SAPPHIRENow - HCM opportunities already missed?

What will we hear on the SAP/SuccessFactors front at SAPPHIRENow next week? We don't know but all the talk feels tactical and not visionary. Here's an alternative take on what they might easily miss.
Written by Dennis Howlett, Contributor

The last couple of days I've been engaged in a lively and interesting back and forth with a number of folk inside the SAP ecosystem around questions for both SAP and the SuccessFactors management teams. It should come as no surprise that given this is the first SAP mega event since SAP acquired SuccessFactors we all want to know what the companies will say. We have some ideas based upon confidential discussions between the companies and influencer groups. We have blog posts talking to the Q&A of what people in the field want to hear. Some of these fall under the label 'strategy,' others fall under the label 'functions.' Others speak to that all important topic, 'what's in it for me?'

It is no secret that in acquiring SuccessFactors, SAP wanted to achieve two goals: defend its position in core HR against new threats while buying credibility as a cloud player in an area where it already has competency (i.e. talent management), but which customers eschewed in favor of SuccessFactors and the like. It is also no secret that Lars Dalgaard, SuccessFactors CEO has been given the job of creating SAP's cloud unit. I've already talked about the fundamental challenges facing that effort.

In back channels with SAP HR/HCM experts, I've suggested that many have been thinking tactically rather than strategically. I've provided an explanation as to what I mean which can be wrapped up in one word 'differentiation.' I am troubled by the fact that I am not really hearing anything from anyone who is trying to re-imagine the future of business let alone the future of work. Instead, I see people concentrating too much on issues around integration, overlaps, functional roadmaps and immediate competitive threats. While all those things are worthy of answers for the short term they don't convey a sense of vision for the long term that reflects emerging realities. Therein lies a much larger problem waiting to deal a potentially lethal blow to SAP/SuccessFactors probable plans.

As I listen to customers from all sizes of company, watch the to and fro among competitors of where they think the threats lay it is easy to assume that in HR/HCM, the war for winning business largely remains between SAP and Oracle with Workday being that annoying upstart that is rapidly becoming a stone in the shoe of everyone. I believe that attention is misplaced.

In Oliver Marks post on HR/HCM 'walled gardens' I saw both a poignancy in his commentary and a clear warning for the mega vendors. In this one post Oliver has the bones of answering a question I've heard and asked over the years: 'Where are the real threats to the incumbents? Have we seen them yet?'  The consensus answer is almost always no. While we analyst types might be clever bastards when trying to understand what we already see, we don't always have the answer for the unseen. Oliver's post points us in that direction. He says:

Despite the slick exterior image many companies create for themselves, the internal reality is typically a patchwork quilt of technologies layered over the years since the dawn of enterprise computing by a succession of inhabitants to serve specific business needs, both departmentally and across the organization. Many of these technologies are clearly modeled on outdated work concepts and processes, but the entire organization hangs together around tenured ideas in the collective mind of the organization and form. The resulting culture is not unlike the organic growth of the walled city structure above, and you have to feel for the IT professionals responsible for security and keeping it all functioning.

That's an uncomfortable assessment. What is the answer? Oliver turns to John Wookey, he who has walked the halls of both Oracle and SAP and who is now tasked with building something fresh at Salesforce.com around social and HCM. Referring to a Wookey post at TLNT.com, Oliver quotes:

…if there is any area that desperately needs a social model, it is HCM. People-centric systems should promote connection, communication, and collaboration. That is the core of the social enterprise.

Consider performance management, which is one of the most important processes for every company. Performance management systems are universally hated. Why? Because they create work for every employee in the company, while serving only to meet HR-driven compliance processes. Somewhere along the way in building these systems, we focused the core design on the wrong problem.

Wookey then goes on to outline the broad strokes of his plan for performance management which is the heartland of the SuccessFactors story. In reviewing his assessment and particularly around his talk of user experience:

...They must be engaging, easy, and fun to use.

I could not help but recall the UI's I've seen from both Workday and SuccessFactors. Most people I speak with believe the Workday UI/UX is among the best they've seen in a long time. I say it is 'getting there' but I'd like to see more. The SuccessFactors UI is pretty and is evolving along lines that will become competitive to Workday over time. But it is the UX that sucks. Repeating Wookey:

Performance management systems are universally hated. Why? Because they create work for every employee in the company, while serving only to meet HR-driven compliance processes.

He believes there is a middle ground where the needs of the workforce can be met in delightful ways while satisfying the needs of compliance and all that other good stuff. Oliver is not so convinced:

Sometimes given HR’s location within the Kowloon Walled City like infrastructure amongst all the company silos, the reality is not immediately apparent that HR’s limitations are often the weakest foundations of the entire crumbling social business edifice, and ripe for overhaul.

And neither am I. In reinventing HR admin, Workday has not had to concern itself about the problems to which Oliver alludes because they are clear about what they're doing: re-engineering a function everyone hates but in a way that satisfies both users and HR admin. They give HR what they need and are comfortable with while making darned sure users want to use the system via a better experience. However - and this is where it gets interesting - they are solid partners with Salesforce.com.

While all the talk around HR focuses upon the Workday threat, I believe the mega vendors are missing the point. What once seemed strange to me - the hiring of John Wookey for an area way outside Salesforce.com's competency - suddenly comes into sharp focus. Here's why.

Wherever I go, whomever I meet on the customer front, it is common for me to hear about some part of the business that is using Salesforce.com.

It doesn't matter whether the company is a 10 person business or a well known brand, I can almost guarantee I will hear the same story. Salesforce is everywhere. Now parse that against the job Wookey is tasked to achieve and you can quickly see how the threats which today remain unseen are obvious and around the corner. It is what Wookey does with those huge Salesforce.com resources that will tell if the company really does have the talent to re-imagine not re-engineer, HR/HCM along the fault lines that Oliver sees. Since Salesforce and Workday are well aligned, there is no reason why that partnership should not flourish and become the 1+1=3 powerhouse that topples the incumbents over time.

Of course SAP and Oracle will snipe away saying that Wookey never completed a project at either place and so the chances of success are close to zero. They will continue to say that CRM is tactical and can be dismissed because only they have what it takes to handle the strategic stuff. I am not of that school. I saw some of the challenges Wookey faced. I feel he led a fantastic effort to get SAP Sales OnDemand close to complete. Salesforce.com is a different animal. Salesforce.com has re-imagined collaboration at the heart of its social business party piece.

Oliver believes that:

The poor economy in most parts of the planet masks a reality that the war for talent has never been more competitive internationally. That talent is typically more agile and connected than ever before, and is very different to back offices used to grappling with digitally supercharged flows of documents and filing cabinets. Old paradigms mapped to modern technologies tend to create information log jams, which are one of the differentiators for quality -or otherwise - of business performance.

Good news for SuccessFactors? Not so fast. He goes on:

Unlike the dismantling of the Kowloon Walled City, there will be no big bang cultural rip and replace across entire businesses. What is happening at an increasing velocity is evolutionary change, and the human resources executive function needs to stay ahead of this wave to become the nucleus - or risk being subsumed into a new wave of chaotic fragmentation across multiple silos.

If Oliver's experiential based thinking makes sense to you then that should be a source of relief for SAP/SuccessFactors. I don't think it plays out that way.

Given what we know about Salesforce.com's relentless and focused approach to marketing, it can only be a matter of time before Wookey walks into Marc Benioff's office with the first fruits of his labors tied to the news that he can hit the marketing go button. That may happen as soon as Dreamforce.

In the meantime we have to wait a few more days to see which direction SAP/SuccessFactors are taking. If it doesn't represent a firm recognition of the topics outlined above then it will be a #fail on vision. Some colleagues say that SAP is always long on vision and short on delivery. I think this is one occasion where they absolutely should be bold on vision if they are to galvanise customers into believing that the SAP/SuccessFactors combination is not just an opportunity to flog more stuff but address the value based problems the companies I speak with are wrestling. And all without disruption. It will be a neat trick if they can articulate that let alone pull it off.

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