focus on energizing, retaining and keeping their best people motivated. It’s not a ”nice to have,” it’s a must have. Currently, companies are spending about 70 percent of operating expenses on their people. Companies need to be ahead of the curve, and SuccessFactors helps provide ways to make better business decisions in today’s tough economy.
Thank you to Lars Dalgaard and Jennifer Gazin for contributing to this profile.
Company: Taleo
Started: 1999
Located: Dublin, California
Public: NASDAQ: TLEO
Geography: Global
Market(s): Human Capital and Talent Management
Products: Taleo Enterprise Edition - Talent Management Suite which includes Sourcing,
Recruiting, Onboarding, Goals Management, Performance Management,
Succession Planning, Compensation Management and Development Planning.
Taleo Business Edition - Talent Management Suite which includes Recruiting,
Goals, Performance Management and Employee Website solutions.
Key Customers: Whirlpool, Hyatt, Macy’s, JP Morgan Chase and HP
Website: Taleo.com
Blog: Taleo Blog – Talent Management Solutions
Recent News:
Taleo Provides Q4 Business Update; Caps Powerful 2008
Taleo Positioned in Visionaries Quadrant for Employee Performance Management Software
Global Businesses Embrace Taleo’s Performance Management Software in Tight Economy
Taleo Named Talent Management Software Leader in Leading Market Research Firm Reports
I asked Al Campa, Taleo’s Chief Marketing Officer a few questions about his business and his view of the SaaS market in 2009.
Did you start out as a Software-as-a-Service company?
In 1999 we were incorporated as Recruitsoft, established our headquarters in San Francisco and launched our Recruiter Web Top product. From the very beginning Taleo has been committed to the SaaS delivery model and was one of the pioneers in SaaS. We provide a comprehensive suite of on-demand talent management applications for businesses of all sizes, across all industries around the world. Taleo was the only SaaS company to design its product from the start for the largest, most complex companies in the world. Most SaaS companies start by meeting the needs of small companies and then work they way up-market.
Why do your customers buy from Taleo?
Three things come to mind – the ROI of talent management, the value of on-demand solutions and the strength of our competitive positioning.
· Even in a down economy, companies continue to see a high level of turnover. And turnover is expensive. Our talent management applications help companies save millions of dollars by reducing or eliminating agency recruiter fees, reducing cost per hire, reducing on-boarding costs, and increasing the effectiveness of candidate sourcing.
· As many organizations are being forced to do more with less, the benefits of using an on-demand solution become clear. Compared to on-premise solutions, our applications cost less, are quick to deploy and provide a rapid ROI.
· As for our competitive positioning, we are one of the few vendors to offer a truly unified talent management solution…we organically developed our recruiting and performance management applications on a single architecture. And we offer scalable, on-demand platforms for enterprises and SMB’s. Plus, we are profitable, growing and have a strong balance sheet.
What do you see as the key trend emerging in the SaaS industry?
The best part of the SaaS model is that it presents opportunities to provide types of innovation that are just not possible with solutions that are installed behind the firewall. The emergence of the concept of Web 2.0 or the next version of the internet is all about collaboration, combining different solutions to make new ones and leveraging aggregate data generated by thousands or millions of users. People see this type of power everyday in the form of the iPhone and it’s ecosystem, Wikipedia, YouTube, and Facebook. Taleo has embarked on an initiative that we call the Talent Grid to leverage new technologies and the aggregate talent management knowledge of millions of talent management practitioners from 3,900 customers as well as a broad ecosystem of partners and subject matter experts. The Taleo Talent Grid will enable customers to collaborate with each other and with Taleo to find solutions to the most pressing talent management and business challenges they are facing.
What is your outlook for 2009?
As we move further into 2009, we believe the overall economic environment will remain difficult and pose challenges. However, we are very optimistic about Taleo’s future and our growth strategy is well defined. Our recurring revenue business model gives us a high degree of visibility, which in turn allows for flexibility in budgeting. We plan to compete in more deals and we also expect our win-rate to improve. We will also compete more in standalone performance management deals and take advantage of international expansion opportunities with our customers. This strategy will allow us to continue to succeed and meet our goals throughout the year.
Thank you to Al Campa, Didi D’Errico and Jaime Spuhler for contributing to this profile.
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