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SuccessFactors has seen rapid growth (37% in 2009) through its human-centered approach and focus on customer needs over traditional software vendors' desires. Led by passionate CEO Lars Dalgaard, SuccessFactors provides cloud-based human capital management software that helps companies increase business execution. While still small compared to giants like SAP, SuccessFactors' disruptive model, growing customer base, and recurring revenue stream could make it a major threat to traditional vendors.

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Global CIO By Bob Evans InformationWeek February 16, 2010 SuccessFactors Is The Future Of Business Software SuccessFactors compelling product strategy, customer-centric mission, and dynamic CEO are turning the software business upside-down. SuccessFactors annual revenue is only about 1/100th of SAPs, it for companies willing to suborn their desires and instead meet the has only about 700 employees, and it has only one CEO. needs of those customers. Here are three classic examples of high- But SuccessFactors should be SAPs worst nightmare. octane Dalgaardisms: And SuccessFactors should also be (or is) disrupting the sweet --The big software companies dont have a clue because they dreams of many other traditional enterprise software companies stopped listening to their customers a long time ago, Dalgaard because it has not only created a compelling new suite of products said in a recent phone conversation. So for them, its like being around the vital need for business execution but is also redefining, on the Titanicwhen they finally do hear something, all they can at a fundamental level, the buyer-seller relationship in the market. say is, Heythat felt like a bump. Or theyll say, Dude, look at us, were going 180 miles per houryeah, but they dont know I fully realize the scope of the claim Im making about the impact theyre headed straight toward the Grand Canyon. SuccessFactors is having and will continue to have on this busi- ness, and I realize that some of you might be asking yourselves, --Our team really delivered a fantastic year in 2009 growing the Who in the heck is SuccessFactors? But Ill bet that number is a top line with less expense than the previous entire year. The team lot smaller than it was six months ago, and that by mid-2010 there is cranking on 2010, we are fired up. The momentum is like a will be very few business-technology executives who dont know tsunami wave. Many companies gave up 2009, but like in sports who the heck SuccessFactors is. SuccessFactors doesnt build character it reveals it. SuccessFac- tors people took market share in 2009. SuccessFactors added 520 Here are four of the primary reasons behind this audacious claim customers in 2009, bringing our total customer count to greater Im making: than 3,000. Today SuccessFactors has the most unique paying us- 1. SuccessFactors human-dynamo CEO has created an intensely ers in the business Cloud with more than 6 million users. (From customer-centric culture and a fresh new category called Business SuccessFactors earnings call with analysts earlier this month per Execution for which most customers have a burning need. the transcript at SeekingAlpha.com.) 2. The companys growing rapidly (37% in the nuclear winter --When we were getting close to closing one of our biggest deals, that was 2009) and creating a rabid customer base that includes we were sitting around a big table with their top execs, and I felt many well-known global corporations (much more on them in a like Bruce Lee because it seemed like everybody was coming at moment). me at the same time. They were asking me where I was born and where I went to grade school and I said, Guys, Ill be happy to 3. It has no on-premises legacytechnical or financialto deal answer any questions you want, but why does this matter? And with, is 100% in the cloud, and has established a significant they said, Lars, were considering entering a 20-year or 30-year recurring-revenue stream. commitment with you and your company, and this relationship 4. SuccessFactors is reaffirming to customer-side CEOs and CIOs will have exposure to every single employee in the company. So that the new wave of cloud-based enterprise-software companies thats why we need to be sure we really know you. does business in a strikingly different way than do the traditional Fueling the fiery talk is a suite of products that started off as stra- on-premises vendors. tegic HR-management tools but have recently made a big leap into At the center of this creative destruction is founder and CEO Lars what Dalgaard calls Business Execution: Dalgaard, who launched the company nine years ago and contin- helping companies animate their strategies through the deeply in- ues to fuel it with a zeal and a freshness that is sorely lacking in an formed and focused actions of every employee in the organization. industry that often seems demand more of its customers than it is As the company describes its products on its website: Centered itself willing to deliver. around Business Alignment and People Performance, our solutions Dalgaard communicates in a way that is more than talkits more are designed to be easy for anyone to use but powerful enough to like he gushes emotion and ideas and metaphors, peppering his uncover critical insights that help drive never before seen business comments with frequent allusions to passionate people, the prima- results. cy of the customer, and the boundless opportunity that exists today Heres how Dalgaard summarized it in our phone conversation: 01
By Bob Evans InformationWeek Global CIO February 16, 2010 SuccessFactors Is The Future Of Business Software Business Execution has been an absolute breakthrough in this Also, late last year the company completed a follow-on offering in market because theres not a company or a person in the world just three days by raising $215 million. And here are two financial who doesnt need the insights our stuff can deliver: schools, highlights in Dalgaards words from that transcript: airports, global corporations, bankruptcy courtsyeah, especially --In the worst economy, SuccessFactors had our best year. Suc- bankruptcy courts, he said with a laugh. cessFactors grew revenue 37% to $153 million and grew our user So when we ask, Are you interested in increasing your project count by 35% for the year. Billings accelerated throughout 2009. completion by 57%?, theres not a CEO in the worldunless hes Billings grew 17% from Q1 to Q2. They almost doubled and grew brain-deadwho wont say, I need you to tell me what youre 28% from Q2 to a very strong Q3, and from Q3 to Q4 Success- talking about. I need to know how I can get more of the essential Factors grew billings 26% sequentially. stuff done quickly. I need to know how I can communicate our --Weve cracked the business model of reputable successful strategy faster and more effectively. customers that renew at over 100% in dollars, but that revenue Adding to that set of insights, SuccessFactors is acquiring a annuity costs only 22% of sales to deliver. This will continue boutique business-analytics firm from Australia called Inform that to give us even greater cash flow in the future and allow us to doesnt fit any mold: its products are purchased almost exclusively continue to invest in growth like none of our competitors because by companies with 100,000 or more employees, but it has no sales so much is available for operating expense. The recurring revenue force to speak ofits sales have all come over the internet. And stream is becoming significant. We now have $150 million worth Dalgaard thinks Informs unique and powerful analytical tools will of recurring revenue base from our customers, which had 68% be a great match for SuccessFactors customers as well as an ideal contribution margin, and now is equivalent to $100 million worth new offering for SuccessFactors sales team. of annual cash flow to our business every single yeara $100 Describing Inform as the McKinsey of the workforce-manage- million cash annuity. ment industry, Dalgaard told financial analysts in the recent earn- Unlocking the formula for turning an industry upside-down isnt ings call that the acquisition will bring tremendous proprietary so hard, Dalgaard saysits just a matter of keeping the priorities expertise and over 28 years of work which has produced academic straight and never wavering from your mission. And its precisely research, published papers, and deep content in cloud technolo- that formula and those priorities that are generating the nightmares gies, strategic workforce planning, strategic reporting, workforce for lots of other software companies. analytics, workforce reporting, over 2,000 key performance met- You need passionate people, and we have that, Dalgaard said. rics, andthis is importantthey have a library built up of key You need a fantastic business model, and we have that. But most benchmarking concepts for over 20 industries. of alland this is what most companies just cant getis that the Informs big-company customer listincluding Starbucks, Target, customer must win. Every one of them. All the time. Nike, MetLife, Aetna, The McGraw-Hill Companies, Blue Cross The customer must win. Blue Shield, Fidelity, Time Warner, and Comcastprovides an ideal complement to SuccessFactors customer base, which includes its blockbuster Siemens deal for 420,000 seats, Nestle, Toyota, Deutsche Bank and Allianz, Goldman, General Motors, Bechtel, British Petroleum, Gulfstream, and many more. Coca-Colas executives have told us that SuccessFactors has become a core part of their global operating framework, Dalgaard said in our phone conversation, describing how his forward- looking software is distinguishing itself for the vital but primarily transactional ERP applications from the big traditional companies. Were gaining a lot of ground with some of the worlds largest retailers because theyve been telling us, Were just not going to keep buying the old wayits not working for us. The passion for customers, the innovative product set, the acquisi- tion, and the cloud-based model have combined to deliver some impressive financial results for SuccessFactors. To get the full flavor of not just the numbers but the companys unique bookings and billings revenue model, I encourage you to review the Seek- ingAlpha.com transcript of the companys fourth-quarter earnings call, which offers a wealth of detail from Dalgaard and CFO Bruce Felt. 02

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Info Week Sfsf 21610 Pr

  • 1. Global CIO By Bob Evans InformationWeek February 16, 2010 SuccessFactors Is The Future Of Business Software SuccessFactors compelling product strategy, customer-centric mission, and dynamic CEO are turning the software business upside-down. SuccessFactors annual revenue is only about 1/100th of SAPs, it for companies willing to suborn their desires and instead meet the has only about 700 employees, and it has only one CEO. needs of those customers. Here are three classic examples of high- But SuccessFactors should be SAPs worst nightmare. octane Dalgaardisms: And SuccessFactors should also be (or is) disrupting the sweet --The big software companies dont have a clue because they dreams of many other traditional enterprise software companies stopped listening to their customers a long time ago, Dalgaard because it has not only created a compelling new suite of products said in a recent phone conversation. So for them, its like being around the vital need for business execution but is also redefining, on the Titanicwhen they finally do hear something, all they can at a fundamental level, the buyer-seller relationship in the market. say is, Heythat felt like a bump. Or theyll say, Dude, look at us, were going 180 miles per houryeah, but they dont know I fully realize the scope of the claim Im making about the impact theyre headed straight toward the Grand Canyon. SuccessFactors is having and will continue to have on this busi- ness, and I realize that some of you might be asking yourselves, --Our team really delivered a fantastic year in 2009 growing the Who in the heck is SuccessFactors? But Ill bet that number is a top line with less expense than the previous entire year. The team lot smaller than it was six months ago, and that by mid-2010 there is cranking on 2010, we are fired up. The momentum is like a will be very few business-technology executives who dont know tsunami wave. Many companies gave up 2009, but like in sports who the heck SuccessFactors is. SuccessFactors doesnt build character it reveals it. SuccessFac- tors people took market share in 2009. SuccessFactors added 520 Here are four of the primary reasons behind this audacious claim customers in 2009, bringing our total customer count to greater Im making: than 3,000. Today SuccessFactors has the most unique paying us- 1. SuccessFactors human-dynamo CEO has created an intensely ers in the business Cloud with more than 6 million users. (From customer-centric culture and a fresh new category called Business SuccessFactors earnings call with analysts earlier this month per Execution for which most customers have a burning need. the transcript at SeekingAlpha.com.) 2. The companys growing rapidly (37% in the nuclear winter --When we were getting close to closing one of our biggest deals, that was 2009) and creating a rabid customer base that includes we were sitting around a big table with their top execs, and I felt many well-known global corporations (much more on them in a like Bruce Lee because it seemed like everybody was coming at moment). me at the same time. They were asking me where I was born and where I went to grade school and I said, Guys, Ill be happy to 3. It has no on-premises legacytechnical or financialto deal answer any questions you want, but why does this matter? And with, is 100% in the cloud, and has established a significant they said, Lars, were considering entering a 20-year or 30-year recurring-revenue stream. commitment with you and your company, and this relationship 4. SuccessFactors is reaffirming to customer-side CEOs and CIOs will have exposure to every single employee in the company. So that the new wave of cloud-based enterprise-software companies thats why we need to be sure we really know you. does business in a strikingly different way than do the traditional Fueling the fiery talk is a suite of products that started off as stra- on-premises vendors. tegic HR-management tools but have recently made a big leap into At the center of this creative destruction is founder and CEO Lars what Dalgaard calls Business Execution: Dalgaard, who launched the company nine years ago and contin- helping companies animate their strategies through the deeply in- ues to fuel it with a zeal and a freshness that is sorely lacking in an formed and focused actions of every employee in the organization. industry that often seems demand more of its customers than it is As the company describes its products on its website: Centered itself willing to deliver. around Business Alignment and People Performance, our solutions Dalgaard communicates in a way that is more than talkits more are designed to be easy for anyone to use but powerful enough to like he gushes emotion and ideas and metaphors, peppering his uncover critical insights that help drive never before seen business comments with frequent allusions to passionate people, the prima- results. cy of the customer, and the boundless opportunity that exists today Heres how Dalgaard summarized it in our phone conversation: 01
  • 2. By Bob Evans InformationWeek Global CIO February 16, 2010 SuccessFactors Is The Future Of Business Software Business Execution has been an absolute breakthrough in this Also, late last year the company completed a follow-on offering in market because theres not a company or a person in the world just three days by raising $215 million. And here are two financial who doesnt need the insights our stuff can deliver: schools, highlights in Dalgaards words from that transcript: airports, global corporations, bankruptcy courtsyeah, especially --In the worst economy, SuccessFactors had our best year. Suc- bankruptcy courts, he said with a laugh. cessFactors grew revenue 37% to $153 million and grew our user So when we ask, Are you interested in increasing your project count by 35% for the year. Billings accelerated throughout 2009. completion by 57%?, theres not a CEO in the worldunless hes Billings grew 17% from Q1 to Q2. They almost doubled and grew brain-deadwho wont say, I need you to tell me what youre 28% from Q2 to a very strong Q3, and from Q3 to Q4 Success- talking about. I need to know how I can get more of the essential Factors grew billings 26% sequentially. stuff done quickly. I need to know how I can communicate our --Weve cracked the business model of reputable successful strategy faster and more effectively. customers that renew at over 100% in dollars, but that revenue Adding to that set of insights, SuccessFactors is acquiring a annuity costs only 22% of sales to deliver. This will continue boutique business-analytics firm from Australia called Inform that to give us even greater cash flow in the future and allow us to doesnt fit any mold: its products are purchased almost exclusively continue to invest in growth like none of our competitors because by companies with 100,000 or more employees, but it has no sales so much is available for operating expense. The recurring revenue force to speak ofits sales have all come over the internet. And stream is becoming significant. We now have $150 million worth Dalgaard thinks Informs unique and powerful analytical tools will of recurring revenue base from our customers, which had 68% be a great match for SuccessFactors customers as well as an ideal contribution margin, and now is equivalent to $100 million worth new offering for SuccessFactors sales team. of annual cash flow to our business every single yeara $100 Describing Inform as the McKinsey of the workforce-manage- million cash annuity. ment industry, Dalgaard told financial analysts in the recent earn- Unlocking the formula for turning an industry upside-down isnt ings call that the acquisition will bring tremendous proprietary so hard, Dalgaard saysits just a matter of keeping the priorities expertise and over 28 years of work which has produced academic straight and never wavering from your mission. And its precisely research, published papers, and deep content in cloud technolo- that formula and those priorities that are generating the nightmares gies, strategic workforce planning, strategic reporting, workforce for lots of other software companies. analytics, workforce reporting, over 2,000 key performance met- You need passionate people, and we have that, Dalgaard said. rics, andthis is importantthey have a library built up of key You need a fantastic business model, and we have that. But most benchmarking concepts for over 20 industries. of alland this is what most companies just cant getis that the Informs big-company customer listincluding Starbucks, Target, customer must win. Every one of them. All the time. Nike, MetLife, Aetna, The McGraw-Hill Companies, Blue Cross The customer must win. Blue Shield, Fidelity, Time Warner, and Comcastprovides an ideal complement to SuccessFactors customer base, which includes its blockbuster Siemens deal for 420,000 seats, Nestle, Toyota, Deutsche Bank and Allianz, Goldman, General Motors, Bechtel, British Petroleum, Gulfstream, and many more. Coca-Colas executives have told us that SuccessFactors has become a core part of their global operating framework, Dalgaard said in our phone conversation, describing how his forward- looking software is distinguishing itself for the vital but primarily transactional ERP applications from the big traditional companies. Were gaining a lot of ground with some of the worlds largest retailers because theyve been telling us, Were just not going to keep buying the old wayits not working for us. The passion for customers, the innovative product set, the acquisi- tion, and the cloud-based model have combined to deliver some impressive financial results for SuccessFactors. To get the full flavor of not just the numbers but the companys unique bookings and billings revenue model, I encourage you to review the Seek- ingAlpha.com transcript of the companys fourth-quarter earnings call, which offers a wealth of detail from Dalgaard and CFO Bruce Felt. 02