SAP SuccessFactors - by Hugo Hue
On the third day of the trip, we visited a subsidiary of SAP, SuccessFactors, offering cloud-based human capital management (HCM) software solutions, and was given a talk by one co-founder Mr. Aaron Au, sharing succinctly from the history of SuccessFactors, personal insights, to the market of cloud solution.
Background of SuccessFactors
SuccessFactors was founded in 2001 by Lars Dalgaard and Aaron Au. It went public in 2007, then was acquired by SAP for $3.4 billion in 2011. Back to the dot-com bubble in 2000, many online-shopping companies and communication companies failed to survive, and many companies have to cut down the expense in the company, including exceeding and redundant human resources and were reluctant to adopt new technology due to the market crash. It accelerated the importance of human capital management for an efficient way to recruit the right candidates, keep the talents, make the growth of the company, which granted Aaron, being acquainted with Cloud technology and technical knowledge from his background, a chance to start the business of HCM, an utterly new concept compared to customer relationship management (CRM), enterprise resource planning (ERP) in the arena of enterprise solution in 2001.
The company then grew and expanded swiftly on the ground that the enterprises need the solution from SuccessFactors to diminish the expense of the company; thus maximized the profit of it. More and more companies asked for the cloud-based human capital management (HCM) software solutions, SuccessFactors was flourishing to make a profit margin for fruitfully over 85%.
Acquisition by SAP
In 2011, SAP, as a 47 years enormous enterprise solution giant, suddenly knocked on the door of SuccessFactors, requesting acquisition of SuccessFactors. According to Aaron, SAP took a liking to the Cloud technology of SuccessFactors, which SAP had spent years and years on but not succeed to implement an efficient solution. Also, SAP had far-sighted the trend of cloud service in the enterprise solution market, so they wanted to acquire SuccessFactors by all mean. On the side of SuccessFactors, they had a faith to expand the use of their cloud service, and believe that cloud technology would benefit the company. Hence, they accepted the acquisition by SAP so that they are able to utilize and leverage the resources from the big corporation, including having more human powers for system implementations globally with the assistance of the technology consulting firms. Moreover, SuccessFactors could deploy those headcounts for customization of the software to the enterprises.
Cloud vs on-premise solutions
In the sharing from Aaron, he pointed out the significance and specialty of cloud technology, especially for human capital management. The people in a company plays the most important role, and the human mind will not be constant forever, but change rapidly. The cloud characteristic does help the configuration of the system. When the changes occur, the configurations can be applied for all the clusters in the whole system; thus, the configurations do not have to update point by point for each company. Furthermore, the feature of cloud sourcing constructs a better view of the data related to human capital which the on-premise system could not achieve. Also, the customization for specific clients can also be done by sending a team to understand the need for them, then make the adjustment upon the requests. Therefore, Aaron claimed cloud service is a trend for enterprise solutions.
Entrepreneurship
In the words of entrepreneurship, Aaron is a solid example to show the struggle of starting his own business and being an entrepreneur, and the path to his success. 'Having a computer science degree was the worst background to be an entrepreneur,' Aaron said. The way computer science program gave us was logical thinking, where every step paves from the previous step. But in running a start-up, or how to grab the correct timing has never been that logical or superficial. Back to the '90s, when he had been working in the cloud industry, "cloud" is a vague idea which no one knows the true value that it could bring. Therefore, when he tried to expand and promote his thought of cloud, not many investors could be persuaded and understand this new concept. It was a hard time to get financial support until he met his partner Lars Dalgaard, who was strongly presentable and had a huge business network, and he believed the power of cloud technologies. Finally, Lars gained the trust of the enterprises, and managed the business development of SuccessFactors; meanwhile, Aaron was in charge of the building of the cloud system. This impeccable team went public successfully in 2007, and the success concluded two important parts of entrepreneurship, good timing, and team, deemed to be the success factors of SuccessFactors.