Truth, Lies and Vendor Mudslinging - SuccessFactors Sues Softscape
Last week, a document began circulating around the industry from an “anonymous” source attempting to highlight SuccessFactors failed implementations, unhappy customers, and product “lies”. The document, which I received, represented many factually incorrect statements about SuccessFactors and they, along with many other vendors, took the circulation of this document very seriously.
This morning, SuccessFactors filed a lawsuit against Softscape, considering them the source of this misleading information. Vendor mudslinging is not new but today we have reached an all new low. This is a very serious allegation and hopefully will force all vendors in the market to reconsider how they compete and share competitive information with their customers and prospects.
One thing I do know for sure….our enterprise customers despise when one vendor bashes another. Frankly, its bad salesmanship, and more often than not, comes across as an act of desperation. Enterprise customers are not dumb and mudslinging is not only bad practice but ultimately insulting to your buyer.
As I have advised many of my vendor friends, the best practice in any competitive sale is to compliment the other vendor and their product. Not only does it show the confidence around your product but shows the high standards and culture of your own company.
UPDATE (3/12/2008): Softscape Responds to SuccessFactors Claim
Softscape, the global leader in integrated people management software, today released this statement in response to the lawsuit filed by SuccessFactors that was announced earlier today:
“The facts in this case will speak for themselves. This is a frivolous public relations tactic without merit or foundation, and we will defend all of the claims vigorously. The SEC maintains that publicly traded companies have the fiduciary obligation to their shareholders and the marketplace to disclose absolute facts. As a profitable and recognized category leader in the human capital management industry, our focus is not competitors. Our focus is on continuous product innovation and maintaining the highest customer satisfaction and retention rates.”
What the hell…a counter-claim of securities fraud? Not the response I would have anticipated.
UPDATE 2 (3/13/2008): SuccessFactors Provides Update in Lawsuit Against Softscape
“SuccessFactors, Inc. (NASDAQ:SFSF), reaffirms its commitment to vigorously prosecute the lawsuit filed against Softscape, Inc. Sworn testimony from the general counsel of Softscape confirms that the presentation anonymously sent to many of SuccessFactors’ customers and prospects was authored by Softscape.
Lars Dalgaard, chief executive officer for SuccessFactors, said, “While we would rather devote all of our energy and attention to making our customers wildly successful, we have a responsibility to the more than 700 highly motivated SuccessFactors employees around the world, as well as our loyal customers, investors and partners, to protect SuccessFactors’ reputation from such a malicious attack.”
UPDATE 3 (3/14/2008): Softscape Successful Against Rival SuccessFactors’ Frivolous Lawsuit
Softscape,the global leader in integrated people management software, today released this statement in response to the lawsuit filed by SuccessFactors (NASDAQ:SFSF) that was announced March 12, 2008:
“The SuccessFactors lawsuit remains a frivolous abuse of the legal system, and we will defend ourselves to the fullest extent. The announcement released by SuccessFactors on March 13, 2008 deliberately misstated Softscape’s general counsel’s testimony, and ignored key facts contained in the complete statement. (http://www.softscape.com/pdf/doc/TRO_Declaration080312.pdf)
“Softscape does not condone the dissemination of the document in question. Although the document was based on substantiated facts, it was intended for internal use only and was not designed or intended for external distribution. We are conducting our own thorough investigation to determine how an internal document ended up in outside hands. “Yesterday, Softscape was successful in having the court narrowly limit the restraining order.(http://www.softscape.com/pdf/doc/TRO_Decision080313.pdf)
“It is common in a highly competitive market for vendors to review each others’ presentations, webinars, and demonstrations and have competitive sales tools. The SuccessFactors lawsuit is an act of desperation by a hostile industry predator.”
UPDATE 4 (3/14/2008): SuccessFactors Granted Temporary Restraining Order Against Softscape
SuccessFactors, Inc. (NASDAQ:SFSF), today announced that the United States District Court for the Northern District of California has granted SuccessFactors a temporary restraining order in its lawsuit against Softscape, Inc.
The order prohibits Softscape from (1) distributing any product or document using SuccessFactors’ trademarks or trade secret information; (2) accessing for an improper reason any computer system owned or operated by SuccessFactors and subject to restrictions on access without SuccessFactors’ express written authorization; and (3) making any statements that purport to be made by anybody other than Softscape or its agents.
The court ruled that SuccessFactors, “has made a sufficient showing that serious questions regarding the merits exist and the balance of hardships tips sharply in its favor to justify granting the relief it seeks.”
Technorati Tags: SuccessFactors, Softscape, talent management, lawsuit
29 Comments Add your own
1. thomas | March 12th, 2008 at 9:27 am
Well put Jason…
2. Syris | March 12th, 2008 at 9:34 am
The sad reality is that it can indeed be effective to play the vendor-bashing card as this is sometimes the edge that is needed in a particularly competitive situation. The big mistake in this case was to (allegedly) engage in a systematic smear campaign (not to mention violating trademark and copyright laws in the process!) This is simply a tactic that gets used in the absence of actual competitive functionality or distinctive innovations. I sincerely hope that these allegations are untrue, but if that’s not the case, then the defendant deserves what’s coming to them.
3. Meg Bear | March 12th, 2008 at 11:52 am
It is pretty sad that you have to explictly tell people that mudslinging lacks class. Have to say I find that disappointing, especially in the Talent Management space when there are so many good vendors out there doing innovative things.
It is pretty sad that some are forgetting that a rising tide lifts all boats and that what we really care about is helping our customers recognize the business value in a Talent Management strategy. If we get that right, there will be plenty of business to go around for all.
Thanks Jason for reminding all to keep the game clean.
4. Jason Corsello | March 12th, 2008 at 12:04 pm
Great quote Meg. Thanks!
5. looking | March 12th, 2008 at 12:33 pm
If these allegations turn out to be true, then it be true Softscape has gone too far. But anyone who has recently evaluated talent management software from a number of vendors is aware that Successfactors is a practiced mudslinger themselves.
6. Marketing as Blood Sport &hellip | March 12th, 2008 at 1:33 pm
[…] on March 12, 2008Filed Under Marketing | Jason Corsello posting an interesting piece about enterprise software vendor bashing which tied in with the whole 6A/Wordpress food fight the […]
7. Lisa | March 13th, 2008 at 3:18 am
Wow… I go away for a few days. All I can say is I have always been served well by speaking positively about my competitors. I don’t think taking the high road has ever hurt anyone.
8. Mark Stelzner | March 13th, 2008 at 6:29 am
I do not sanction this type of behavior but have seen it raise its head in less overt forms from nearly every human capital vendor in the space. The sales term is FUD - Fear, Uncertainty and Doubt - and it is applied typically in a last minute appeal to cause the buyer to pause and refocus on the land mines sales has attempted to place around their competitor.
If Softscape not only sanctioned but organized this campaign, it is an extremely brazen attack. When you have 15 minutes, I’d suggest you read the fully filed claim at http://www.successfactors.com/docs/complaint.pdf.
Quick question Jason - does Knowledge Infusion work with both vendors or only SuccessFactors?
Best,
Mark
9. Jason Corsello | March 13th, 2008 at 7:01 am
Hi Mark,
I have read the complaint. I’m not sure if you are suggesting we are pro-SuccessFactors but the answer is no. Similar to Inflexion Point, clients pay us for our insight, intelligence and opinion. Knowledge Infusion works with practically every HCM and talent management vendor in the space. We are 100% vendor agnostic and champions for our enterprise clients. Period.
We do have Center of Excellence membership services available to vendor-clients for next-generation market research purposes. If you are asking if either Softscape or SuccessFactors are members of the Center of Excellence, the answer is no.
Thanks for your question. Hope all is well.
Jason
10. Dorian | March 13th, 2008 at 7:30 am
I actually received the “document” (actually a pdf version of a PowerPoint presentation) last week via email from “John Anonymous”. It was the strangest thing to see this post. The whole thing smacked of trash talking to me and I certainly wouldn’t take anything received in such a manner with any seriousness. I thought it was odd that I received it directly through email and I wondered long and hard where it came from, given that my organization is considering the Performance Mgmt offerings of both Softscape and SF. Very interesting…
11. Brian Sommer | March 13th, 2008 at 8:06 am
Jason - I’m sure you know you (and I) were quoted in an HR Executive piece re: this issue. The link for this is: http://www.hreonline.com/HRE/story.jsp?storyId=80084193
Their article has some additional perspectives neither of us covered (yet!).
12. Lisa | March 14th, 2008 at 5:23 am
Having looked at the latest assertion that the presentation was for internal use only, I have a couple of questions.
1. Why does it have the SF logo but not Softscape’s logo anywhere?
2. Why doesn’t it have a footer that says “for internal use only”
3. Why does it say “your data security is mixed with others” on slide 24 - the meaning of ‘your’ being a customer, meaning to me that this was designed to show to a prospect?
13. Jason Corsello | March 14th, 2008 at 5:45 am
Great points Lisa. They use “you” and “yours” throughout the document.
14. Bernie | March 14th, 2008 at 4:55 pm
Where can a copy of the presentation be viewed.
15. Martin Snyder | March 15th, 2008 at 7:34 am
Sales is like politics- negative attacks do work with a subset of buyers, but its hard to keep the mud off yourself .
Over the years, I have casually broken down buyers into three groups: Innovation buyers, who always ask first- what does this do ? Value buyers, who always ask first-what is the ROI with this? and Safety buyers, who always ask first- who else is using this?
Negative selling works well with Safety buyers, not so much with the others. Softscape has a point that all firms engage in competitve intel operations- from time to time we have the distinct feeling that we are being ’shopped’ by strawmen.
I think the ultimate measure of this case is the actual content of the Powerpoint - if it is factual or not- and the means used to obtain the information; did Softscape or its agents misrepresent themselves to any party to obtain it, or where they given the information by prospects, other competitors, etc ? Should be interesting to see how the law is applied to these facts.
I am somewhat struck by the apparant hubris of the SuccessFactors CEO when he says “While we would rather devote all of our energy and attention to making our customers wildly successful” .
If someone selling me something said that to me, I would throw them out of my office. My success does not turn on your widget, period.
16. Martin Snyder | March 15th, 2008 at 7:52 am
I read the complaint- does not look too good for Softscape on the trademark and computer access matters. The ‘facts’ as described seemed to fall within (or near) the usual range of sales communications; debatable, but hardly insane rantings.
17. Bill Kutik | March 17th, 2008 at 10:14 am
Now that Softscape has admitted writing the document for internal use, the question comes down to who actually distributed it?
Since it was e-mailed through a gmail account, I was surprised to see SuccessFactors getting subpoenas for Verizon and Comcast (the two carriers used by those allegedly researching the document), and not for Google.
That’s where the answer is to be found and, perhaps, the next shoe to drop.
18. Jason Corsello | March 17th, 2008 at 3:04 pm
Bill…I would disagree. Creating an invisible Gmail account in quite easy that would have no identifable tracking information. If I was John Anonymous, I would have gone to an internet cafe far from my house, create the dummy Gmail account, and sent the document from there. Sure they could track the IP from the location/Gmail account but it would be useless unless it is directly tied to a PC/server of a Softscape employee.
We will find out soon enough if John Anonymous was this smart.
Jason
19. Phil Fersht | March 17th, 2008 at 6:05 pm
They have internet cafes in Madison CT?
20. Roy | March 19th, 2008 at 1:26 pm
Well now that Softscape has admitted that they created the document, it really doesn’t matter who sent it. I’m sure the document didn’t just mail itself, and an employee is still an Agent of Softscape and thus Softscape is still liable.
And if it was mailed from a coffee house (as some have proposed). I don’t think a jury is going to think that the presentation got thirsty.
Since this is a civil suit and the standard for liability is 51% (preponderance of the evidence) I think Softscape’s admission of creating the document brings the percentage to at least 60%.
21. Marc | March 20th, 2008 at 7:14 am
Ridiculous probably isn’t the right word, but I think both SFSF and Softscape, really look poor. Talk about taking the wrong approach…
Both of them have taken a scorched earth policy to another level by waging a public battle rather than a private one. A better approach would have been for Softscape to publicly condemn the PPT and its dissemination; then launch a rigorous internal investigation to ferret-out what happened on behalf of SFSF. SFSF should have privately handled their business rather than posting press release after press release in an apparent attempt to get back at Softscape.
Albeit, I guess it’s difficult to see straight when you’re seeing red. The old adage of “Any publicity is good publicity” clearly isn’t true in this case.
22. Bernie | March 20th, 2008 at 1:50 pm
Marc:
You should look at some of the prior interactions between SuccessFactors and Softscape. This has been brewing for a while.
23. Roy | March 31st, 2008 at 1:28 pm
http://www.successfactors.com/press-releases/detail/?id=1123548
Thats the latest. Apparently, Dave Watkins owns a shoe company.
24. tom obrien | April 6th, 2008 at 9:23 pm
Jason:
Just saw this - and it reminds me if a VERY large deal I worked. We were in finals and the only other competitor was a company I had recently left. I knew ALL of their dirt. (>30k ees, total ben admin deal)
I wanted (in the worst way) to say something - but my better judgement prevailed. I never said a word - not even that I had ever worked there.
We won the deal - and in talking to the buyer later - they or course knew I had worked there - and he told me in no uncertain terms how that would have ruined our credibility.
Sell yourself - and let your competition do likewise. If you are talking about them you are in trouble.
TO’B
25. WrorOraWAceri | May 5th, 2008 at 6:13 pm
No problem is so formidable that you can’t just walk away from it.
– C. Schulz
—————————————————————————————————-
http://xanga.com/emoryroyzf
26. Phil Deys | May 30th, 2008 at 2:13 pm
“No problem is so formidable that you can’t just walk away from it.
– C. Schulz”
If so, there would be a lot less lawyers in the world. Not a bad notion…
Any updates on this thing? Since the initial flurry I haven’t heard anything.
27. Phil Deys | May 30th, 2008 at 2:30 pm
Sorry about the double post, but I found this article to be interesting. The headline is that the SF move (to sue) could backfire, but then the article does very little to back up the claim. I think the suit does nothing to help or hurt either company in the end. I agree with the above posts that thinking individuals who got the document will see it for what it is. Softscape’s reputation will not be overly impacted since prospective buyers won’t even know about this suit in a few months, if ever.
http://www.allbusiness.com/legal/trial-procedure-suits-claims/10205637-1.html
28. Phil Deys | June 5th, 2008 at 4:52 pm
Well, here’s the update. “Replace All” the company names and right back atcha.
http://www.softscape.com/us/pr2008/pr_08_0605_sf-2008ma-complaint.htm
A shame these guys can’t get over themselves and just get back to the business of creating a better product than the next guy. Good news for the other HCM vendors as these companies waste their time and money on lawyers.
29. Jason Corsello | June 5th, 2008 at 8:42 pm
Just read the complaint. 1. Seems to me, Softscape should be going after the individuals that were under NDA not SuccessFactors. 2. Last I check, attempting to log into a secure site was not against the law. 3. Many products on the market look similar. Unless Softscape patented some of the things they are claiming with SuccessFactors stole with Ultra release, it is meaningless.
Is Softscape’s countersuit attempting to increase any negotiating leverage they have against the original suit?
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