SAP to Acquire SuccessFactors, Increasing Cloud Portfolio

December 05, 2011 | SAP News | Clare Plaisance | 0 Comment

Graphic: SAP to Acquire SuccessFactors

SAP announced on Saturday, December 3 that it plans to buy SuccessFactors, an SaaS human capital management solutions and business execution software provider for $3.4 billion. In size, this is SAP’s most significant acquisition after Business Objects and Sybase.

About SuccessFactors

SucessFactors was founded in 2001 by Lars Dalgaard, who is still the CEO of the company, and it is headquartered in San Mateo, California. SuccessFactors has focused on providing human capital management solutions such as performance management and workforce planning based on its on-demand platform. SuccessFactors also offers mobile applications, a collaboration platform, social media integration, and analytics tools.

SuccessFactors is a significant player in the cloud market and has a healthy rate of growth. According to SAP’s press release:

SuccessFactors is believed to operate the largest scale of paying cloud users with 15 million subscription seats. With more than 3,500 customers in 168 countries, SuccessFactors is growing rapidly, recording 77 percent revenue growth year-over-year in the third quarter 2011 and 59 percent revenue growth year-over-year in the first nine months of 2011.

SuccessFactors and SAP’s Cloud Strategy

The sheer size of the acquisition shows a definitive commitment to cloud services on SAP’s part. and SAP has high hopes that buying SuccessFactors will boost its cloud offering.

“The cloud is a core of SAP’s future growth, and the combination of SuccessFactors’ leadership team and technology with SAP will create a cloud powerhouse. The acquisition will help us address the top priority for CEOs globally – managing people and talent,” said Bill McDermott, Co-CEO, SAP. “Together, SAP and SuccessFactors will create tremendous business value for customers, with potent synergies to accelerate our growth in the cloud.”

With SuccessFactors, SAP is not only acquiring a cloud platform to energize its cloud offering, but also new leadership. After the acquisition is complete, Lars Dalgaard will continue to serve as the CEO of SuccessFactors, but will also oversee SAP entire cloud business. Customers have been complaining that SAP’s cloud portfolio and roadmap are confusing, but there is some hope that Dalgaard will be able to streamline SAP’s various cloud platforms into more powerful and straightforward products.

How will SuccessFactors integrate with SAP?

SuccessFactors will come under the SAP America division of SAP and will, like Sybase, remain an independent company under the name SuccessFactors, an SAP Company.

There is already some precedent for tying together SuccessFactors and SAP. 14% of current SuccessFactors customers use SAP. Once SuccessFactors becomes a part of SAP, integrating these should become easier.

Dennis Howlett speculates that SAP might use its Gateway technology to connect SuccessFactors and its current integrations to other SAP systems and mobile applications. He also points out that SuccessFactors may replace ByDesign as the underlying architecture for SAP’s cloud applications.

How SuccessFactors’ HCM portfolio will be integrated with SAP’s remains to be seen. Some of SuccessFactors’ HCM applications, such as it’s Recruiting and Learning tools, have analogues in SAP’s current HCM offering, while SuccessFactors itself lacks a complete HCM solution.