SAP's line-of-business cloud applications are still in their early days, with products such as Career OnDemand lacking in serious sophistication, Martens said. Now that SuccessFactors is in the fold, it will be interesting to see whether those new products are actively sold or instead SuccessFactors' family of software acts as the focal point for the line of business strategy, she said.
Overall, buying SuccessFactors serves as an "adrenaline shot," for SAP's cloud business, co-CEO Bill McDermott said in an interview. "We think Lars is the best leader in the [cloud software] business, by a lot."
SAP made its play in mobility through a large transaction as well, with the purchase of Sybase. It ultimately made sense to do the same with cloud software, McDermott said. "I really did kind of have a feeling it was going to go down that way," McDermott said. "Not that we don't have fantastic plans of our own, we do. But clearly the know-how around the on-demand business is different. We could have built it on our own but we wanted to get there fast." SAP is primarily interested in growing revenue organically, but future acquisitions aren't out of the question, McDermott said during the conference call Monday. "Where there is a crown jewel like SuccessFactors … you make the move."
One open question is whether SAP will face a counteroffer for SuccessFactors from the likes of Oracle. While not out of the question, factors against such a move include the fact that HCM software is serving as an initial centerpiece of Oracle's new Fusion Applications, Martens said. Therefore, an attempt to buy SuccessFactors might send confusing signals to the market.
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. 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.
Although 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."
Chris Kanaracus covers enterprise software and general technology breaking news for the IDG News Service. Chris's email address is Chris_Kanaracus@idg.com.