Can it be third time lucky for SAP?

Can it be third time lucky for SAP?

Summary: SAP is counting on Successfactors CEO Lars Dalgaard to put its cloud strategy on an upward curve. Based on previous history, the odds are against him succeeding.

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At first sight, the recruitment of Successfactors CEO and founder Lars Dalgaard to SAP's executive board — once it completes its acquisition announced this weekend — looks promising. There's been plenty of comment in the past 36 hours on how this will bolster SAP's cloud strategy. Except that SAP doesn't have a good record of holding onto outside talent. Shai Agassi, once seen as next in line to take over the top job, left in 2007 after attempting to reshape SAP's technology platform to meet the Web-enabled challenges of the new century. Earlier this year, ex-Oracle luminary John Wookey departed after creating a fascinating portfolio of next-generation on-demand products (most of which are still waiting to reach general availability). Now it's Dalgaard's turn, this time charged with shaping SAP's cloud strategy. What are the chances it will be third time lucky?

Pretty slim, I'd say. Even though, as Dennis Howlett cannily notes, Dalgaard is, like SAP co-CEO Jim Snabe, a Dane and therefore will have an extra cultural advantage when the two compare notes on what it takes to make headway in SAP. But look at the evidence. SAP is resistant to change. While significant progress has been made, the organisation simply refuses to bite the bullet and run with good cloud offerings even when it has them. I suspect the best SAP can hope for is that Dalgaard will shake things up for a couple of years, bludgeon and drag it further towards the direction it needs to go, and then leave unexpectedly.

Is Dalgaard the best choice to do this? That I wonder about too. Successfactors is built on a singular vision of driving business performance through focus on goals, implemented for cloud delivery. Sure there is cloud expertise there but the nuts-and-bolts knowledge may be lower down in the organisation than the CEO's office. And then I don't understand what the logic was of its acquisition earlier this year of learning management vendor Plateau Systems, which brought a lot of single-tenant technology and thus a huge migration headache into the organisation. There's a sense in which Successfactors needed to expand its application footprint in order to continue to deliver its sales numbers and was losing its way because it could only do so through acquisition. Perhaps the timing of the SAP deal was dictated by knowing the company was about to peak as a standalone proposition.

There is, however, one hidden jewel for SAP in this acquisition. It's neither the cloud piece nor the talent management piece, but the social collaboration that Successfactors brings by virtue of its earlier Cubetree acquisition. Cubetree, especially in the way that Successfactors has integrated it with other elements of its technologies to bring information together from across an enterprise, can inject a lot of extra strength into SAP's existing StreamWork collaboration platform. If SAP can add that along with Successfactor's undoubted expertise in efficiently operating cloud infrastructure, then SAP will have gained its money's worth from this acquisition. But for this to turn out well, SAP will have to buck its track record and make it third time lucky. Unfortunately, the odds are stacked against a happy outcome.

PS: Is this acquisition big news? Techcrunch says not. WSJ says it "shows just how big a threat online products are becoming to the kings of conventional software." I know who I'd say has more credibility.

Topics: SAP, Banking, Enterprise Software

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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  • RE: Can it be third time lucky for SAP?

    Just as SAP spend US$4.3billion on a first generation cloud Talent Management play, the industry realises that current state Talent Management app functionality is pretty much useless. Performance Reviews? Meaningless. Recruitment Tools for Agencies? Just prolongs the life of an industry way past due death date. On-boarding? What does this mean? ... pointless. And so it goes on. The dinosaurs buy the first generation cloud app players - just as the second generation get started.
    XceliantBear
  • Enterprise Resource Planning

    The social factor is still being seriously underestimated in the enterprise software world.cube tree might actually be more then just icing on the cake....
    Pidex