I had planned to keep away from this topic as it is all getting rather shrill but requests in the back channel persuaded me to change my mind.
SAP finally closed the SuccessFactors deal today. But you'd be forgiven for thinking the event occurred a while back. At least that's the impression from the blizzard of self promotional advertorial coming out of Forbes AdVoice, SAP's latest propaganda mouthpiece. Let's take the most recent piece and start picking it apart:
Some people who know SAP only by its past reputation are having trouble imagining how a highly entrepreneurial company like SuccessFactors will be able to retain its nimbleness and agility as part of a huge enterprise software company that is, among other things, the leading ERP vendor in the world.
Good question given that SuccessFactors is retaining its identity as a separate business. The author thinks it is a DNA issue that is assumed will work like some kind of blood transfusion. Ever tried mixing Type A and B? We'll see how well that pans out in a year or so's time. What I know from past experience is that companies which remain independent tend to be viewed with deep suspicion by the staff in the acquiring company. In SAP's case it is a little more nuanced than that because there are layers of personnel based in Walldorf who don't acknowledge the existence of Palo Alto. the expression: 'They're dead to us,' comes to mind. The SAP culture and 'SAP way' of doing things is certainly not going to change overnight. But then SuccessFactors can perhaps ignore that slight by sticking to its San Mateo premises.
The message is reinforced by genuflection in the direction of co-CEO's Snabe and McDermott, noting that:
...it’s this new and customer-driven and high-octane environment that made the deal so appealing to Dalgaard, a charismatic leader whose fast-growing company certainly did not need to be acquired.
I can think of 3.4 billion other reasons why SuccessFactors was acquired.
The article goes on to say that SAP has committed more than double the existing engineering resource for SuccessFactors. Great - but where are those engineers going to come from and when, if they're new, are they going to become productive? More to the point, in my first take I asked:
Does the SuccessFactors purchase indicate that SAP’s Business ByDesign experiment is done?
I'm not seeing any answers to that question.
It is at this point that the mutual praise goes completely off the rails. Dalgaard is quoted as saying:
I believe this allows us the scalability, the capability, and the strength to build beautiful products for mobile devices that have never existed before. And you WILL have the chance to have them integrate into any product on the planet, because SAP can deliver those tools, and we can deliver them in the cloud.
Most beautiful compared to what? From what I hear, at least some end users of SuccessFactors loathe the product. Integration? Does he have any idea just how hard it is to integrate solutions? I suspect not and especially given that SAP solutions are fundamentally different from cloud offerings. Just because stuff is in the cloud doesn't hide the fact that integration is tough work.
Elsewhere SuccessFactors fever has hit the SAP Community Network with the reprint of a press release that talks to the partner angle. Plenty of juicy praise there which is nicely summed up by this from Mark Willford, Global Managing Director, Accenture’s SAP business:
“With the acquisition of SuccessFactors, SAP is expanding its rich portfolio of offerings in key areas such as cloud computing and human capital management. For Accenture, the main beneficiaries will be our SAP clients who are increasingly interested in adding these capabilities to their information technology mix.”
Of course the partners are happy. Other than upgrades there is no real growth left in the on-premise ERP business so they need something new to sell. I was surprised to find one notable absentee from the roster of SIs heaping praise on the deal. That's IBM, SAP's most important partner by some measures. All I know is that I'm not getting a wholly convincing story from senior SAP people about how they think a combination of the Business Suite and SuccessFactors will stand up in the competitive market place.
SAP has said that there is plenty of opportunity because of little overlap. The last number I heard was 14%. But then I have seen other research suggesting the customer overlap might be as high as 39% in some markets. Once again time will tell how well cross selling goes.
I give kudos to Dalgaard and team for firing up the propaganda machine. They've done a superb selling job. But that's all it is and in the real world, customers tend to ignore that. So please, stop selling yourself. The real work has only just begun.