Successfactors (SFSF) the Strategic Human Capital Management/people performance software as a service company I last wrote about in June, today expanded their scope to embrace 'Business Execution Software', which is now the strap line under their company logo.
As Larry Dignan covered here on ZD Net prior to the analyst briefing today
The people performance market—SuccessFactors’ current market—is estimated to be about $15.9 billion by the company. With a move into business execution—sort of a lightweight business intelligence category—SuccessFactors can more than double its target market. The business alignment category is a $20 billion market.
Despite the recession the Successfactors stock price is already back on a par with their ipo price in 2007. There are no players in the broadly similar Enterprise 2.0 space who are uniquely influencing the capital markets, although larger player collaboration offerings may have some impact on stock price. It's therefore encouraging to see Sucessfactors take this position, and from my conversations with various analysts today their message and strategy seemed to be well received.
Lars Dalgaard, Founder - and now calling himself 'Chief Execution Officer', which has a sinister ring particularly around the HR sides of their offerings - didn't attend the briefing as his wife was giving birth. Excellent to see that he had his priorities right! The Chief Execution Officer instead briefly appeared on video extolling the winning differentiation the ability to execute business strategy well enables.
This is a cloud company that in some ways is technically larger than Salesforce in terms of reach (although Salesforce are way ahead in capitalization at 7 billion vs 790m), with a similar momentum. This latest expansion of their offerings essentially extends the performance and talent management modules (which enable alignment of employee HR management with company goals) to tools to execute business strategy.
Return on Execution
According to Successfactors It’s estimated that on average 70% of operating expense is labor, but getting those people to do the right things at the right time towards planned results is challenging. “The truth of the matter is that you always know the right thing to do. The hard part is doing it" to quote US General H. Norman Schwarzkopf.
Given this huge chunk of operating cost tied up by labor, the premise is that execution is all, and getting employee performance and alignment tighter, like a winning sports team, will increase productivity as they successfully perform the tasks needed against strategy and tactics.
Software for creating performance reviews and tracking employee sick days isn't the sexiest category - like training and elearning software its utility only comes alive if it can effectively communicate organizational strategy. The whole stodgy category of enterprise learning and talent management is strewn with legacy systems and never installed shelfware sold on the promise of strategy execution, but the reality was that without a clear tactical path from strategy to execution the promised productivity gains became underused software cost on the bottom line.
Successfactors, having significantly outperformed this historical market area over the last few years, are now moving further up the strategic value chain with their Business Execution Software offerings and associated philosophies. Business alignment with people performance has been tried in the enterprise learning and talent management space previously with limited success, but Successfactor's momentum could see this area become fashionable because their business results are attractive, which will of course be the acid test.
The differentiator is the cloud: providing a platform with on demand modules is significantly different to biting the bullet and committing to purchasing on premise software and associated plumbing. Staffing is foundational to companies of any size, staff that know what it is they are supposed to be doing and actually doing it may sound obvious but is key to success.
The intersection between structured and unstructured data management, which is at the heart of the rapidly maturing Enterprise 2.0 space, and this fundamental business strategy and tactics move by Successfactors is worth watching closely.
(image from McLean Scotland Vacations)