SAP to Buy SuccessFactors

Meanwhile, SuccessFactors acquires Jobs2Web

By Greg Wright Dec 12, 2011
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If executives at human capital management software company SAP say they are on cloud nine after announcing plans to buy SuccessFactors, they are not kidding.

Acquiring the San Mateo, Calif., company for $3.4 billion could allow SAP products to capture a bigger share of the cloud computing market. By using SuccessFactors’ cloud computing expertise, SAP can use the Internet to deliver more employee recruitment, payroll and other human resource products directly to customer desktop computers, laptops and mobile devices instead of selling traditional software licenses, experts said.

Officials at the Walldorf, Germany-based SAP said the company could become a more dominant player in the human capital management market. Analysts said it is unclear how the SuccessFactors deal will affect the products SAP offers human resource professionals, although SAP officials say the move will allow them to offer customers more innovation and value.

“With the addition of SuccessFactors to our portfolio, we will gain an immediate strength and leadership presence in the fast growing segment of cloud-based applications for people and talent management,” SAP co-CEO Bill McDermott told reporters and investors when the deal was announced Dec. 3, 2011.

More companies are turning to providers such as SAP and SuccessFactors to help manage HR tasks, including workforce scheduling, recruiting, training and tracking employee progress on projects. These companies are getting more of these services through the cloud.

Cloud Gaining in Popularity

Cloud computing is gaining in popularity because businesses do not have to install a suite of software on each employee’s computer, laptop or mobile device. Instead, employees can use the Internet or the “cloud” to access data and, within minutes, get tools they need to do their jobs.

The human capital management market is expected to be valued at $10 billion by 2015; about 75 percent of the products will be delivered through the cloud, according to market research firm Gartner.

SAP has a respectable share of the crowded human capital management market. It has deployed its products to 15,000 companies with more than 500 million employees worldwide.

With SuccessFactors’ expertise in cloud computing and by combining sales teams, SAP hopes to broaden its reach to a billion employees, McDermott said.

“SuccessFactors gives us the No. 1 human capital management solution in the cloud—period,” he said.

Regulators and SuccessFactors stockholders must still approve the deal. It was not clear immediately how SAP’s purchase of SuccessFactors would affect the mix of products and services the company offers human resource professionals, market experts and SAP officials said.

In fact, SAP and SuccessFactors offer some of the same products, said Josh Bersin, president and CEO of Bersin and Associates, a human resources research and advisory firm in Oakland, Calif.

“There is a lot of overlap,” Bersin told SHRM Online. “It is not clear to customers what parts of SuccessFactors that SAP may have to replace.”

However, there were already signs of products SAP could offer. Just days after SAP announced its acquisition plan, SuccessFactors said it was buying Jobs2Web, a Minneapolis-based company that offers software that lets companies attract job candidates by using social networks such as Facebook and LinkedIn.

Jobs2Web’s services likely will be rolled into SAP’s product line after it buys SuccessFactors.

“There are 300 million job searches alone on Google each year that companies don’t know how to get to,” said Lars Dalgaard, founder and CEO of SuccessFactors. “With Jobs2Web, SuccessFactors can help companies turn resumes into candidates, broadcasting their jobs in all social networks.”

Greg Wright is a Maryland-based freelance writer who has covered Congress, consumer electronics and international trade for major news organizations, including Gannett News Service/USA Today, Dow Jones and Knight-Ridder Financial News. He can be reached at gregoryleonwright@msn.com.

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