Air Product’s Sherryanne Meyer laughs when she recalls the question she posed to her SAP sales rep not too long ago. Seeking succession planning software, SuccessFactors was one of the vendors that long-time SAP HCM customer Air Products considered and liked, especially for its nice visualization capabilities. Her company, however, always strives to use its existing SAP software wherever possible.

“Can’t you just buy one of these other companies?” Meyer, who is manager of IT HR and Applications Solution and Delivery at Air Products, says she asked the rep. Air Products sells atmospheric gases, process and specialty gases, performance materials, equipment and services.

SAP’s acquisition of SuccessFactors—announced Saturday—not only boosts its cloud cred, but gives SAP a solid HR portfolio and shows that it is committed to enhancing and delivering more functionality in its line of HCM products, say several customers and analysts. Companies have moved past the stage of simply managing HR data, and now want to make better decisions with it—in terms of compensation, talent management and coming to grips with the changing workforce. And SaaS deployments are in many cases the route they’d prefer to take to get there.

That said, several questions remain around how SuccessFactors’ products are harmonized with current and planned SAP products, whether SuccessFactors-SAP integration will be as simple as promised, and how current HCM partner products like Nakisa will fare in SAP’s future plans.

“Customers have already been confused about the SAP roadmap,” says Jarret Pazahanick, a long-time SAP HCM consultant, managing partner of EIC Experts and SAP mentor. “I see it as an imperative that SAP makes those decisions and comes with a very clear decision to the market.”

Integration, Roadmap Top Concerns

Integration concerns top the list. SAP’s stated plan with its line of business on-demand strategy has been that its applications would augment on-premise functionality with seamless integration between the two. During a call with analysts and the media announcing the acquisition, SAP executives pointed to the 14 percent of SAP customers—including multinationals such as Siemens, Walmart and Hilti—who have already integrated SuccessFactors with their SAP HCM back-end without much trouble. SAP Co-CEO Jim Hagemann Snabe said integration would be “out-of-the-box” and “easier, better and cheaper” than anything else.

But some question those claims. Up until now, SAP was trying to sell its own talent management products against SuccessFactors—or sell those products from partners such as Nakisa to its customers, Pazahanick points out. Customers using SuccessFactors now have built their own interfaces between SAP and SuccessFactors.

Plus, there’s other “technical heavy lifting” to do in the background, says Gartner Research Vice President Thomas Otter. SAP now has several different HR technology platforms—ERP HCM, Business ByDesign, architectures for on-demand HR BI and analytic products, and now SuccessFactors. What they decide to move forward with, and more importantly, when, is critical to communicate to its customers as soon as possible.

“Communication with mergers hasn’t been a strong point if you look to the [BusinessObjects] acquisition,” Otter says. “Sybase was better. But these things overlap much more than Sybase does.”

Such product roadmap concerns remain big questions for SAP customers. What about Nakisa implementations, one of SAP’s current talent management partners? And how should customers approach enhancement packages that augment much of the functionality in their on-premise systems that SuccessFactors could deliver on-demand?

Another matter for customers is the fate of Career OnDemand, the on-demand talent management product currently in development by SAP (due for release in 2012). Meyer had been consulted for initial input and feedback on this product a year and a half ago. What she saw so far was a really collaborative, innovative product that modeled a much more intuitive workflow, she says. It enabled more of a “living appraisal” approach for customers, which allowed managers and employees much more collaboration around goals and metrics, rather than a twice a year look at performance.

However, what SAP has worked on so far might not be a total loss. Companies typically prefer to put their own stamp on compensation and performance management software, Meyer says. But succession planning is more black and white. SuccessFactors has a strong suite here, to which SAP brings that strong customization background.

Deal is Good News for SAP Customers

Even with those critical outstanding questions, the SuccessFactors acquisition is definitely a positive for customers, those interviewed agree. It not only adds solid SaaS talent management capabilities but an e-learning management system in the Plateau acquisition and workforce analytics in Inform, acquisitions SuccessFactors completed in 2011 and 2010, respectively, Otter points out.

Longer term, there’s the possibility of giving customers the choice of an entire, on-demand HR suite in SuccessFactors’ Employee Central. On Monday’s analyst and press call, SuccessFactors’ CEO Lars Dalgaard said that software could become an alternative to SAP’s on-premise HCM suite.

In all, most SAP watchers agree that the SuccessFactors buy is a smart move by SAP. Human resources technology has been, in many senses, the first battleground for newer technologies, Otter says. After all, the first business applications were payroll. The first client-server applications were HR internal applications. And the first web-based applications behind the company firewall were employee self-service ones.

“Generally I’m positive about this,” Otter says. “It shows the importance of HR technology, and it validates SaaS for this space. And it shows that SAP is facing up to Workday, and creating a challenge to Oracle as well.”

Some SAP customers feel the same way.

“In last few years, I’ve seen SAP pay attention to people products; they’re really working on them,” Meyer says. “When I first joined the HCM community, we said, ‘SAP why aren’t you paying attention to us?’ In the last couple of years, SAP’s ramped it up, and this reinforces that.”

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2 Comments for SAP-SuccessFactors: Good News, But Integration, Roadmap Concerns Remain

Paul Hamerman

Nakisa is not a talent management solution, it’s a UI enhancement – hierarchy visualization.

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