Post-acquisition, SAP and SuccessFactors outline where marriage is headed

In what might be the most-jargon-filled press release ever, enterprise-software giant SAP announced Wednesday how it will incorporate and improve SuccessFactors’ enterprise cloud services, after completing its purchase of the company last week.

SAP agreed to acquire human capital-management (HCM) company SuccessFactors for a staggering $3.4 billion in early December. After that announcement, the HCM space exploded with other major buys that could impact SuccessFactors. First, Salesforce agreed to buy Rypple for an undisclosed sum in December, and two weeks ago Oracle plopped down $1.9 billion to buy Taleo.

Over the past few months, SAP and SuccessFactors have been plotting their own integration strategy to better compete against rivals. The companies plan to find new ways to bridge SuccessFactors’ cloud-based Business Execution Suite (BizX) apps with SAP’s human capital management software. To do this, SuccessFactors CEO Lars Dalgaard will begin leading SAP’s cloud software strategy. SAP plans on “boldly investing” in SuccessFactors’ Employee Central product to establish it as “the go-forward core human resources offering in the cloud.”

Unfortunately, I didn’t get to chat with Dalgaard about what’s coming next, but I did get to speak with two execs who explained what the two companies were brewing. Sven Denecken, SAP’s VP of cloud strategy, told me that there is only a 14 percent overlap where companies are using the SAP and SuccessFactors software side-by-side. Ideally, the company is seeking to better integrate SAP’s mostly on-premise software and SuccessFactor’s cloud-based software, so that large enterprise customers will want to have both SAP and SuccessFactors software. Denecken also noted that SuccessFactors’ strong cloud products will help give SAP a framework for moving its local software experience to the cloud.

SuccessFactors Product Marketing VP Jeff Kristick proudly boasted that SuccessFactors was better than all of its rivals. I pointed out that its new parent company still had some shortcomings in the cloud. Workday, for example, offers payroll software completely in the cloud, where SAP’s payroll software is still on-premise only. That means you’re not tied to any single device with that important HR data. Kristick’s response: Workday is only available in two countries, whereas SAP is legitimately global. Touché.

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