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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.
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.
In Charles Darwin’s landmark work on the Theory of Evolution, he stated that “…Natural selection acts only by taking advantage of slight successive variations; it can never take a great and sudden leap, but must advance by short and sure, though slow steps.” Based on what has been happening with our economy over the past six months, the Human Capital Management software world is going to be forced to do a quick evolution.
Times are tough; just consider the global economic slowdown over the past three years. In 2007 it was the sub-prime mortgage crisis, in 2008 it was the Banking crisis and in 2009 we are beginning to see the Human Resources crisis.
This is very different environment for HR professionals than the old War for Talent era that was discussed by industry experts over the past five years; this current crisis is more related to a dramatic reduction in jobs in the economy and unemployment approaching 10%. Human Resources related budgets and headcount have been cut way back in an effort to stem the financial tide. Unfortunately most companies were not ready to eliminate anywhere from 5-30% of their workforces overnight. Not only were they not prepared for this change but they probably don’t completely understand what the future impact of their actions will be for their workforces. These dramatic changes have left HR in a precarious position looking forward because they have little in the way of staff or resources but their charter remains the same.
HR’s Rapid Evolution
As someone who sold HCM software for the last 12 years, it was always part of the sales pitch that the HR organization is always expected to do more with less. Now that the environment has really changed, when senior executives now say to HR, ‘do more with less,’ they really mean it.
Just like in natural selection, the HR survivors need to evolve. So in this brave new world, you no longer have the level of resources that that you have taken for granted for years. Resources like IT support, capital dollars in your annual budget, a team of people to work on projects and time. You may ask, how do I evolve? With dramatically less people, budget and basically the same responsibilities, you need to automate as much of your workload as well as your personal interactions. In this new world, the human touch is going to be at a real premium when it comes to HR.
Well - now that you are completely depressed, let’s review some ideas on how you can be an HR survivor. Did you know that most companies have up to 200 different HR suppliers, depending on the size of your company? Do you really need all of them? Since you are now in a zero sum budget exercise, start looking at your operating expenses as one big pot of money and start determining what is essential and what is optional. As you start your process, you need to free up budget to fund critical automation projects that can enable HR to continue to push along its strategic objectives. This may actually be a process that your IT business partners might actually be willing to help you with, since they are feeling HR’s pain like never before.
Natural Selection
So as you start thinking about your natural selection budget project, you should start to build out your game plan by trading out your old software for new software. My general conclusion about software is simple, old software is bad and new software is good.
Let me explain…
Many of the current Human Capital Management software providers evolved from PeopleSoft. PeopleSoft was the leading HR software provider in the market for nearly twenty years and spawned a complete suite of Enterprise Resource Planning applications including benefits administration, payroll and other HR applications. When PeopleSoft was purchased by Oracle in 2005, Oracle became the dominant provider but they appear to have no clear future plans for their HR software. So you need to continue to pay maintenance for old software, which keeps getting older.
When thinking about natural selection for HR software, think about the clear disadvantages in the current environment for your old school software provider:
- Software requires a large capital investment. This might be really difficult to get funded in our current environment, no matter how critical the software is to your company’s objectives.
- Implementation projects are both long and complex. Lots of investment to support customization and an expensive team of consultants who will live on-site for months or years. The consultants have to install your software in your data center, which will require a significant investment in hardware and infrastructure.
- Massive software upgrades. Whether it is moving from PeopleSoft 8 to PeopleSoft ? or to the latest version of SAP, these upgrades are expensive and require a lot of internal support resources and a big hardware investment.
- Lack of flexibility. The older software providers typically have rigid products, which make it tough to make even basic changes to features, reports or anything else. This is also a big disadvantage of buying all your HR software from a single vendor, like Oracle or SAP.
- Don’t play well with others. Ideally all of the software works together to make it easier to configure workflows, data elements, reports, and analytics because your data is sitting in a lot of different systems. If your software isn’t open to working with other systems, it can get really expensive, and you don’t have any budget to glue everything together.
Now you can see why old software is bad… and why they may be going the way of the dinosaur in the next 5-10 years. That’s right, even Oracle and SAP. Remember MSA and McCormick & Dodge!
What attributes should you be looking for in your future surviving HCM software suppliers?
These survivors have these clear market advantages:
- Software-as-a-Service. You have probably heard this term but it is simply when the software company rents you the software and you subscribe to their service the next 3-5 years. Because of this approach to delivering software as a service, SaaS firms are forced to be more cost-efficient because they get paid over time. SaaS software is delivered to your users through the Internet, which means your IT department doesn’t have to have to buy or support any software or hardware – this can save your company a lot of money.
- Long-term relationships. Because you rent the software, your SaaS provider has a vested interest in keeping you happy because you will want to continue to renew your subscription to the their software. Unlike old software firms who would sell you their software and disappear, SaaS firms are encouraged to stay close their clients and listen to your input.
- Incremental changes. It was not only the expense but also the tremendous organizational disruption associated with large software upgrades that customers really dislike about the old software model. SaaS clients enjoy a ongoing stream of transparent upgrades, that fix bugs, add features and their software literally evolves over time.
- Less extra costs. Since SaaS providers host their software in their own data centers, your company doesn’t need any IT staff to support their software or infrastructure (servers, firewalls and security) typically required to run HR applications.
- Configuration. SaaS firms offer more flexibility in the way they set up your software. Unlike the older software firms that bring a cast of thousands to customize and install your software, SaaS companies can set up an initial version of your software in minutes or hours rather than in months. Then once they understand your business needs, the software can be configured without custom programming. This approach saves you both time and money.
- Open for business. In this new world it will be difficult for any company to purchase every type of HR software from a single provider, so it is important for software to communicate and share information with many different software packages. This sharing will enable you to automate as many HR tasks as possible, allowing you to do more with fewer resources over time.
Slow Evolution of HCM Software
A little known fact is that the original Software-as-a-Service provider is Automatic Data Processing. They have been delivering payroll and HR services as a service, for nearly fifty years. Their offerings started out as a basic payroll service and their internal software just helped them to deliver their service more efficiently to their clients.
In the 1990’s, the next generation of on-line solutions appeared - where on-premise software was transitioned to being hosted in providers’ data centers (commonly referred to as Application Service Providers). A number of HR ASP software providers emerged including: Employease, PeopleSoft eCenter, and Workscape.
Then about ten years later, the conversation evolved from just hosting traditional software and a new model emerged - on-demand software, that provided a pay-as-you-go pricing model along with streamlined upgrades and new support processes. Some of these on-demand providers included: Authoria, Kenexa, SumTotal, Stepstone and Ultimate Software.
Then just a few years ago SaaS providers started to gain momentum. These firms really looked at delivering their software truly as a service and never delivered it on premise, sold in the traditional way. The HR SaaS providers always delivered their software over the Internet, with a modest amount of services, no upgrades, per-employee-month pricing and self-service support. Many better known HR SaaS providers include SuccessFactors, Taleo and Workday.
The next generation of HCM software might be based on Cloud Computing, where the SaaS providers no longer own their data centers and use providers like Google or Amazon.com to deliver world-class infrastructure support at on a pay-per-transaction fee. This approach could drive down costs, complexity and make a wide range of traditionally expensive HCM software much more affordable for small and medium-sized businesses.
Darwin Speaks
The HCM software market has undergone a number of wide ranging transformations over the last thirty years. We come back to the premise of old software is bad and new software is good. Old software is bad because it is expensive to maintain, modify and upgrade. Software teams that have the experience of working on traditional software but now working at new companies where they are using modern techniques might find it difficult to make their software better, faster and cheaper.
As you think of your portfolio of HCM software providers, maybe Darwin could help. And if Darwin were alive today, and knew about Human Capital Management software, I think he could put many of your company’s providers into these categories:
- Endangered – they are doing some of the right things to turn themselves into survivors but haven’t turned the corner just yet. These are the providers you need to keep a close eye on, just in case they become extinct.
- Extinct – those providers who are on the downside of innovation, living off of your precious maintenance, old architectures, delivered on premise and probably won’t be around for the long term.
- Survivors – those software firms who are worthy of your investment and will be in the market for the long term.
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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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