Tag Archives: successfactors

Why TechCrunch is boring, SAP is not, and the world has gone mad

It’s cold by the way. Winter finally arrived, I realised as I pondered SAP’s acquisition of SuccessFactors on the run into work. I can still feel the cold imbued from the run into the metal palmrest of my laptop as I write this.

The highlight of the weekend was Alexis Tsotsis’ faux-gonzoistic impression on TechCrunch. I say faux, because it has the attitude of gonzo journalism but not the style. From what I get of her article, if it’s not Apple or a startup, she’s not interested – and therefore the SAP acquisition of SuccessFactors is not worth reading about:

…you can never be too sure with these incredibly dull companies. I am too bored to Google it. In fact, I am literally bored to tears writing this, like I am seriously crying here in my local coffee shop and everyone is looking at me weird…

Really, this says a lot more about what’s wrong about TechCrunch, and actually the world as a whole. And so last night, I was discussing this point with a bunch of Enterprise Irregulars on Twitter. I’m going to disagree with Dennis Howlett (who used to be an Irregular), which is always a good way to start the morning.

@dahowlett: @applebyj giving idiots ANY play is plain dumb

Sameer Patel chimes in with a reminder that the Facebook acquisition of Gowalla – a FourSquare-style location based service, got much more airtime.

@sameerpatel: @applebyj @dahowlett not shocking. Most of yesterday tech meme led w/ reruns of Gowalla FB acquisition for an undisclosed sum vs a $3B buy.

And Frank Scavo got the feel of the enterprise community spot on:

@fscavo: I stopped reading TechCrunch years ago. @alexias’s recent post reminds me why. cc: @dahowlett @applebyj

But actually I think that Timo Elliott nailed it. Yes Timo, this is the real world.

@timoelliott: Strangely, this techcrunch post about the “boring” SAP acquisition made me very proud: techcrunch.com/2011/12/03/zzz… #dudethisistherealworld

And let’s just be reminded about how real this world is:

Facebook SAP
Revenue $4bn (estimated) $12.46bn
Profit $1bn (estimated) $1.18bn
% of world’s transactions Ermm? 65%
Users 800m 500m
Market Capitalization $82bn $72bn

If you compare Facebook even by their own metrics, they are still insignificant compared to the behemoth that is SAP. Billions of people interact with SAP on a day to day basis – every transaction with giants like Barclays Bank. 90% of the world’s beer is produced by SAP. And since SAP’s Chief Marketing Officer Jonathan Becher took the time to point it out, I’ll quote him:

@jbecher: @applebyj Amused by bit.ly/tFOK7J Don’t forget 65% of world’s televisions, 86% of athletic footwear, or 70% of world’s chocolate

Who says that SAP isn’t cool, with such accolades! And yet Facebook has the greater market capitalization. Why is this? High growth and cool factor. But Facebook has not proven that it has a sustainable market model.

Why does this mean there is something wrong with TechCrunch?

Well it strikes me that TechCrunch gets Consumer IT and is all over the topics that generate a lot of traffic, like Apple, Facebook and Google, and there’s nothing wrong with this. I do however think there’s two major areas where TC has a problem:

First, Founder and former co-editor Michael Arrington sold out to AOL then whined about their involvement. What amazes me here is first, his naivety, and second his desire for self-importance.

Second, it’s fine if you don’t understand Enterprise IT. But don’t whine about it being boring – because if you read Alexia’s article you will see that there are (currently) 99 comments, all of which criticise her and her journalism. Don’t write a crap piece of journalism and then follow it up with “I was just being honest” on Twitter – and then delete the Twitter post.

06/12/11 Correction – Alexia’s “I was just being honest” was in the comments area, not a Tweet. She didn’t delete it. My bad.

And what’s wrong with the world?

Well for my money SAP is possibly the most interesting technology firm in the world right now. I make my money out of the SAP industry so perhaps I would say that, but it’s also born out by facts.

They have the leading enterprise mobility platform, integrated back into an incredibly complex suite of software that covers 65% of the world’s business transactions. They are leading the world with in-memory technology.

And to add to that they have just made a major cloud acquisition, which might be the third dimension to prevent the risk of their becoming irrelevant in 5-10 years time.

What’s wrong with the world is that they are so focussed on Apple, Google and Facebook – with their over inflated IPOs and everything that comes with that. The world was not built on technology bubbles – it was built on hard work and honest money.

For a small number of lucky individuals there is a bubble with an IPO and a retirement salary. For everyone else, the world is a very tough place to live. My advice: stop being bored by the stuff which makes the world turn.

SAP acquires SuccessFactors – is it all hot air in the cloud?

This time last year I was on a flight to Santa Clara, where SAP was hosting its Influencer Summit. It’s a shindig where SAP communicates and listens to a group of analysts and influencers and last year, there was a clear focus: cloud.

SAP had the excellent John Wookey, who at that time was heading SAP’s on-demand strategy and he was positioned front and centre. There was an entire day dedicated to cloud and SAP’s core cloud product, an ERP system called Business ByDesign was aggressively marketed to the audience.

Now for two of SAP’s strategic areas – Enterprise Mobility, and in-Memory software, 2011 has been a fantastic year. The key products – the Sybase Unwired Platform for mobility, and the HANA in-memory platform – have had fantastic success. At the time of the Influencer Summit, Marge Breya – EVP of SAP’s solution portfolio, was on her way out – eventually headed off to join her old boss Leo Apotheker at HP.

But for the cloud side of the business, 2011 has been very lacklustre for SAP. Wookey left SAP and in a cruel twist of fate, ended up at Salesforce after his gardening leave was complete. The noise around HANA and SUP meant that the cloud messaging was quiet in the market as a whole, and also at SAP’s flagship conference, SAPPHIRE NOW.

There has been quite some criticism of SAP’s cloud strategy in the interim, with some suggestions that they are haemorrhaging customers within Line of Business to organisations like Workday and Salesforce.

So when I was invited back to the Influencer Summit, this time on the 12th December in Boston, I was surprised to see that once again, there was a whole day dedicated to cloud. Given the relative lack of progress and visibility in the last year, this caused me some surprise.

And today we heard the news that SAP is in the process of acquiring SuccessFactors in cash for $3.4bn. That’s 170,000,000 used $20 bills in a giant black briefcase. I hope Bill McDermott has been lifting weights. Note that they are massively overpaying – some 49% above stock value. Which sounds totally nuts.

But for my money, SAP’s senior management team has made two excellent acquisitions with Business Objects and Sybase. And for that reason I’m minded to consider that they’re acquiring SuccessFactors for some very good reasons. Here’s what I think they are.

The first is talent. SAP has lost some talent, notably John Wookie, but also various others. Jeff Stiles is leaving SAP in January and cloud marketing was high on his agenda. I believe that SAP doesn’t know how to create, market and sell (profitably) a cloud platform and all of the solutions built so far have lost SAP a ton of money. So acquiring a leader in Line of Business cloud allows SAP – like it has done with Business Objects and Sybase – to acquire great leaders. SuccessFactors CEO Lars Dalgaard will become the EVP of cloud at SAP.

Second up is credibility. Under the leadership of Aneel Bhusri, Workday have started to do in the Human Resources Line of Business what Salesforce.com did to the Sales & Marketing Line of Business. Workday don’t have the global reach of say SAP or Northgate Arinso but SAP must be terrified that Workday could get there. This acquisition gives SAP better cloud credibility and the ability to compete with Workday and Northgate Arinso.

Third up is diversification. There’s very little overlap between SAP and SuccessFactors customers and this means they acquire 3500 new customers and 6m users, up front. SAP’s intention appears to be to keep SuccessFactors as a separate business unit and that sounds like it makes sense in the first instance.

What’s also interesting is that SAP America has acquired SuccessFactors, which presumably means that SAP is keeping it away from the SAP AG management structure. I’m pretty certain that this is not a coincidence and SAP is looking to push the balance of power away from the legally constrained German organisation with its arcane labor laws.

In the end, the proof will be in the pudding and acquisition strategy is one thing, and execution is something else entirely. SAP’s ability to execute and integrate SuccessFactors will define its ability to compete in the cloud. Because SAP has overpaid for SuccessFactors, it needs to ensure that the acquisition is a force multiplier to SAP’s ability to execute in cloud, and not just a means to add a few hundred million of revenue to the top line.

My prediction is this is a good move and the SAP senior management team have got what it takes to make it to work. But this is just an initial reaction and as we get into the Influencer’s Summit in Boston, we should get a better feeling for what SAP is really up to. It will certainly be an interesting 2012.