Has SuccessFactors Lost to its Innovative Roots?
I was first introduced to SuccessFactors back in 2004. The company was 30 employees, operating out of their venture capital firm’s office in Silicon Valley, and doing less than $15 million in revenue.
What impressed me about SuccessFactors back then was that they were different. The product was intuitive, simple and easy to use…all characteristics that were truly leading the market at the time. They were on the bleeding edge of usability and their SaaS delivery model, although not unique, was true multi-tenant. They were also pioneering the market in talent management functionality…goals, performance and succession management.
Fast forward to 2009. The market has changed. Competition is coming from every angle. Modular functionality, like performance management, has been somewhat commoditized and replicated in some shape or form by most every talent management vendor. But has SuccessFactors continued to be “different” while everyone was catching up?
Over the past few years, many would argue SuccessFactors has not maintained their innovative ways. Sure, they have gone wider (more modules) and deeper (great functionality within the modules) than most of their competitors. With recent ho-hum releases recently such as EasyReviews, Business Performance Accelerators, and Stack Ranker, though, the company’s innovation has been relegated to what one client has recently described as, “…forms and changes in provisioning to support marketing programs”.
Is the innovative culture still there? I think so but it will be interesting to get a pulse on the company this week at their user conference in NY. With the highest growth rates of any SaaS vendor, a large and growing customer list (did you seen the Siemens announcement?), and subscription users surpassing 4.5 million, it is obvious the company has been doing something right. I do think, though, the regulations of being a public company combined with the growing demands that come from servicing 2,000+ customers has stifled some innovation. Frankly I think the next wave of growth for SuccessFactors, or any talent management vendor for that matter, will be predicated on stickiness (going back to the application every day instead of every year) and intuitiveness (taking process out and adding intelligent decision support).
Where does SuccessFactors go from here? Does the recently release of Employee Central, for all intensive purposes a lightweight HRMS solution, signal the direction of the company? Will they ever get serious on social collaboration like many of their competitors?
All good questions for debate later this week in New York. If you are going to be at SuccessConnect New York let me know and we can discuss these and many more topics live.
Technorati Tags: successfactors, innovation, successconnect
8 Comments Add your own
1. Naomi Bloom | June 16th, 2009 at 8:08 am
Innovation isn’t the end game. Profits are. And that’s not just for public companies; it applies equally to KI. So there’s a very delicate balance that even the most innovative HRM software and outsourcing vendors must achieve — sufficient innovation to lead the market and their customers to better outcomes FOR WHICH THEY ARE WILLING TO PAY but not so much innovation that the market and their customers are confused, don’t adopt, OR FOR WHICH THEIR CUSTOMERS AREN’T WILLING TO PAY. I give SuccessFactors a lot of credit for working hard at that balance even as some members of their leadership may find that kind of balancing act personally constraining. What I wish that SFSF and the entire HRM software community would focus on a lot more is embedded intelligence, which includes actionable analytics, aimed at improving the practice of HRM and its business outcomes. But any such focus depends on an HR community that can provide the intelligence that’s specific to their organization, e.g. identifying positions that drive business outcomes, modeling the KSAOCs of those positions, determining by what methods those KSAOCs can be recognized/developed/rewarded, etc. And yes, I’ve been pushing for HR to do the heavy lifting as long as I can remember.
2. Jason Corsello | June 16th, 2009 at 8:52 am
Great points Naomi. Innovation is always a delicate and fragile balance that becomes more difficult with customers, profits, and success. My post was not to be critical of SuccessFactors. Good, bad or indifferent, their heritage of innovation surpasses most in the HR technology space. With that, though, comes expectation from many (like myself) to keep a continued pace of highly innovative and unique products.
At some point, HR success must not be solely focused on process efficiency but surpassed by driving intelligent and actionable business-centric decisions (ie with embedded analytics). Like you, I think the entire HR vendor community could be doing much more to drive outcomes not process.
3. Grandpa | June 16th, 2009 at 1:05 pm
1. In 2004, according to their publicly available S-1 filing, SF did $10.2 Million in revenues and had $17 Million in total expenses. That’s hardly 30 employees. At $120k per head fully loaded, that’s 140 people and growing..
2. The company was originally incorporated in 1993. They had already been in business for 10+ years by 2004. Do you really think they were working out of their VC’s office space?
Please try to have some respect for the accuracy of data.
4. Jason Corsello | June 16th, 2009 at 6:15 pm
“Grandpa”-
Thanks for your comment. Last I checked, $10.2m is “less than $15m”, but thanks for clarifying. Secondly, thanks for forcing me to pick up their S-1 (its been a while). The company’s total operating expense in 2004 was $11.1m not $17m. I also just double-checked some past notes and the company was 108 employees at the end of 2004.
Additionally, the company was incorporated on May 23, 2001 as Success Acquisition Corporation (they acquired performance appraisal IP so their is some heritage to the products) and later officially changed its name to SuccessFactors in 2007 (although conducted business during the whole time as SuccessFactors).
Lastly, since I was actually at Greylocks (one of their VC firms) office back in 2004, I am quite certain they were working out of there. Obviously I must have met them in early 2004 before they had the larger employee size and moved into their location down the street.
Thanks for reading and keeping me honest.
5. Bill Kutik | June 17th, 2009 at 5:32 am
Jason — SFSF has a much more complicated early history than either you or Grandpa describe. The rebirth of the company in this decade included merging with a successful company from the previous one: Austin-Hayne, which I believe specialized in assessments. Perhaps Naomi can come back and fill out my memory.
6. Jason Corsello | June 17th, 2009 at 5:57 am
Yes Bill…SFSF has a complicated history dating back to 1993 centered around skills management and performance appraisals. In fact, at one point of time, the company sold its software in a nice shrink-wrapped box similar to Microsoft Office. Consider that for one of the software industry’s most noted SaaS market leaders.
I do consider 2003 though as a restart of the company because I believe they purchased the IP assets to the previous company (former Austin-Haynes and later Success Factors Systems) that we all know now as SuccessFactors, and really when the true innovation began to occur.
7. Edward Brown | June 19th, 2009 at 7:16 pm
Jason, I like that you mentioned the importance of stickiness. I agree, this is the next frontier. Apps will be judged based on breadth of user adoption and frequency of use, where “daily” will be good and “living in it constantly” will be better. The apps that achieve this, through seamless collaborative and social frameworks, will take the lead.
8. Grandma | June 25th, 2009 at 6:08 am
Jason, great post on Success Factors. I do admire SF in many ways - you are correct on their latest innovations. Stack Racking is technology for technology’s sake. Maybe the name is a misnomer but I would have rather seen a calibration engine instead. Focal reviews, a SF specialty, have many problems – one of those is brining in business-level data from systems that measure performance on a daily/weekly basis. I came across an early customer (2001) of Success Factors in the banking industry. They said they really liked the product but the adoption was poor. Business managers felt that the SF system basically automated a broken performance process. There was much reluctance to even use it because so many other systems measured performance. Bringing in this data transactionally is very difficult in a SaaS environment.
I wrote about “transactional” performance awhile back. There is a very good comment from from an incentive compensation vendor who thinks his product tackles performance as well.
http://grandmaslaw.com/?p=54
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