SAP as No. 1 in Cloud HCM in 2013

SAP leads the Cloud HCM apps market with SuccessFactors products.

611

SAP

Dietmar-Hopp-Allee 16
Walldorf, 69190
Germany
+49 62 2774 7474
http://www.sap.com

Overview: 

Ownership: Public (SAP:NYSE)
Employees: 64598
Key Verticals: Aerospace & Defense, Automotive, Banking, Chemicals, Consumer Products, Construction, Healthcare, Education, Technology, Insurance, Media, Mining, Oil & Gas, Professional Services, Life Sciences, Government, Retail, Communications, Transportation, Distribution, Utilities

Key Cloud HCM Applications:

  • SuccessFactors Empolyee Central
  • JAM
  • SuccessFactors BizX Suite
  • Ariba
  • Fieldglass

Cloud HCM Apps Revenues, $M:

Rank

Vendor

2012 Cloud HCM Apps Revenues, $M

2013 Cloud HCM Apps Revenues, $M

YoY Growth, %

2013 Cloud HCM Apps Market Share, %

1

SAP

329

490

48.9%

9.8%

 

2013 Cloud HCM Apps Revenues By Region:

Region

% of Total Revenues

2013 Cloud HCM Revenues $M

Americas

37.9%

185.5

EMEA

46.9%

229.8

APAC

15.2%

74.7

Total

100.0%

490.0

 

SCORES Analysis

Strengths

Following the 2012 acquisition of SuccessFactors, SAP has made HCM priority No. 1 in its pursuit for Cloud dominance. SuccessFactors, which started out in Cloud applications for performance management and succession planning, moved rapidly into eRecruiting, Learning Management as well as Core HR through extensive development and acquisitions.

The result was an across-the-board increase in the number of customers as well as the products they purchased in 2013. In 2011 new customers of SuccessFactors were buying products in less than two categories. By the end of 2013, the figure had jumped to 4.5, suggesting accelerated traction in exposing customers to such new products as onboarding, eLearning, social HCM via Jam, as well as Employee Central for Core HR and Payroll. What it illustrates is the same pattern of gaining wallet share among its largest customers that has made SAP the enterprise software powerhouse.

The push to sell more SuccessFactors products has taken on greater urgency now that SAP is propelling its Cloud software to new heights by combining it with its latest platform technologies such as SAP HANA for in-memory database and advanced analytics. The result is a dramatic boost in functionality and performance that could widen SAP’s lead in the Cloud applications market.

Customers

SAP has more than 5,000 customers running different Cloud HCM applications and the number has been rising steadily since its 2012 acquisition of SuccessFactors. Since its early years SuccessFactors saw its customer count grow from a handful in 2001 to 2,360 in 2007. By the first quarter of 2011, the figure had climbed to 3,550 including the 350 customers that SuccessFactors picked up from its $290-million acquisition of Plateau for talent management and eLearning in April 2011.

After closing the purchase of SuccessFactors in February 2012, SAP sustained its momentum by leveraging its existing relationship with key accounts as well as a global network of SAP partners and field personnel.

SAP’s recent HCM wins included Aspen Insurance Holdings Limited, Live Nation, The Weather Channel, Electricity Supply Board, Air Products, Banco Popular, Bigpoint, Al-Futtaim Group, Taronga Conservation Society Australia, Molinos Rio de la Plata, Chemicals Inc. and others.

Other long-standing Cloud HCM customers include Allergan, American Electric Power Services Corp. Duke Energy, Baker Hughes, Baylor Health Care System, Becton, Dickinson, Cadbury Schweppes Plc, Coca-Cola Enterprises Inc., Corinthian Colleges Inc., EMC Corp., Flextronics International USA Inc., General Motors, GGNSC Administrative Services LLC, Harris Teeter Inc., Henry Ford Health System, Ingersoll Rand Co. Textron Inc., Inova Health System, Jet Propulsion Laboratory, Kaplan Inc., LensCrafters Inc., LG Electronics, Mellon Bank N.A, MetLife Insurance Co., Morgan Stanley, Nokia Siemens Networks Oy, Orange Personal Communication Services, Pep Boys-Manny, Moe & Jack, PepsiCo, Pfizer, Republic Services, Rogers Communications, Symantec, Sanofi-Aventis U.S. LLC, Sears, Roebuck and Co., Sutter Health, Takeda Pharmaceutical Co. Ltd., The Gap Inc., Toronto-Dominion Bank, United Nations Development Program, and US Steel.

Opportunities

SAP continues to invest heavily in SuccessFactors with special emphasis on keeping the release cycle to four updates per year, a steady tempo that ensures uninterrupted innovation by ascertaining and delivering timely enhancements based on customer requests.

Some of its recent updates included SuccessFactors Presentations, a team collaborative app that aims to improve look and feel of content distribution; global processing and localized compliance for customers of Employee Central, which now supports up to 71 countries for Core HR and 28 countries for payroll; as well as SAP Jam updates designed to help employees resolve services requests faster, while facilitating team travel planning as employees turn to the business social network for real-time productivity gain.

Another major expansion area lies in the recent acquisition of Fieldglass for its contingent workforce management applications. While SuccessFactors has been primarily used by companies to manage their full-time employees, the Fieldglass offerings will target those that require massive hires of part-time and contingent workers based upon seasonal or project-specific conditions.

Risks

SAP has high hopes for its Cloud applications and SuccessFactors may well be the above-average performer. That could entail doubling the number of Employee Central customers to over 700, compared with about 379 in the second quarter of 2014. So far 132 of these Employee Central customers have gone live and many more are waiting in the queue.

As the vendor aims to sustain the growth of its Cloud applications revenues, it may feel compelled to focus on the biggest organizations by taking them live as soon as possible. Exacerbating the go-live issue is the pressure to cross-sell and upsell more modules to these customers, potentially resulting in more complex deployment.

Ecosystem

SAP’s ecosystem continues to grow covering more than 13,000 partners around the world. While some resell and distribute software like analytics for SAP, others co-innovate with the vendor to bring jointly-developed products to the marketplace.

In the Cloud HCM market, SuccessFactors has been mostly been selling directly, but it signed an agreement in 2013 with Kronos to joint-sell HCM applications to customers around the world leveraging Kronos’ reach into tens of thousands of customers in the workforce management applications segment.

Shares

Rank

Vendor

2012 Cloud HCM Apps Revenues, $M

2013 Cloud HCM Apps Revenues, $M

YoY Growth, %

2013 Cloud HCM Apps Market Share, %

1

SAP

329

490

48.9%

9.8%

 

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