SuccessFactors pushes new products in competitive cloud software market

SuccessFactors has been updating its software suite rapidly to keep up with competition in the market. (Photo courtesy of

In the past year, SuccessFactors, Inc. (NASDAQ: SFSF), a maker of cloud-based human resources software has increased its product line from 11 to 17 products to keep pace with increasing competition.

As a player in a $10 billion market of human resources software, SuccessFactors started a massive push for growth in its software-as-a-service suite of products last year with a host of new products and software updates. The latest additions debut tomorrow.

Software-as-a-service differs from traditional software in that it is lightweight software delivered through the web. It can be updated more often than older on-premise software. Bret Starr, a partner at Starr Tincup, a human resources marketing firm said human resources has been the first group to really embrace this type of software.

With these types of products, a typical human resources representative has a consolidated source of employee and recruiting information and can quickly use that information for a number of purposes relevant to human resources challenges.

The biggest concerns for HR representatives right now, Starr said, are attracting and hiring top talent, engaging that talent to be as productive as possible, measuring performance, planning for succession, and providing learning and development to help productivity and coach managers.

Integrated talent management software, which is what SuccessFactors and competitor Taleo Corp.  provide, addresses all those above categories. “They’ve got the software that addresses the most relevant issues right now, and they are integrating those solutions across the enterprise,” said Starr.

Over the past year SuccessFactors has expanded to develop its products saying that it needs to offer the most robust suite of products to move ahead of  the pack.

Last year SuccessFactors acquired three companies and increased its research and development spending by 63.5 percent  to $39.9 million from $24.4 million. The investments seemed to have paid off based on fourth quarter results. SuccessFactors reported revenues of $60.2 million, up 42.5 percent from the same period last year. Annual revenues rose to $205.9 million, up 34.5 percent from $153 million last year.

While the rise in revenues may have reflected greater consumer interest in SuccessFactors’ software suite, the company’s competitors also reported strong fourth quarter.

Competitors like Taleo and Ultimate Software Group, Inc. reported revenues of $67.2 million and  $60.4 million, indicating growth  of 33.1 and 15.7 percent respectively.

Starr expects strong growth in this market to continue as companies are using these types of software to attract talent and revamp employer brands, changing the perception of what it’s like to work for a company.

“For the 99.9 percent of companies during the recession,” Starr said, “they broke a lot of the promises that they had made to employees, and most of us didn’t handle it very well.” Starr added, “At the end of the recession, most companies had destroyed their employer brand.”

Now as the economy is showing signs of life, Starr said, “We’re  going to see massive turnover in labor, so companies need to improve their employer brands to retain talent.”

For SuccessFactors, getting ahead of the pack means focusing on the products. Brad Mattick, the company’s senior director for product marketing  said  SuccessFactors takes a three-pronged approach to developing new products  and expand  its software suite: internal development, partnerships and mergers and acquisitions.

“We are aggressively building our BizX product suite. Every year we release product updates five times, March, May, July, September and November,” Mattick said.

The products that Mattick said he is seeing gain popularity are the applications for analytics, social networking and recruiting.

The company’s analytics tools are new as of last year from the acquisition of Infohrm, Pty., Ltd. (Inform), a Australian company that specialized business analytics. These products, Mattick said, are meant to give top-level managers the run-down in straight numbers, so they can see how the company is meeting overall goals.

With last year’s acquisition of CubeTree, Inc., SuccessFactors put together its social business software. Using the acquired social networking tools from Cubetree. SuccessFactors has built functions in  its products meant to help people throughout different departments and across the company to communicate and collaborate more easily and effectively.

Probably the one tool with the most competition in the marketplace is SuccessFactors recruiting tool. Mattick also said the competition in recruiting software is a result of increased competition for talent . “With the current war for talent, more companies are recognizing the importance of using best practices for recruiting including social & mobile,” Mattick said.

One feature of the recruiting tool, demonstrated on SuccessFactors’ website, shows the applicant pool for a position, a percentage rating of each person’s eligibility, a timeline for each application, and comments. Another feature for inside hiring aggregates the potential in-house candidates based on recorded performance: goals that the employee has met in their current position, skills, and training. However, these are features that seem to be implemented across the board in most competitors recruiting software as well.

What Starr said he thinks is the key from a product design standpoint to engaging new customers is usability. “People want to buy software that is fun and easy to use,” said Starr. For example, a company out of Auckland, New Zealand, Sonar 6, which makes performance management software, “is like playing a video game,” he added.

While Starr said he thinks SuccessFactors is not at the state-of-the-art level in terms of usability, there are indications that the company is focusing on this issue.

Just this Monday, SuccessFactors announced its has acquired Jambok, Inc. a software-as-a-service social learning company that makes of mobile video creation and sharing technology that can be applied to workforce learning and development. Jambok’s technology, according to the SuccessFactors press release announcing the acquistion, “draws on the consumer world’s popular web 2.0 tools like YouTube and Facebook.”

Also, now for SuccessFactors software, there’s an app for that. Using the social technology in CubeTree, the company has developed mobile functionality, which is demonstrated on their website as useful for fast-paced recruiting.

The demonstration features the steps of a virtual hiring process that needs to be done as soon as possible. Using various digital platforms from desktops to smartphones and tablets, the people involved in hiring someone new send messages, give interview feedback and eventually hire a new employee.

As with many smartphone apps, whether it hits home with users in terms of usability will be something to gauge as customers begin to use it. Still, its creation indicates a move toward developing user-friendly mobile interfaces.

As with many smartphone apps, whether it hits home with users will be something to gauge as customers begin to use it. Still, its creation indicates a move toward developing user-friendly mobile interfaces.

Many companies like SuccessFactors have online video demos of  their offerings. Others are trying to show how products are more tailored for a specific class of companies.

Starr said video demos should only be one factor companies consider when selecting software. “The reality is that the software that works the best depends on the company,” Starr said, “It’s more about does it have the right stuff for what your company needs.”


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