7 ms·

SAP To Acquire SuccessFactors For $3.4 Billion

70 points by tilt 15y ago

cadr 15y ago
Has anyone here used SuccessFactors? My company implemented it, but it just never really got traction. I'd be interested to hear if anyone had any success with it (no pun intended...)
- dekayed 15y ago
  We use it for year-end reviews. It is pretty telling that every year before the reviews start, our HR department apologizes for still using SuccessFactors. We have also tried to do more year-round tracking on the progress of business objectives, but that hasn't caught on either.
- cdh 15y ago
  My employer uses it. I hate it, but then, performance reviews aren't exactly fun stuff to begin with.
- arthuryip 15y ago
  My previous employer use SuccessFactors. We filled the quarter goals and reviewed them through SuccessFactors. The funny thing is my previous employer was acquired by SAP few years ago too.
mbesto 15y ago
SAP guy here (well I work in the industry). I know Enterprise Software is not highly regarded here on HN, but this is pretty big news considering the onslaught of Workday and SalesForce.com to enterprise software. What is interesting is how SAP manages to handle disruptive technologies to its existing portfolio. Does large enterprise now use SuccessFactors or SAP HCM (via NetWeaver Portal/ESS/MSS)? For anyone interested in the theories of the Innovator's Dilemma this is an awesome example.
- neeleshs 15y ago
  Ex-Successfactors guy here. It is indeed going to be an interesting thing to watch. Successfactors was innovating big time in terms of usability and flexibility on their ESS/MSS suite during my tenure there.
  - teyc 15y ago
    Share an example. I work in an enterprise sw co and I want to learn from their success.
    - teyc 15y ago
      haha. I don't see why all the angst here. The place I work at also has a big VB legacy code base that has to be moved to the cloud. Furthermore, a lot of these large companies start off with a MVP hastily knocked up from 4GL tools and spend a lot of time doing customer development. (remember lean?) Eventually they get big enough to be able to afford proper software engineering processes. Gianforte of RightNow, a big enterprise player, started off in his bedroom with a list of possible features and lots of phone calls.
      - neeleshs 15y ago
        I've no idea why your first comment was downvoted. I've seen SAPs HCM interfaces and SuccessFactor's. The SF one definitely looks cleaner, more responsive (Web 2.0, Ajax and all). This is purely my own opinion. It may not be the case with all products of SF, but definitely the ESS/MSS modules. and you are absolutely right, these businesses lean more towards customer development, and hopefully, probably, catch up on other fronts(processes, eng quality etc) later. When I was there, SF had a pretty reasonable dev process and a reasonable codebase.
        teyc 15y ago
        HN community tend to have a knee jerk response against enterprise software. They forget that Steve Blank of "4 Steps to Epiphany" made his fortune in enterprise software.
Maro 15y ago
For reference, SAP's market cap is $70B.
- deleted 15y ago
  [deleted]
kabdib 15y ago
I used to work there, circa 1999. It was a train-wreck (Austin-Hayne merged with SuccessFactors, and we lost most of the SF-side engineers). Lots of horrible, Enterprisey Java code, and a bunch of inherited Visual Basic. I guess they got things under control. Good for them. I'd invested about $1000 in stock before I left; I called 'em up a few years ago (after finding out they were still around) and found out they'd done some kind of restructuring that blew my shares into oblivion somehow. Easy come, easy go.
- antimora 15y ago
  How is it possible to loose $1000 of stock? I was wondering because I am a bit concerned about my own stocks that I invested.
  - idoh 15y ago
    Maybe a cramdown after recapitalization?
  - kabdib 15y ago
    Something about a transaction in 2001 that created a new corporation and "extinguished all equity interests in the predecessor companies." I'm sure it's entirely legal and so forth. Let me tell you about the time I turned $10,000 into 17 shares of Oracle . . .
    - antimora 15y ago
      I still don't get it. So it's not that you lost $1000 of SuccessFactors shares, right? It's something you had invested in some other company which was bought by SuccessFactors later, and during this conversion period existing shares were restructured, or something along with these lines.
      - kabdib 15y ago
        Well, something like that -- I wrote a check for SuccessFactors shares. I have a letter to this effect in my files. Later, some mumbo-jumbo happened that "extinguished" the value of these shares. I'm guessing this was some kind of IP transfer, whereupon the "old SuccessFactors" went out of business, and the "new SuccessFactors" -- different company, same name -- arose. Given how "old SuccessFactors" was being run, it doesn't surprise me.
jtchang 15y ago
If you've never worked in big corporate environments you probably are scratching your head at WTF SAP is. Though to be honest most people who have worked with SAP still struggle explaining what SAP is. I personally think SAP is a ridiculously overblown and complicated piece of software. It is just asking for a bunch of smaller companies to come in and slice and dice it apart. However there is huge value in going with a single provider for all your logistics needs. I see this move by SAP as wanting to shore competition up. If SAP integrates this into their product then I'd be happy. The product will get better. If they don't...well...who knows what will happen?
- mrich 15y ago
  It is hard for startups to replace the real value of SAP, because it is a standard ERP basis+auxiliary apps, all integrated on the same data. You will spend years to build e.g. the payroll system, and then you only have one piece of the puzzle. Thus it has become the standard for large companies (e.g. many companies in BRIC countries are now adopting it). And it is very powerful and stable software, for which you are guaranteed to find experts to fix problems that might put your company's production at risk.
- AndyNemmity 15y ago
  "Though to be honest most people who have worked with SAP still struggle explaining what SAP is." Completely untrue. People that work at SAP are just like people working in startups or anywhere else. This is just made up fantasy. They can explain SAP, although at times perhaps only their area of expertise. "I personally think SAP is a ridiculously overblown and complicated piece of software." It isn't a piece of software, it's many pieces of software. Some of those are complex, others are not. "I see this move by SAP as wanting to shore competition up." What does that even mean?! The reality is as simple as you'd imagine. SAP is buying SuccessFactor because it doesn't have extensive experience in Cloud based delivery models, and would like to add their experience and infrastructure to SAPs. Just like they did with Sybase, and Business Objects. This is completely obvious, and nothing in your comment made a lick of sense.
  - nahname 15y ago
dotBen 15y ago
I think one thing any founder or shareholder of a "cloud-based" startup can take away from this is that the Big SaaS Co's are getting itchy feet and are needing to invest (read:buy) some bleeding-edge cloud technology to feel that they still have skin in this game. There might be some good exit opportunities here. SAP buys SuccessFactors, Salesforce buys Heroku, etc. These companies have money, difficulty hiring a-game talent and a lack of industry foresight. You can help them and they'll no doubt pay handsomely for it.
- pinaceae 15y ago
  no. SAP is not SaaS, yet. They have an offering, Business on Demand, but the Netweaver core is not SaaS, it is classic on premise. Salesforce is biting into them. Microsoft right now has a strong campaign for cloud ERP, spearheaded by CRM. Oracle is peddling Oracle On Demand. SAP is trying to protect their belly with this move.
  - sunchild 15y ago
    A huge part of the ERP business model is on-premises install/config. By leaving implementation to others, traditional ERP vendors avoid the risk of actually getting it to work properly. They're accustomed to selling a box of tools and pointing you to an army of consultants who will gladly take a shot at making it work. By the time you have anything to test, SAP has long since cashed your license check and booked their revenue.
tryitnow 15y ago
Has anyone used either SAP or SuccessFactors and thought "wow, this is really great!"? I use SAP (in finance) and it's pretty craptacular in terms of user experience. It's generally counterintuitive and obscure. The problem with enterprise software is that the end user doesn't buy it, the buying decision is made by IT departments and executives who generally don't have to interact with the product on a daily basis. It seems to me that the only hope for enterprise is software companies that are almost more service than software. Unfortunately, most businesses need something other than a cookie cutter solution and let's face it, that's what you get from most of these big companies, even the SaaS. One solution is for business oriented programmers to come in and create customized solutions. Believe me, there is definitely a business case for paying a a few good hackers to create customized solutions and manage those solutions on an ongoing basis.
- mrich 15y ago
  > One solution is for business oriented programmers to come in and create customized solutions. Believe me, there is definitely a business case for paying a a few good hackers to create customized solutions and manage those solutions on an ongoing basis. You just described the job of an SAP consultant :)
  - kabdib 15y ago
    This. At SuccessFactors, I once spent about a month figuring out how to install PeopleWare. Somehow word of this leaked out, and I started receiving many cold calls from consultants offering "help" doing the install. [Installing PeopleWare is, by the way, not for the faint of heart. I would start bad-mouthing it here, but then I wouldn't be able to stop. Let's just say that its craptacularness is fractal] To buy something like PeopleWare, you pay several hundred thousand dollars and you get a disc in the mail. You throw away the disc and hire a roomful of consultants, each of whom arrives with their own discs full of better versions and customizations and so forth. Three years later you have PeopleWare running. SAP, same deal (what I hear). I will never work with Enterprise software again.
- AndyNemmity 15y ago
petercooper 15y ago
SuccessFactors, a cloud-based maker of human-resources software Excuse my entirely naive level of questioning, but to someone who's pretty ignorant of the 'enterprise' world, are they essentially an enterprise-level equivalent of a 37signals or similar? They say they have 15 million subscribed users, while 37signals merely says "millions", so perhaps 37signals is worth $450m+? Or is there something about companies like SuccessFactors (perhaps big contracts, lock in clauses, or higher rates) that could lead to such large valuations?
- mrich 15y ago
  They produce software for employees of other companies, where they can track their performance/bonus plans etc. So this number is probably the number of seats solds to companies (I think Siemens was one of their customers).
- VladRussian 15y ago
  the're being bought at 20x this year revenue and 15x of the next year one. It is a bit on the higher end of the range, yet nowhere close to the "hot air" based billion valuations everybody knows about.
- deleted 15y ago
  [deleted]
- hello_moto 15y ago
  That's 15M _paying_ users right there. 37Signals says "millions" of users, active, inactive, paying, and free. Numbers probably way lower than that (10% of paying users?)
  - jonknee 15y ago
    No, that's 15M people who work for companies who are paying users. SF claims to have 3,500 customers.
    - hello_moto 15y ago
      Correct me if I'm wrong. Enterprise SaaS usually charge by the seat (with a few asking for discounts). So at the end of the day whether it is 3.5k customers or 15M users. They all pay. That is my point.
AndyNemmity 15y ago
This is an excellent acquisition. SAP has been unable to deliver as well as they hoped on their "on-demand" promise, and this is a step towards that. My belief is that they are purchasing SuccessFactors more for their experience with the cloud based delivery model, than for their actual software. Which is a great thing I think. Instead of trying to homebrew a cloud which isn't your core business, you buy a group who that's their bread and butter, and you integrate them with your guys, and make a real SAP cloud (on demand) solution. And if their software isn't terrible, that's icing on the cake. Perhaps there's something to take away there, I'm just not familiar with it.
hello_moto 15y ago
One of SF products is written in Ruby on Rails. Interesting. Seems like an on-going trend that Big Co. are using Rails for their newer projects (I believe BusinessObjects were looking for a few Ruby on Rails talent as well not too long ago for their new products). https://performancemanager4.successfactors.com/career?career_ns=job_listing&company=sf&navBarLevel=JOB_SEARCH&rcm_site_locale=en_US&career_job_req_id=12652&selected_lang=en_US&_s.crb=fFQ0ex0EJEgNLe4lpgjRxaAZH50%3d https://performancemanager4.successfactors.com/career?career...
- allertonm 15y ago
  SAP Streamwork and parts of the BI On Demand offerings are written in jruby / rails. (I used to work at SAP on Streamwork, which was done at the former Business Objects development centre in Vancouver.)
- neeleshs 15y ago
  That piece came as part of an acquisition - CubeTree
isthmus 15y ago
What does this mean for their competitors? Taleo, Kenexa, etc.?

70 points by tilt 15y ago

cadr 15y ago

Has anyone here used SuccessFactors? My company implemented it, but it just never really got traction. I'd be interested to hear if anyone had any success with it (no pun intended...)

dekayed 15y ago
We use it for year-end reviews. It is pretty telling that every year before the reviews start, our HR department apologizes for still using SuccessFactors. We have also tried to do more year-round tracking on the progress of business objectives, but that hasn't caught on either.
cdh 15y ago
My employer uses it. I hate it, but then, performance reviews aren't exactly fun stuff to begin with.
arthuryip 15y ago
My previous employer use SuccessFactors. We filled the quarter goals and reviewed them through SuccessFactors. The funny thing is my previous employer was acquired by SAP few years ago too.

mbesto 15y ago

SAP guy here (well I work in the industry). I know Enterprise Software is not highly regarded here on HN, but this is pretty big news considering the onslaught of Workday and SalesForce.com to enterprise software. What is interesting is how SAP manages to handle disruptive technologies to its existing portfolio. Does large enterprise now use SuccessFactors or SAP HCM (via NetWeaver Portal/ESS/MSS)? For anyone interested in the theories of the Innovator's Dilemma this is an awesome example.

neeleshs 15y ago
Ex-Successfactors guy here. It is indeed going to be an interesting thing to watch. Successfactors was innovating big time in terms of usability and flexibility on their ESS/MSS suite during my tenure there.
- teyc 15y ago
  Share an example. I work in an enterprise sw co and I want to learn from their success.
  - teyc 15y ago
    haha. I don't see why all the angst here. The place I work at also has a big VB legacy code base that has to be moved to the cloud. Furthermore, a lot of these large companies start off with a MVP hastily knocked up from 4GL tools and spend a lot of time doing customer development. (remember lean?) Eventually they get big enough to be able to afford proper software engineering processes. Gianforte of RightNow, a big enterprise player, started off in his bedroom with a list of possible features and lots of phone calls.
    - neeleshs 15y ago
      I've no idea why your first comment was downvoted. I've seen SAPs HCM interfaces and SuccessFactor's. The SF one definitely looks cleaner, more responsive (Web 2.0, Ajax and all). This is purely my own opinion. It may not be the case with all products of SF, but definitely the ESS/MSS modules. and you are absolutely right, these businesses lean more towards customer development, and hopefully, probably, catch up on other fronts(processes, eng quality etc) later. When I was there, SF had a pretty reasonable dev process and a reasonable codebase.
      - teyc 15y ago
        HN community tend to have a knee jerk response against enterprise software. They forget that Steve Blank of "4 Steps to Epiphany" made his fortune in enterprise software.

Maro 15y ago

For reference, SAP's market cap is $70B.

deleted 15y ago
[deleted]

kabdib 15y ago

I used to work there, circa 1999. It was a train-wreck (Austin-Hayne merged with SuccessFactors, and we lost most of the SF-side engineers). Lots of horrible, Enterprisey Java code, and a bunch of inherited Visual Basic. I guess they got things under control. Good for them. I'd invested about $1000 in stock before I left; I called 'em up a few years ago (after finding out they were still around) and found out they'd done some kind of restructuring that blew my shares into oblivion somehow. Easy come, easy go.

antimora 15y ago
How is it possible to loose $1000 of stock? I was wondering because I am a bit concerned about my own stocks that I invested.
- idoh 15y ago
  Maybe a cramdown after recapitalization?
- kabdib 15y ago
  Something about a transaction in 2001 that created a new corporation and "extinguished all equity interests in the predecessor companies." I'm sure it's entirely legal and so forth. Let me tell you about the time I turned $10,000 into 17 shares of Oracle . . .
  - antimora 15y ago
    I still don't get it. So it's not that you lost $1000 of SuccessFactors shares, right? It's something you had invested in some other company which was bought by SuccessFactors later, and during this conversion period existing shares were restructured, or something along with these lines.
    - kabdib 15y ago
      Well, something like that -- I wrote a check for SuccessFactors shares. I have a letter to this effect in my files. Later, some mumbo-jumbo happened that "extinguished" the value of these shares. I'm guessing this was some kind of IP transfer, whereupon the "old SuccessFactors" went out of business, and the "new SuccessFactors" -- different company, same name -- arose. Given how "old SuccessFactors" was being run, it doesn't surprise me.

jtchang 15y ago

If you've never worked in big corporate environments you probably are scratching your head at WTF SAP is. Though to be honest most people who have worked with SAP still struggle explaining what SAP is. I personally think SAP is a ridiculously overblown and complicated piece of software. It is just asking for a bunch of smaller companies to come in and slice and dice it apart. However there is huge value in going with a single provider for all your logistics needs. I see this move by SAP as wanting to shore competition up. If SAP integrates this into their product then I'd be happy. The product will get better. If they don't...well...who knows what will happen?

mrich 15y ago
It is hard for startups to replace the real value of SAP, because it is a standard ERP basis+auxiliary apps, all integrated on the same data. You will spend years to build e.g. the payroll system, and then you only have one piece of the puzzle. Thus it has become the standard for large companies (e.g. many companies in BRIC countries are now adopting it). And it is very powerful and stable software, for which you are guaranteed to find experts to fix problems that might put your company's production at risk.
AndyNemmity 15y ago
"Though to be honest most people who have worked with SAP still struggle explaining what SAP is." Completely untrue. People that work at SAP are just like people working in startups or anywhere else. This is just made up fantasy. They can explain SAP, although at times perhaps only their area of expertise. "I personally think SAP is a ridiculously overblown and complicated piece of software." It isn't a piece of software, it's many pieces of software. Some of those are complex, others are not. "I see this move by SAP as wanting to shore competition up." What does that even mean?! The reality is as simple as you'd imagine. SAP is buying SuccessFactor because it doesn't have extensive experience in Cloud based delivery models, and would like to add their experience and infrastructure to SAPs. Just like they did with Sybase, and Business Objects. This is completely obvious, and nothing in your comment made a lick of sense.
- nahname 15y ago

dotBen 15y ago

I think one thing any founder or shareholder of a "cloud-based" startup can take away from this is that the Big SaaS Co's are getting itchy feet and are needing to invest (read:buy) some bleeding-edge cloud technology to feel that they still have skin in this game. There might be some good exit opportunities here. SAP buys SuccessFactors, Salesforce buys Heroku, etc. These companies have money, difficulty hiring a-game talent and a lack of industry foresight. You can help them and they'll no doubt pay handsomely for it.

pinaceae 15y ago
no. SAP is not SaaS, yet. They have an offering, Business on Demand, but the Netweaver core is not SaaS, it is classic on premise. Salesforce is biting into them. Microsoft right now has a strong campaign for cloud ERP, spearheaded by CRM. Oracle is peddling Oracle On Demand. SAP is trying to protect their belly with this move.
- sunchild 15y ago
  A huge part of the ERP business model is on-premises install/config. By leaving implementation to others, traditional ERP vendors avoid the risk of actually getting it to work properly. They're accustomed to selling a box of tools and pointing you to an army of consultants who will gladly take a shot at making it work. By the time you have anything to test, SAP has long since cashed your license check and booked their revenue.

tryitnow 15y ago

Has anyone used either SAP or SuccessFactors and thought "wow, this is really great!"? I use SAP (in finance) and it's pretty craptacular in terms of user experience. It's generally counterintuitive and obscure. The problem with enterprise software is that the end user doesn't buy it, the buying decision is made by IT departments and executives who generally don't have to interact with the product on a daily basis. It seems to me that the only hope for enterprise is software companies that are almost more service than software. Unfortunately, most businesses need something other than a cookie cutter solution and let's face it, that's what you get from most of these big companies, even the SaaS. One solution is for business oriented programmers to come in and create customized solutions. Believe me, there is definitely a business case for paying a a few good hackers to create customized solutions and manage those solutions on an ongoing basis.

mrich 15y ago
> One solution is for business oriented programmers to come in and create customized solutions. Believe me, there is definitely a business case for paying a a few good hackers to create customized solutions and manage those solutions on an ongoing basis. You just described the job of an SAP consultant :)
- kabdib 15y ago
  This. At SuccessFactors, I once spent about a month figuring out how to install PeopleWare. Somehow word of this leaked out, and I started receiving many cold calls from consultants offering "help" doing the install. [Installing PeopleWare is, by the way, not for the faint of heart. I would start bad-mouthing it here, but then I wouldn't be able to stop. Let's just say that its craptacularness is fractal] To buy something like PeopleWare, you pay several hundred thousand dollars and you get a disc in the mail. You throw away the disc and hire a roomful of consultants, each of whom arrives with their own discs full of better versions and customizations and so forth. Three years later you have PeopleWare running. SAP, same deal (what I hear). I will never work with Enterprise software again.
AndyNemmity 15y ago

petercooper 15y ago

SuccessFactors, a cloud-based maker of human-resources software Excuse my entirely naive level of questioning, but to someone who's pretty ignorant of the 'enterprise' world, are they essentially an enterprise-level equivalent of a 37signals or similar? They say they have 15 million subscribed users, while 37signals merely says "millions", so perhaps 37signals is worth $450m+? Or is there something about companies like SuccessFactors (perhaps big contracts, lock in clauses, or higher rates) that could lead to such large valuations?

mrich 15y ago
They produce software for employees of other companies, where they can track their performance/bonus plans etc. So this number is probably the number of seats solds to companies (I think Siemens was one of their customers).
VladRussian 15y ago
the're being bought at 20x this year revenue and 15x of the next year one. It is a bit on the higher end of the range, yet nowhere close to the "hot air" based billion valuations everybody knows about.
deleted 15y ago
[deleted]
hello_moto 15y ago
That's 15M _paying_ users right there. 37Signals says "millions" of users, active, inactive, paying, and free. Numbers probably way lower than that (10% of paying users?)
- jonknee 15y ago
  No, that's 15M people who work for companies who are paying users. SF claims to have 3,500 customers.
  - hello_moto 15y ago
    Correct me if I'm wrong. Enterprise SaaS usually charge by the seat (with a few asking for discounts). So at the end of the day whether it is 3.5k customers or 15M users. They all pay. That is my point.

AndyNemmity 15y ago

This is an excellent acquisition. SAP has been unable to deliver as well as they hoped on their "on-demand" promise, and this is a step towards that. My belief is that they are purchasing SuccessFactors more for their experience with the cloud based delivery model, than for their actual software. Which is a great thing I think. Instead of trying to homebrew a cloud which isn't your core business, you buy a group who that's their bread and butter, and you integrate them with your guys, and make a real SAP cloud (on demand) solution. And if their software isn't terrible, that's icing on the cake. Perhaps there's something to take away there, I'm just not familiar with it.

hello_moto 15y ago

One of SF products is written in Ruby on Rails. Interesting. Seems like an on-going trend that Big Co. are using Rails for their newer projects (I believe BusinessObjects were looking for a few Ruby on Rails talent as well not too long ago for their new products). https://performancemanager4.successfactors.com/career?career_ns=job_listing&company=sf&navBarLevel=JOB_SEARCH&rcm_site_locale=en_US&career_job_req_id=12652&selected_lang=en_US&_s.crb=fFQ0ex0EJEgNLe4lpgjRxaAZH50%3d https://performancemanager4.successfactors.com/career?career...

allertonm 15y ago
SAP Streamwork and parts of the BI On Demand offerings are written in jruby / rails. (I used to work at SAP on Streamwork, which was done at the former Business Objects development centre in Vancouver.)
neeleshs 15y ago
That piece came as part of an acquisition - CubeTree

isthmus 15y ago

What does this mean for their competitors? Taleo, Kenexa, etc.?