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2/16/2010
07:28 AM
Bob Evans
Bob Evans
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Global CIO: SuccessFactors Is The Future Of Business Software

SuccessFactors' compelling product strategy, customer-centric mission, and dynamic CEO are turning the software business upside-down.

SuccessFactors' annual revenue is only about 1/100th of SAP's, it has only about 700 employees, and it has only one CEO.

But SuccessFactors should be SAP's worst nightmare.

And SuccessFactors should also be (or is) disrupting the sweet dreams of many other traditional enterprise software companies because it has not only created a compelling new suite of products around the vital need for business execution but is also redefining, at a fundamental level, the buyer-seller relationship in the market.

I fully realize the scope of the claim I'm making about the impact SuccessFactors is having and will continue to have on this business, and I realize that some of you might be asking yourselves, "Who in the heck is SuccessFactors?" But I'll bet that number is a lot smaller than it was six months ago, and that by mid-2010 there will be very few business-technology executives who don't know who the heck SuccessFactors is.

Here are four of the primary reasons behind this audacious claim I'm making:

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1. SuccessFactors' human-dynamo CEO has created an intensely customer-centric culture and a fresh new category called Business Execution for which most customers have a burning need.

2. The company's growing rapidly (37% in the nuclear winter that was 2009) and creating a rabid customer base that includes many well-known global corporations (much more on them in a moment).

3. It has no on-premises legacy—technical or financial—to deal with, is 100% in the cloud, and has established a significant recurring-revenue stream.

4. SuccessFactors is reaffirming to customer-side CEOs and CIOs that the new wave of cloud-based enterprise-software companies does business in a strikingly different way than do the traditional on-premises vendors.

At the center of this creative destruction is founder and CEO Lars Dalgaard, who launched the company nine years ago and continues to fuel it with a zeal and a freshness that is sorely lacking in an industry that often seems demand more of its customers than it is itself willing to deliver.

Dalgaard communicates in a way that is more than talk—it's more like he gushes emotion and ideas and metaphors, peppering his comments with frequent allusions to passionate people, the primacy of the customer, and the boundless opportunity that exists today for companies willing to suborn their desires and instead meet the needs of those customers. Here are three classic examples of high-octane Dalgaardisms:

--"The big software companies don't have a clue because they stopped listening to their customers a long time ago," Dalgaard said in a recent phone conversation. "So for them, it's like being on the Titanic—when they finally do hear something, all they can say is, 'Hey—that felt like a bump.' Or they'll say, 'Dude, look at us, we're going 180 miles per hour'—yeah, but they don't know they're headed straight toward the Grand Canyon."

--"Our team really delivered a fantastic year in 2009 growing the top line with less expense than the previous entire year. The team is cranking on 2010, we are fired up. The momentum is like a tsunami wave. Many companies gave up 2009, but like in sports SuccessFactors doesn't build character it reveals it. SuccessFactors' people took market share in 2009. SuccessFactors added 520 customers in 2009, bringing our total customer count to greater than 3,000. Today SuccessFactors has the most unique paying users in the business Cloud with more than 6 million users." (From SuccessFactors' earnings call with analysts earlier this month per the transcript at SeekingAlpha.com.)

--"When we were getting close to closing one of our biggest deals, we were sitting around a big table with their top execs, and I felt like Bruce Lee because it seemed like everybody was coming at me at the same time. They were asking me where I was born and where I went to grade school and I said, 'Guys, I'll be happy to answer any questions you want, but why does this matter?' And they said, 'Lars, we're considering entering a 20-year or 30-year commitment with you and your company, and this relationship will have exposure to every single employee in the company. So that's why we need to be sure we really know you.' "

Fueling the fiery talk is a suite of products that started off as strategic HR-management tools but have recently made a big leap into what Dalgaard calls Business Execution:

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