Siemens AG has signed a software-as-a-service contract with SuccessFactors for 420,000 employees worldwide, marking one of the biggest deals yet for SaaS. The deal, announced Monday, and others like it show that large companies are becoming more comfortable using SaaS for workforce applications.
The deal calls for Siemens' employees and their managers to use SuccessFactors' talent management SaaS to manage goals, performance, compensation, recruiting, and more, in 80 countries and in 20 different languages, replacing seven existing systems. The size of the deal wasn't disclosed. The Germany-based electronics and engineering giant reported nearly $111 billion in revenue last year.
Two months ago, SuccessFactors announced a deal with "one of the world's largest retailers" for more than 300,000 users. (Based on follow-up discussions with SuccessFactors executives, InformationWeek believes this customer to be Wal-Mart.) SuccessFactors has more than 30 customers with more than 25,000 users, including Textron and Ingersoll Rand.
In the past two years, most of the big wins for SaaS have been for workforce-related applications. Flextronics and Chiquita Brands, for example, signed on for 200,000 and 26,000 seats, respectively, of Workday's Human Capital Management SaaS last year, for managing attendance, benefits, compensation, and performance.
The most obvious reasons for the size of these SaaS deals is that workforce applications are now designed to be accessed by every employee in a company -- not just managers and human resources staff -- while other types of SaaS offerings are designed for specific groups of employees within a company (such as CRM for salespeople and customer-service reps).
But there are other reasons why large companies are becoming comfortable with SaaS for workforce management. Even while businesses realize the importance of linking employee performance to revenue and profits, workforce apps aren't necessarily integrated with those that run a company's operations, such as financials, supply chain, and business intelligence apps. Companies are more likely to embrace SaaS if they can bypass any integration issues with their core business applications.
That doesn't mean companies that choose to have their workforce apps hosted, managed, and updated by a vendor, rather than by their IT staffs, view them as less important. In fact, Siemens calls the SuccessFactors selection a "strategic board-level initiative," and part of its FIT4 2010 company-wide program. This program calls for Siemens to focus on its strengths in key industries, foster a performance-based and ethics-minded culture, and innovate by linking technology and business ideas, in order to increase revenue, profitability, and improve cash flow.
Paul Albright, chief marketing officer at SuccessFactors, says that the company has 4.7 million people logging in to its performance management system, which is supported by four geographically dispersed data centers.
While CRM such as Salesforce.com gets the most attention, "SaaS has become a very accepted way of delivering" workforce applications, he said. "This is not just for sales or a specific function. The best analogy is the BlackBerry. We're in front of the eyeballs of every person in a company."
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