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SAP faces cloud strategy questions with SuccessFactors buy

Chris Kanaracus | Dec. 5, 2011
SAP's US$3.4 billion purchase of SuccessFactors not only gives the company an increasingly popular set of on-demand human resources applications, but could also bring its entire cloud software portfolio into a new focus.

SAP was also impressed by SuccessFactors' ability to win and deliver on major projects like its 400,000 seat installation at Siemens, according to Wang. "It's one of those projects where they successfully blocked out SAP. This is still one of the biggest cloud installations."

"You have to keep in mind that this is a system that every employee may use once a month, as opposed to a [sales application] where they're using it on a daily basis," Wang added. "But while it's lower-touch, imagine when 400,000 employees use it all at the same time at the end of the month."

In an interview, Dalgaard echoed the point. "We can handle [major traffic spikes] because of the way we've built the multitenancy," he said, referring to the software architecture style used by many SaaS companies. The "clever" way SuccessFactors has designed its software means big savings on hardware, he added.

Last week, Dalgaard had a meeting with his CIO to discuss expanding the company's data center footprint by 20 racks, he said. But after mulling it over, they determined that just six should work, according to Dalgaard. The point is that cloud application development teams which spend less time on basic issues such as scalability and reliability can focus more on making better software, he said.

While Dalgaard and his team will bring cloud know-how to SAP, he'll have to apply and share it within a much larger and more complex organization. "The biggest challenge is going to be culture," Wang said. "SuccessFactors is very top-down driven, while SAP is very consensus-driven."

Still, it seems that Dalgaard will enter the job with strong support at the highest levels of SAP to execute a vision.

"When Lars gets in there, he'll see what he likes and what he doesn't like, and he'll make the calls," McDermott said. Also, in the press release announcing the deal, SAP noted that company founder Hasso Plattner is recommending Dalgaard for a seat on the company's executive board.

SAP's leadership has shown "an incredibly open mind and willingness to partner," Dalgaard said. "Man, I'm learning. I really don't feel I should get paid. I'm having too much fun."

 

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