Definition

SAP SuccessFactors

Contributor(s): David Essex and Delaney Rebernik
This definition is part of our Essential Guide: How SAP is handling the social media explosion

SAP SuccessFactors is a major vendor of cloud-based human capital management (HCM) software and talent management software.

SAP SuccessFactors has long been best known for its talent management suite and seen as an innovator in the segment, which has grown steadily since the company's founding to become a major component of HR technology. SAP SuccessFactors has consistently ranked at or near the lead position in talent management vendor ratings from analyst firms like Forrester, Gartner, IDC and Nucleus Research.

Since SAP acquired SuccessFactors, it has made the brand, product and technologies the centerpiece of its software as a service (SaaS) HCM offerings and has integrated them with SAP application suites, including on-premises HR systems, such as SAP HCM.

Capabilities of SAP SuccessFactors

The company breaks out its talent tools into modules in its SAP SuccessFactors HCM Suite. Capabilities include the traditional "four pillars" of talent management: recruiting, learning and development, performance management and compensation management. The suite also has onboarding and time and attendance software, as well as modules for workforce planning and people analytics.

Employee Central is the core HR hub of the SAP SuccessFactors product line. It serves as the HR system of record, a data repository that stores information on each employee, such as address, Social Security or national identification number, salary and benefits enrollments. It may also contain regulatory compliance records, information about job titles (positions) and the reporting structure in the organization.

Employee Central also has employee self-service (ESS) and manager self-service functions, which allow users to make changes they have the authority to make, without assistance from the HR department.

This chart compares HR processes with SuccessFactors modules.
Connecting SuccessFactors modules with HR processes

Employee Central Payroll is a separate, optional module that handles payroll, which is often considered a core HR function. As of 2018, SAP SuccessFactors claimed the module had out-of-the-box support for payroll requirements in 41 countries. Many SAP SuccessFactors users already have a payroll application or service they prefer to use, such as that offered by Automatic Data Processing Inc. (ADP) or a multi-country payroll outsourcing (MCPO) provider. For this reason, SAP SuccessFactors provides a wide range of integration options from both Employee Central and Employee Central Payroll.

The vendor has recently joined other HR software makers in adding artificial intelligence (AI) to augment the analytics function and to help automate HR processes with chatbots, natural language processing (NLP) and machine learning.

History of SuccessFactors

The company was founded in 2001 by Lars Dalgaard, and during its first decade, SuccessFactors acquired five companies to bolster its cloud-based offerings. SuccessFactors went public in 2007.

In early 2012, SAP acquired SuccessFactors for $3.4 billion. The company became an indirectly wholly owned subsidiary and was renamed SAP SuccessFactors. At the time, the acquisition was seen as a major effort by SAP to get further into the fast-emerging market for SaaS business applications.

Industry analysts viewed the SuccessFactors acquisition as a significant competitive salvo against Oracle, SAP's biggest rival in enterprise applications. Soon after, in April 2012, Oracle bought Taleo, a maker of SaaS recruitment and talent management software, for $1.9 billion.

SAP SuccessFactors is headquartered in South San Francisco, Calif.

Challenges with SuccessFactors

As a SaaS vendor acquired by another vendor, SAP SuccessFactors faces challenges of integrating with the legacy HCM and ERP applications of its parent company. A large part of its original customer base added SuccessFactors for the talent management features but kept their original core HR systems made by different vendors. The situation raises difficult questions about whether to move entirely to SuccessFactors by adding Employee Central, a move that presents integration and data migration challenges.

SAP users who employ either the on-premises SAP HCM suite or a third-party product for all or most of their HR functions must decide whether to switch to SAP SuccessFactors. In 2018, SAP announced it will eventually require SAP HCM users to adopt S/4HANA HCM, an on-premises HCM suite for S/4HANA, the next generation of its ERP suite. SAP made clear, however, that it will focus the bulk of its HCM development efforts on SuccessFactors and considers it to be the eventual upgrade path for HCM users.

This was last updated in May 2018

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