SuccessFactors mints ‘business execution software’

If there is one corner of the IT industry that has benefitted from the recession, it is the on-demand human capital management (HCM) applications market, which sits at the intersection of two converging trends. First is the move away from capital expenditure towards operational cost in IT procurement. This has driven growth for software-as-a-service vendors, whose customers pay in monthly installments.

The second trend is the almost universal imperative to reduce headcount. HCM tools such as talent or performance management applications help organisations discover who their most valuable employees are.

These trends help explain on-demand talent management vendor Taleo’s recent 40% quarterly revenue hike to $49 million, and SaaS performance management supplier SuccessFactors’ 44% revenue rise to $37 million for its second quarter of the financial year. Thanks to winning a 420,000-seat contract with Siemens, which its says is the largest SaaS deployment in the world, the latter company grew its EMEA revenues by 169%. All this was achieved in a period during which the industry as a whole, as measured by the Information Age Index, shrank by around 8%.

And now, while many traditional vendors are battening down the hatches SuccessFactors is planning to launch not only a new product line but what it describes as an entirely new category of application; business execution software. HCM tools, which measure performance, manage personal goals and support employee reviews, are today used most commonly in a human resources capacity.

But SuccessFactors believes that these functions are in fact a part of everyday business operations. It is therefore launching a new set of tools that build upon its existing software to create a platform for ‘getting stuff done’; this involves project management, collaboration, goal setting, social networking, talent and performance management and more.

This as-yet- untitled platform promises to embed strategy and performance management into day-to-day operations. The potential opportunity for this category of software is, in theory at least, enormous. “We believe that 70% of an organisation’s operational cost goes on getting stuff done, whether it is sales or marketing or product development,” says Paul Albright, SuccessFactors’ chief marketing officer.

Bruce Richardson, chief research officer at analyst company AMR Research, certainly sees the use case for SuccessFactors’ new platform. “What this does is connect strategy with real execution, by decomposing everything into a process or a sub-process,” he says.

The system will certainly allow managers far greater scrutiny of their subordinates. But rather than resent this closer surveillance, Richardson believes that staff may well welcome the clarity this could bring to their job role. “In many cases, employees don’t know what exactly they are supposed to do, and how they are being judged. This would help them see the finite goals they expected to achieve day-to-day,” he says.

It’s a bold bid from SuccessFactors: the new platform represents a new model for managing a business. But it is those technology vendors that succeed in business that get to steer the innovation agenda; SuccessFactors therefore has as valid a claim to the rudder as any.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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