SuccessFactors Drives Top and Bottom Line Growth

Does Performance & Talent Management really impact the bottom line?

The billion dollar question: does a focus on performance & talent management really drive financial results for organizations? We don't think so, we know so.
Saugatuck Technology Inc., a leading SaaS (software-as-a-Service) consulting and research service, studied all of our public customers with 500 or more employees that have been using SuccessFactors for at least 3 full quarters and found that at least 2-3% top line growth is attributable to the usage of SuccessFactors.

This report, Strategic Talent Management Solutions and Superior Top line Growth, confirms what we have believed all along – setting and aligning goals throughout the organization, measuring and managing employee performance, compensating employees based on their results, and focusing on making great use of talent across the organization directly lead to better financial results.

Comparing Apples to Apples

This study compares each company with the industry average of its competitors. Focusing on difference vs. industry competitors ensures that comparisons are not skewed because of differences in industry performance. That means that for a given SuccessFactors customer that the company’s financial performance is compared to its industry mean and not to companies in completely different industries.

Research Findings

In terms of revenue growth, SuccessFactors' customers have clearly outperformed their industry competitors. Over 12 months, our customers grew revenue an average 4.8% percentage points more than their competitors. Over 36 months, this difference increased to 11.4% percentage points.



However, revenue growth alone is not a good predictor for shareholder value. In order to deliver sustained shareholder value companies need to balance growth with strong profit levels. Thus we have also analyzed net income growth between our customers and their industry competitors.

Net Income shows even greater gains over time than revenue growth. Delivering value to shareholders depends on profit and growth.

Gains appreciate over time

To further establish the relationship between usage of SuccessFactors and increased revenue growth, Saugatuck looked at gains based on length of deployment of our solutions, versus the competitor industry average.

As you can see below, SuccessFactors customers grew over the time of the deployment, with customers using SuccessFactors for at least 12 quarters seeing the greatest delta in growth from their competitors.

If you look closely, you can see that there is acceleration in revenue growth for our customers. In fact, they have 98% stronger revenue growth (10.4% in absolute percentage points) than their competition after only 3 years of using SuccessFactors.

Only 2-3% ?

2-3% top line growth for a large company could represent billions in revenue. As the charts above illustrate, the average growth has been much higher for most customers. Why then do we claim only 2-3% top line improvements in performance?

Too many variables effect growth to claim that SuccessFactors drove all of the improvements seen by our customers. With that being said, the research results do show that there is an increasing difference in performance over time for companies using SuccessFactors, which strongly indicates at least a 2%-3% average increase in annual revenue and profit growth. Saugatuck determined that companies investing in HCM are likely to see savings from increased retention, improved engagements, and hard dollar savings from efficiency gains. The SaaS model helps accelerate implementation and realization of these potential gains.

SuccessFactors Research has also studied the financial performance of our customers on an industry and size basis (independently of Saugatuck), and has developed a tool to help calculate the potential effectiveness and efficiency gains that a company might see when implementing SuccessFactors – available now on the SuccessFactors Customer Community. We can help you analyze your company to understand if your performance & talent management initiatives are truly driving business results. Please email us directly for more information at research@successfactors.com.