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.

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Why I chose SuccessFactors Employee Central

Many of you will know that I joined EPI-USE America this week as Principal Consultant for SAP and SuccessFactors with a focus on Employee Central. For those that know me and my background in talent management this might come as a surprise. However, there are many reasons why I have chosen to move into core HR in the Cloud.

While my focus will be on Employee Central, it will also remain with Talent but on a much longer-term perspective. Employee Central is a compelling offering and is the next generation core HR system. It has been and is being built with different design principles than SAP ERP HCM and the methodologies behind it are both exciting and interesting. Employee Central will not be the next version of R/3. It is an entirely new system that is designed for 21st century business users and takes away the reliance on IT to support the system to the extent that a typical on-premise system requires.

There have been over 200 sales of Employee Central since its inception and it continues to grow at a much faster rate than was anticipated when the acquisition of SuccessFactors was closed. The appointment of Thomas Otter as VP of Product Management for Employee Central by SuccessFactors was a strategically brilliant move as his previous role as VP of Research for Human Capital Management (HCM) at Gartner gave him exposure to thousands of customers that will enable him to shape how Employee Central can solve their business challenges over the course of the next few years.

Many of you will know that my background is within talent management and my interest has not changed. In fact, to successfully deliver talent I feel that every consultant should have an overview of all HR processes to more holistically architect solutions that support the business without having a negative impact elsewhere. This is just as important from a functional and business processes perspective as it is from a technical perspective. In addition, Talent is a fairly new in terms of HR Technology and the SuccessFactors applications are not a world apart from their on-premise counterparts, thus the transition – at least for me – is fairly minimal. Another important point is that the talent market is fairly saturated with experienced consultants who can implement Performance & Goals, Learning, Recruiting, etc. I have no desire to compete with experienced consultants in these areas despite my previous experience.

I am very much looking forward to cutting my teeth further into core HR than I have in the past, particularly with the modern approach that Employee Central delivers. It will be a challenging and rewarding time and I look forward to help growing the market for the cutting edge core HCM system that is Employee Central.

More can be found on Employee Central at http://successfactors-corehr.com/.

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.