Lars Dalgaard Interview

Jim

Welcome back to the show everybody, this is Jim and Steve, Steve are you out there?

Steve

I'm here!

Jim

How are you doing? Have you recovered from SuccessConnect yet?

Steve

I think so; I'm pretty much schmoozed out for a little while, lots of good conversation, but lots and lots of it so it's good to be back.

Jim

Yeah, it was a fun time for sure.

Steve

It was.

Jim

So, this week we were going to take, since we've sort of been down this path the last couple of weeks, I think we're going to take another different approach today and talk a little bit about, you know, the main sponsor of our show, which is SuccessFactors.

Steve

Yeah, we have people sometimes asking us, what does SuccessFactors actually do, and we don't talk too much about SuccessFactors itself on this show, because we want to talk about other things outside of our specific product offerings that SuccessFactors does, but they are the reason we exist or the ‘raison d'être' as they say in French, and rather than have us describe it, we actually had the opportunity to have somebody who interviewed Lars, our CEO at SuccessConnect, somebody named Stuart Lauchlin who writes for HR Zone.co.uk. He did an interview that we have and you can hear from Lars, who is really the person largely responsible for creating SuccessFactors, and he can tell you more about what SuccessFactors is and why we exist, and what we do.

Jim

Yeah, it was good interview. We actually loaned out our studio over at SuccessConnect to Stuart and his crew, and so we were able to get a copy of it there. It's also available, I believe, at HR Zone and there may be an article as well, so check it out and check out this interview.

Stuart

Okay Lars, well thank you very much indeed for making some time. Can we start with just a little bit of a basic explanation of who SuccessFactors is because there is this cliché in the industry of the best-kept secret and I suspect you guys kind of fall into that category somewhat?

Lars

Yeah, we're not very good at marketing, but we're great at executing for our customers and what we've done is, over the last seven years, built a product over the web, it's entirely web-based, that allows you to completely transform your organization. We allow you to take any type of an application, we have a suite of eleven things, but basically what you can do is just start out by finding out who your top performers are, who your worst performers are, how to pay them accordingly, how to promote them, how to recruit them, how to make them better, how to take care of them in the business, and how to perform more as a company, how to grow top-line.

So, one of the exciting things we've been able to create is also a dynamic people system, like an employee profile, that sort of is beginning to replace HR MIS systems a little bit, and so it's very exciting because you can go live with this in just a matter of weeks, and we have some of the biggest implementation that's ever been done, like 300,000 of the world's largest retailers, but also in the UK lots of great customers like British Telecom, Lloyds Bank, and those types of things.

Stuart

The area of the market that you guys are in are in "software as a service", a lot of attention in that space has been focused on the customer management people and the salesforce automation people. As you say, you have some of the biggest implementations in the world on that front, can you define software as a service for people, and how it differs from perhaps traditional outsourcing?

Lars

I think the key difference here is that you have a fully operational system that you don't need anybody to help you with so it's much more self-service I guess. It's much more the way I guess consumers in general have become used to doing their banking online in most parts of the world. It's a little bit like that, instead of having to go to a big, honking firm and they do all the stuff for you and then give it back to you, in this case you do it yourself directly, it's very much of an operational tool that, it's really the transformation is you're doing it on the web, but there's a lot of best practices built in. Like you said there's been a bunch of companies that have done some really great things earlier than us in the customers supply area. Now I think it's time for the thing that touches most people in the world which is how to manage people, and that's what we do.

Stuart

The entire HR market was one of the big boom areas for outsourcing in the first place because, as you say, all companies have one thing in common, they all have employees.

Lars

Yeah.

Stuart

What's the potential in this marketplace, do you think, for software as a service as a model in terms of your growth predictions for the future?

Lars

So today we're the fastest growing "SAAS" company that's public; we're also the fastest growing software company that's public, so certainly at the moment we're pretty happy with that. We've grown 100% over the last five years and so we see this as not even the tip of the iceberg yet, it's sort of like just the surface outline and we're beginning to tap into the tip, very, very large market. We have customers, there's like a fast food chain in Singapore over to the French Post Office, to the biggest investment banks in the US, grocery chains in Latin America, and I'm telling you that so you get a feel for how broad this is and how applicable it is. We're in 60 industries today, 60 different verticals, so we think we're literally at the bottom and we are just beginning to work ourselves up in a massive market, I'll be long gone before anybody reaches a material mass.

Stuart

One of the drivers identified by other SAAS players is the one of cost, reduced cost and of course, we've had the rental model for this as opposed to the up-front licence cost. Is cost still the primary driver for people investing in your type of technology?

Lars

No, I don't think it really ever has been. I think it is an important driver but not the important driver, so I think that the important driver is immediate gratification, I am getting something that works that I can immediately do something with. The type of economy we've become and now with this current trouble that's in the global economy is becoming even accelerated, companies need to do something now and the traditional model introduced by SAP and Oracle PeopleSoft, that you have to do thing two years from the day you made the decision is just dead, and so people need something that happens right now and it's effective, and if they don't like it they switch it off. So it's a different quid pro quo between supplier and buyer, and I think that's the biggest driver, and then secondarily is cost and all the other elements that come after that.

Stuart

Again a lot of the other SAAS vendors talk about the relationship with CIO when they're going in selling, some CIOs see software as a service as a threat rather than as an opportunity, because it's taking power away from them, (a) do you find that, and (b) what's the reaction from HR people, HR directors, to this type of technology?

Lars

So we saw that when we started six or seven years ago, but it's changed. We're mature leaders in an organization, and I understand it's not a matter of their personal headcount, it's a matter of delivering for the organization as a CIO, and so they know the organization needs great systems, and frankly the most mature business leader CIOs that are not just living in dinosaurland of, "How much more money can I get for my organization? How many more people can I hire?" They realize they play a job, they're leaders and they need to do this more effectively, efficiently for the organization and so they welcome us in. It's exciting to hear them say, "We can trust this", it's not at the core where we need to spend our time, we need this to be working out of the box, quickly deploy it, get success with it, have it be improved by the vendor and then beyond to something else that's more important for our business.

Stuart

We have to raise the issue of downtime and service outages; obviously, it's very important for customers to get very tight service level agreements off their vendors, what's your policy on downtime? What's your track record?

Lars

We have an outstanding track record and we've just invested the money, because as you've mentioned I think up until now the biggest implementations before we announced 100,000 and 300,000 was something like 5,000 and then I think the biggest vendor in the SAAS base has 5, 10,000 user companies. We have 75 so it's a little more than tin axe, so basically it's an area for us that we have had to go and really invest in the uptime, and it's an absolutely essential aspect of our business, so we've invested in data centres across the world, and we invested in strength and stability and security early on, so that's definitely a direction of strength for us. In fact, whenever we have the opportunity to show our operations we never lose because the IT teams get so excited to see how carefully we've crafted that and how secure we've crafted it.

Stuart

How easy is it to internationalize the kind of offering that you've got, because obviously employment laws and HR laws vary from country to country?

Lars

Yeah so we didn't go that route, I was lucky to get a job at Unilever and Novartis, which were two global organizations, Unilever had 320,000 globally in 192 countries, and so I decided to build the product globally from the start and not internationalize it later. I'm European and I just didn't want something that was dummied down for the European market, it came from the US, so we just built it globally from the start and that's been a very big driver in what we've done. So, we have it today in 22 languages and we're continuing to do that. It's a very flexible product, so you can accommodate cultural aspects very well in the system, and so globality is our key piece. We're being used in 185 countries I think it is.

Stuart

What about the question of integration with other systems, both sort of on premise, HR, or personnel relation systems, but also linking into things like payroll and finance?

Lars

Yeah, I think that's essential and luckily we've built this xml native so unlike other vendors we don't need a lot of third party tools to integrate, and we can just wait until we get a feed or feedback so we do a single sign-on and we have to accommodate those types of elements. We work with 75 systems or so today.

Stuart

What's the biggest success story that you've seen so far in terms of the customers out there? Is there one that you can point to and say, "That's a textbook example"?

Lars

We have many and they do it very differently, but I think some of the most exciting ones are where we've seen them lose 10,000 people less than they were losing before SuccessFactors, and these are thousands of people that they wanted to keep to drive themselves forward. Both on a personal level for running a business I know how much it hurts to lose somebody you don't want to lose, and then for them to be able to keep those, but then on a business side be able to execute them much better because you've now have been able to keep those people. That's something we're very proud of and we have hundreds and hundreds of customers that have done that.

Stuart

You guys have kind of come into the SAAS market almost in a different way to a lot of the other SAAS vendors in that they've started at the low to mid range market and gone up to the enterprise. You've seem to have started at the enterprise and come down to mid-range, is that just the nature of human resources?

Lars

It's completely accidental. There was not any thought put into it, I just went out and sold to whoever the hell wanted to buy it, and there are more big companies that wanted to buy it than small.

Stuart

So from your point of view concerns about the scalability of software as a service are totally unfounded?

Lars

It's completely, yeah, that's why it's so odd for us to get those questions because we've just always had to play the big boys' game from the first day. Now luckily today we also have some of the smallest implementation with three people, and we've made a big investment into small. We think small and medium is a very important market, we work a lot in alliances with HR outsourcing co-partners, but enterprise is our bread and butter, it's the crown jewels where I started.

Stuart

Can you tell us a little bit about the relationship with IBM and how that works?

Lars

I think IBM is an important brand globally, they have a lot of trust from a lot of clients and so I think it's an important opportunity for the two companies to work together. We're grateful they looked across the whole world and found SuccessFactors; we're going to be their partner. We had the Head of the Human Capital Division speaking at our conference, joined me on my key note, stating that he thought we are the most exciting company. I think that's fantastic, so we've had several meetings with many different groups across our companies and we're continuing to invest very aggressively in this. It's going to be a very, very aggressive combination of these two companies going to market together globally.

Stuart

If I'm a software as a service virgin, as a company, what do I do as a starting point? Do I come and talk to you guys and you give me some consultancy advice? Do I sign up on the website, fire away and off I go?

Lars

You can, there is a trial you can start with, but it's easiest, we respond within a couple of hours to anybody who gives us a call on any of the phone numbers anywhere on the website, or talk to some customers. We list every single one of our customers on our website so they're all referenceable. Talk to them, or have us come and show you what we do. We can do it over the web very seamlessly, no intrusion of your privacy, you can be at home and you can get a full experience of what the product can do or we can come on site and help you with it. We're everywhere in the globe and we're happy to service people immediately.

Stuart

One last question, what's it like to be European in the US sufferance?

Lars

I haven't gotten that question before. It's a massive advantage actually, because you're just thinking very differently out of the box all the time. I think I don't come with a bias around how it needs to be, whereas a lot of the other CEOs are very ‘cookie cutter' and they are competing with each other. I don't really care about what they're doing; I care about building a great company that breaks through in terms of how it adds value to customers and have an employee group where we are doing things that make us very excited every day. I tell everybody every day at all our alliance meetings, "If you don't love working here then what you should do is leave", and that's how we all think. So, it's a bunch of people who are doing things they care about and it's creating great value globally. 3.7 million users, it's exciting stuff.

Stuart

And no assholes!

Lars

And no assholes, and we just insist on that!

Stuart

Super, thank you very much indeed.

Speaker

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