Changes at the top: the impact of SuccessFactors’ Shawn Price taking over SAP Cloud

SAP has announced that Shawn Price, President of SuccessFactors, will be promoted to a new position heading SAP Cloud after Bob Calderoni resigned. The position – President, Global Cloud & Line of Business – comes amid a reshuffle that will see Shawn Price run the current SAP Cloud business units along with a number of on-premise line of businesses. He will report to Rob Enslin.

What does this mean for SAP?

I believe that for SAP this is going to even further accelerate SAP’s move to the Cloud. Certainly SAP on-premise customers should be mindful about SAP’s future investment in on-premise and overall direction. Or maybe that should be limited investment in on-premise. But should customers be concerned? Well, if you want to remain on-premise in the long-term then very much so. If you are planning on revamping your enterprise software investment then this should be seen as another reason to consider the Cloud sooner rather than later.

And what about SuccessFactors?

SuccessFactors will now be looking for a new President and Price’s will be tough shoes to fill. Executives Dmitri Krakovsky and Thomas Otter would make good appointments but this may be shifting the problem elsewhere as they both play critical roles within SuccessFactors core product team. David Ludlow has been the face of HCM at SAP for some time, is well known within the industry, and has an outside chance of taking the role. Unlike Price’s appointment, which came at a time when Dalgaard had departed SAP, outside cloud leadership is not so important now that SAP and SuccessFactors have merged the cloud and on-premise HCM businesses. However, Shawn is likely to keep a strong focus on HCM as the forerunner of SAP’s cloud initiative and could retain his role as part of the broader Global Cloud position. Overall there should be little change as SuccessFactors’ product direction is determined largely by Krakovsky and his influence will continue to be present.

Summary

All change at SAP Cloud again, but a great move by SAP. However, will Shawn last longer than his predecessors? My belief is that he will; both Lars Dalgaard and Bob Calderoni were coming into this role from the outside and Price has already established himself in SAP/SuccessFactors at an executive level prior to this appointment and should already have an understanding of the executive mechanisms of SAP. But whatever reasons led to the departure of Dalgaard and Calderoni – and these have not and probably will not be fully disclosed – may still linger and one hopes that there is more stability in the Cloud business going forward.

Topics and trends in HR technology with Jason Averbook

Topics and trends in HR technology with Jason Averbook

HR technology guru Jason Averbook was guest on the SAP HCM Insights Podcast team’s latest recording talking about HR technology trends. As usual Jason comes out with a number of excellent points and this is well worth a listen whether you are in SAP or not.

Belgium: An example of Cloud changing the SAP HCM consulting market

I live in Belgium, but rarely work there. However, I have many friends in the consulting space and have been following the market closely over the last 3 years. We’re beginning to see a slowdown in the market; rates are dropping by half, the market is crowded with SIs and is saturated with contractors, and many of the big projects have all been completed. And now Cloud has gained a growing foothold within Belgium and many consultancies cannot compete with pocket size implementation rates that competition is bringing to the market.

So, is this a trend that we can expect to see in other markets in the future?

I believe it is. I believe that Belgium is an example of how the SAP HCM consulting space is going to change in other markets. The biggest factors are the shorter projects with lower costs. There is a need to bill consultants, but with SuccessFactors it will be a matter of 1 FTE – or less – on a project. The days of 20+ FTEs on a project for 150+ days will soon be over.

There is going to be a contraction in the consulting market. With less business to go around, it is inevitable that there will be SIs going under. I don’t think we’re going to see many large casualties – the likes of Accenture and Deloitte have other successful and profitable lines of business – but there are some that will simply be unable to be profitable in the Cloud. One tactic I have already seen by some SIs is using junior consultants on SuccessFactors projects to ensure profitability. However, as a long-term plan that is a flawed strategy. The value of Cloud is not in the technology, but rather in what it offers to the business. Do juniors really understand how to offer this value when they are still learning the technology?

And that leads to another fundamental mistake some SIs are making: they are treating SuccessFactors like just another niche technology, as if it was Nakisa or OpenText. By sidelining it, being reactive, and using juniors then SIs are making a recipe for their downfall. While on-premise is where the money is, the future is all about the Cloud. Not being able to proactively build a business, create relationships with the vendor and their sales executives, and not being able to provide true value will make it very hard for SIs to transition.

Having seen what is happening in Belgium and understanding the revenues that SIs need to make, I find it hard to see how many of the SIs are going to survive as Cloud becomes bigger and bigger in the SAP HCM market. With diminishing project revenues and stagnant costs, is there going to be consolidation of the markets? I can only see it going that way.