The Key To A Successful SuccessFactors Acquisition For SAP

Into this complexity, SAP overlays a consensus management process, with an executive board, a supervisory board, and teams of executives all over the world weighing in on key decisions. At times this works extremely well, but all too often it yields a surplus of cooks and a potentially spoiled broth: Without the command and control structure of, say an Apple or an IBM, SAP sometimes has trouble matching the dictatorship of the markets with the dictates the company needs to thrive.

On top of all this, SAP is now buying SuccessFactors. And sorting out the fragmentation in SAP's HRMS strategy makes sorting out a mobility strategy look easy. As ably pointed out by the grande dame of HRMS, Naomi Bloom, SAP is sitting on a virtual hairball of HRMS code bases and products. Adding SuccessFactors to the tune of $3.4 billion should put the onus on SAP to figure out this mess and drive a unified strategy into the market. Will it be able to do so?

My concern isn't with the SuccessFactors acquisition itself--it's a great choice for SAP, one that's desperately needed both in terms of the company's HRMS strategy and its on-demand strategy. My concern comes with the suffix "an SAP company." This works extremely well from a personnel standpoint, and is consistent with SAP's culture, but, keeping in mind the teething problems of BusinessObjects and to a lesser extent Sybase, will keeping SuccessFactors independent be the right way to go? I'm not advocating the slash and burn strategies pioneered by Computer Associates and continued by Oracle, but I'm a little wary of friendly acquisitions when the result is too much friendliness and not enough acquisition.

Why does SAP need this kind of unification so badly? After all, as I just said, BusinessObjects has helped make SAP a top BI and analytics company. The answer is simple: Oracle. SAP is fighting Oracle's "engineered for investors" strategy by putting forth a more cohesive, better integrated, and therefore more cost-effective platform + applications strategy. One of the key value-adds that SAP can offer is a more integrated stack, better rationalized across the different pieces of its portfolio. That approach lies in sharp contrast to the dis-integrated, heterogeneous offerings and big integration price tag in the Oracle applications strategy.

The point is simple: The more SAP makes these big acquisitions, the more it must ensure that this key point of differentiation is protected. This is less imperative in mobility, which is by definition new and different enough that any expectation of deep, built-in code-base integration is low. But HRMS is very different, and if SAP is going to use SuccessFactors to beat Workday, Oracle Fusion, and Oracle PeopleSoft in the SAP core customer base, it's going to have to build that integrated strategy quickly and convincingly.

Can SAP do this? I wish I were more confident that it could. I trust that the different market imperative for HRMS--and the enormous opportunity that SuccessFactors presents--can sharpen the company's resolution and help quiet the internal politics, but it won't be easy. Time is of the essence: Workday is definitely on a role, and the PeopleSoft market is full of customers for whom an upgrade will require a full re-implementation and for whom non-Oracle SaaS opportunities are making the shortlist. With SuccessFactors, SAP has the chance to truly be in the right place at the right time.

But only if SAP can get this acquisition right, and get it right the first time.

Josh Greenbaum is principal of Enterprise Applications Consulting, a Berkeley, Calif., firm that consults with end-user companies and enterprise software vendors large and small. Clients have included Microsoft, Oracle, SAP and other firms that are sometimes analyzed in his columns. Write him at [email protected].