As you probably have heard, SAP announced its intent to buy SuccessFactors on December 3rd. While this news is clear validation of our view that cloud computing is challenging the traditional enterprise applications, it is unclear how this transaction will be beneficial for SAP or SuccessFactors customers.

Our Observations about the Acquisition

Clearly SAP is looking at this transaction as a way to enter the cloud market and become the single provider of all business applications. There has already been extensive coverage by the press and industry analysts, but here are a few of our thoughts on the SAP acquisition of SuccessFactors:

• SuccessFactors' current platform is not a single platform, but a collection of applications from the myriad of acquisitions - Plateau, YouCalc, Jambok, Cubetree, Inform, and others. SuccessFactors will need to integrate with SAP's existing ERP and talent management systems, which are quite complex and lack the depth of functionality. But the integration efforts will likely be slow-going given that the purpose of the acquisition is not necessarily to create the next-generation, unified talent management solutions, but rather to help SAP gain a presence in the cloud market.
• A key decision criteria for any customer is a vendor's product roadmap, which includes functional depth, user experience, and product innovation. With SAP's investment in its own LMS, talent management, HCM, and HRIS, it'll take quite some time to integrate and rationalize SuccessFactors' products with SAP's. Most likely, SuccessFactors will get mired with endless integration decisions, making it impossible for it to keep pace with the innovation market demands.
• Customers have long embraced the benefits of deploying neutral and open talent management platforms that are interoperable with HRIS, financial, and ERP systems. With a unified platform and an open platform strategy with other back-office systems, Saba People Cloud provides the smart alternative to high integration costs and cumbersome and expensive upgrade of the back-end systems.

Saba's Commitment to Your Success

At Saba, we believe that one company cannot provide every innovative, industry leading solution. Instead, our mission is to be the single, best solution for helping our customers transform the way work is done in their organizations and to bring the most innovative solutions to market through an open ecosystem on the Saba People Cloud platform.

For the last two years, Saba has been working diligently to reinvent the talent management industry and create this type of innovation, open platform and broad partner ecosystem. This is why we have begun signing strategic partnerships with market leading companies whose services and offerings are complementary to Saba's. In early 2012, we will launch an entirely new type of solution called the Saba People Cloud, a unified, people-centric and social platform designed to transform the way people work.

More than 1,600 customers, 23 million users, and 51% of the Fortune 100 today trust the Saba People Cloud platform, with its proven scalability and performance to meet the requirements of organizations of all sizes. We remained committed to continuous product and technology innovation to ensure that Saba People Cloud platform will deliver to the promise of transforming the way you work.

You are a valued Saba customer and we appreciate our continued partnership. Please feel free to reach out to your Saba Client Executive with any questions you might have. We look forward to our continued partnership in making your talent management initiatives a great success!

Sincerely,

Bobby Yazdani
Founder & CEO Saba