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SAP.iO provides SAP an opportunity to partner instead of acquire

Rather than acquire every company it believes could benefit its customers, SAP is doing something else -- partnering with them.

About 18 months ago, SAP contacted Caitlin MacGregor about her startup, Plum.io. It wanted to invest in her psychometric assessment firm. This outreach is part of SAP's strategy to partner with companies and avoid acquisitions.

MacGregor said "no." But the SAP.iO strategy with MacGregror's firm included not taking "no" for an answer. MacGregor's initial reaction was out of concern for the future of her company.

"I was worried about closing doors to other partners," MacGregor said. The Waterloo, Canada, firm was founded in 2012 and had already built a base of SMB customers. She believed an SAP partnership "was going to be a lot of work to make them look good," she said. "I wasn't going to get much in return."

Caitlin MacGregor, CEO and co-founder of Plum.ioCaitlin MacGregor

SAP persisted and, as she learned more, MacGregor relented. Plum became part of SAP.iO, a two-year-old program that incubates and funds early-stage startups. Plum's testing is used in hiring efforts, but can also be used by firms to better match employees' talents to their work, she said. The partnership provided Plum with integrations into SuccessFactors and security certifications. 

McGregor said the effort by SAP "has made us more credible." Plum gained business from enterprises. Systems integrators, including Deloitte Consulting, are also expanding the company's reach. "We've definitely been able to increase our growth," she said.

SAP strategy differs from peers

MacGregor was at SuccessConnect, SAP's SuccessFactors conference that recently concluded in Las Vegas. The integration of the Qualtrics acquisition was the major theme, but SAP's strategy with HR partnerships such as Plum ran a close second.

Since 2015, SAP has made 13 acquisitions, about half of what IBM and Oracle have made over a similar period of time. SAP prefers partnerships over acquisitions, according to Stephen Spears, chief revenue officer at SuccessFactors. The strategy is not exclusive to SAP.iO and its partner programs. It is using SAP.iO as one way to invest in startups that could provide functionality SAP customers want.

Acquisitions can stifle creativity and productivity at the firm being acquired; "it's just a fact of life," Spears said.

There is a sense of strangulation that occurs regardless of how good I do the post-merger acquisition.
Stephen SpearsChief revenue officer, SuccessFactors

"There is a sense of strangulation that occurs," he said, "regardless of how good I do the post-merger acquisition."

Spears said firms that they do acquire, such as Qualtrics, are seen as critical to adapt to changes in the market. In the case of Qualtrics, it was the rising importance of employee experience, customer experience and other types of measures that can gauge satisfaction. SAP paid $8 billion for Qualtrics.

With the companies it acquires, SAP does everything it can to avoid acquisition strangulation, Spears said. SAP has kept Qualtrics leadership and personnel as well as its "branding and company culture." It has maintained its headquarters and its perks, including free lunches.

Talent acquisition partner

Another firm that received a lot of attention by SuccessFactors at its conference was Censia Inc., a talent acquisition platform based in San Francisco.

SuccessFactors asked Censia, founded the same year as SAP.iO, to join its partner network after customers began asking for integrations with SuccessFactors. It joined in January and its integrations went live in June, said Jo Riley, co-founder and CEO of Censia.

Censia works to improve searches for talent and eliminate bias. Language can hurt keyword searches due to multiple meanings of a word as well as how skills, positions and company names are described, according to Riley.

"There are a lot of different skills that mean very similar things," Riley said. "There are a lot of job titles that mean the same thing."

With a keyword search, "you can only find what you're typing in," Riley said.

Censia aggregates information from over 2,000 sources, including public LinkedIn profiles, professional networks such as Stack Overflow, Dribbble and Kaggle, as well as public records and alumni networks, among other data sources. The startup cleans the data, standardizes it and normalizes it, creating what amounts to one version of the truth, Riley said.

The system also uses AI technologies to remove bias in results, such as a preference for graduates of Ivy League schools. The system will build out its list of people based on individual capability, and not on any bias, Riley said.

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