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Micah Fairchild Politics of HCM Software: The Public Battle between SAP and Oracle

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 By Micah Fairchild

Finding Truth in the Great SAP/Oracle HCM Software Debate

I must admit, with the way things have been shaping up in the HCM software market, I'd almost swear that I'm keeping tabs on a political battle rather than a software vendor back-and-forth. After all, one can certainly draw an incredible amount of striking similarities analogously. Two major competing parties which aren't vastly different from each other? Check. Said two parties taking up all the air in the room even though other alternatives exist (and, yes the irony isn't lost on us that with this post we're adding fuel to this fire)? Check. Said two parties in a constant battle to "one up" the other in the public's eye? Check.

Of course I'm talking about Oracle and SAP, the two largest enterprise software vendors in the HR software space who seem to be locked in a perpetual state of battle that has each one of these massive companies coming out with what feels like daily press releases. Of late—first, it was SAP with announcements about HANA, then it was Oracle's announcements about Fusion. Next, it was SAP about SuccessFactors (SFSF), then it was Oracle about Taleo; all bringing us current to SAP's recent integration plans announcement for SuccessFactors purchase (which itself triggered a press conference response from Oracle/Taleo execs). To be sure, none of these announcements is small; in fact each one listed above represents (at minimum) millions and often billions of dollars of invested time and resources that both companies have dedicated to driving future revenues.

And in a world where technology innovation and the electorate's voice have together started to craft new purchasing paradigms, both Oracle and SAP should at least be lauded for their continued efforts to stay relevant and drive increased HR software value for customers. However, one can easily get the impression that these announcements are simply veiled attempts to get the better of their opponent. So, in true HRlab fashion, let's see if we can't take these latest announcements and get to the truth and heart of the matter. After all, voters have a right to know all the facts about politicians; we just feel customers should receive that same courtesy. Here's what we can surmise after all the announcement dust has settled…

The Truth About the SAP/SuccessFactors Situation

Many months ago, SAP's acquisition announcement about SuccessFactors (SFSF) had the media abuzz. As we referenced in earlier blog posts and articles on this subject, this acquisition was hardly a game changer, but nevertheless SAP's latest integration announcement sheds light on some key points that current and prospective customers should remain cognizant of. In a nutshell, the announcement was a broad-stroke painting of SAP's intentions to take current talent management investments (in SAP ERP HCM and Business ByDesign) and shift focus to SuccessFactors. While for the moment, SuccessFactors will remain an independent company that is affiliated with SAP; as SAP's recent announcements indicate, plans are on the fast-track to make deep integration happen between these two HR software solutions. If SAP had ever been lukewarm as to its HCM software offerings, it's clear that those days are behind them given the amount of time, energy, and considerable resources that are being thrown at the SuccessFactors endeavor. Specifically, here's what we know:

  • The company appears to be the phasing out the SAP ERP HCM solution. While a commitment of support has been given until 2020, the fact is that SAP will not be delivering significant innovations for this HR software solution beyond what has already been planned (e.g. mobile functionality, in-memory analytics via HANA, and an improved user interface).
  • SAP's heavily pre-publicized and burgeoning Career OnDemand is no more and will be essentially picked clean for any potential innovations not seen in other solutions.
  • SuccessFactors' Employee Central will become SAP's go-to SaaS HCM product—a unified core HRMS and talent management software offering for the cloud. Current and/or potential customers of either of these solutions (SF/SAP) however should recognize that regardless of resources, this is a lengthy endeavor—even if SAP already has a 51-country head-start on payroll.
  • Mobile and social tools (though both SuccessFactors and SAP currently leverage them) are a decidedly gray area which the company references, but provides few details for. As such, organizations requiring robust functionality within these areas should pay close attention within the coming months to determine whether these capabilities receive necessary planning and investment.
  • Business Intelligence (BI) for SAP's new solution remains an intricate and complex initiative. Specifically, the company looks to integrate SuccessFactors Inform, Business Objects, and HANA to forge a new HCM analytics creation—an exceedingly difficult endeavor that involves overlapping functionalities; on-premise and SaaS delivery combinations; and the death of one or more solidly performing BI solutions (most notably SAP's Strategic Workforce Planning). However, if and when this offering becomes available, it may in all likelihood be the single-best human capital analytics software solution on the market.

The Truth About the Oracle/Taleo Situation

Likewise, Oracle's latest press conference highlighted several key points that current and would-be customers should be aware of. First off, whether Mr. Ellison truly cares about current Taleo customers or not, one thing is for sure—he wants to keep as many of them as possible. Perhaps that's why there is far less carnage than typically happens after a large-scale acquisition such as this (especially for Oracle). While it was suspected that Oracle acquired Taleo for the company's recruitment software functionality (and customer base) reasons, it's clear now, from Oracle's recently released roadmap, that more functionality will be used from Taleo than just recruiting. Specifically, here's what we know:

  • First off, the deal hasn't fully closed yet, so current and prospective customers alike should take all proposed plans with caution. While it's clear that Oracle and Taleo are working together before this acquisition is finalized, plans can (and often do) change course rapidly.
  • It appears as though Taleo's Recruiting, On-boarding, Performance (with added functionality from what the company calls "unification" with Oracle Fusion), and Learning & Development applications will form the base of Oracle's "cloud" HCM solution.
  • Taleo's Compensation Management will be killed off in favor of leveraging the considerable compensation offerings that Oracle already possesses.
  • Oracle has plans for on-going support for those smaller organizations that are currently using Taleo Business Edition (TBE)—a base of approximately 4,300 customers; as well as Taleo Enterprise Edition (TEE).
  • While adept at managing the technical debt and numerous product lines that they have incurred to date, Oracle's agreement to support TBE and TEE nets yet another code base to maintain—a problematic (albeit common) issue especially considering the smaller size of a sizeable portion of Taleo's customer base.
  • No indication has been given from Oracle as to when these changes will be taking place nor whether priority will be given to "plugging in" Taleo as company executives called it; or simply letting Taleo operate as is/where is.

Other than these points, only time will tell what will happen next for Oracle and SAP. However, it's clear that both companies are seeing the competitive threat of Workday and other SaaS HCM vendors (though SAP is the only one so far to actually admit this). Indeed, though no numeric comparison can happen with SAP, Oracle's Fusion HCM has only slightly more than 50 customers signed (which are mainly small to mid-sized companies) versus Workday's 280+ customers, many of which are in the 15-20K employee range (granted Workday has a considerable head-start on both SAP and Oracle). That said, both Oracle and SAP appear to finally be taking the strategic steps necessary to close this gap; a verity that will likely inevitably lead to more announcements. In fact, even now rumors are swirling that say Oracle's not done acquiring companies for its HCM software offering. Others say SAP will follow Oracle's lead from its Apps Unlimited days—keeping various pieces of legacy or antiquated software in perpetuity. The only thing that is for certain is that the battle between these two behemoths is far from over.

Other than that there really is only one more, truly pressing, question that remains open for discussion…if Oracle and SAP were running for office, what would their campaign songs be? For my money, I'd say that "Let's Stay Together" by Al Green would be SAP's (for their efforts to maintain their market position); "At Last" by Etta James would be Oracle's (for the fact that after 6 years in the making Oracle Fusion has finally happened); and for good measure (and representation for the ever-present 3rd-party candidate) "Do You Believe in Magic?" by the Lovin' Spoonful would have to be Workday's. End

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While for the moment, SuccessFactors will remain an independent company that is only affiliated with SAP; as SAP's recent announcements indicate, plans are on the fast-track to make deep integration happen between these two HR software solutions. If SAP had ever been lukewarm as to its HCM offerings, it's clear that those days are behind them.

 

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