Softscape Settles SuccessFactors Lawsuit

Posted on December 23, 2008. Filed under: HR Systems | Tags: , , , , |

Today Softscape settled the lawsuit filed by SuccessFactors in March of 2008.   This lawsuit, which we wrote about in a prior blog post, revolved around a contentious sales presentation which was developed by Softscape and leaked into the public domain.   In the final settlement Softscape agreed that the presentation in question had some errors and should not have been distributed directly to customers.

As we discussed in our earlier post, this type of activity is very common in the enterprise software business.  It is very common for almost every software company to create harsh and pointed “talking points” about competitive products and claims.  In my days in the software industry I wrote many such documents and frequently used them in sales training and customer discussions.

In this particular case, the lawsuit, filed by SuccessFactors, seemed unnecessary and of little value.  SuccessFactors has managed to grow at over 70% during the period since March and both companies have continued to grow and prosper as the market for talent management software continues.   All the vendors in this market will continue to build aggressive sales presentations and I personally do not think lawsuits are a good way to promote healthy competition.

We continue to have great respect for both companies, and we firmly believe that the most important way to build a software company is to build excellent products, clearly segment the target market,  provide outstanding customer service and support, and stay very close to evolving market needs.   Both Softscape and SuccessFactors are successful, growing companies and both are executing well.

The Talent Management Software Market Evolves

We do see some major changes taking place in the talent management software market – and we will be explaining this further in the coming months.    Not only is the market growing, but it is becoming more mature – organizations now realize that the “talent management suite” is not really a suite, but a complex set of enterprise software which must provide a complete solution for many elements of people management.   The days of young, small companies entering this segment of the market are ending – and the players today are rapidly expanding the definition of “talent management” software to include much more than the traditional elements of performance, succession, and career development tools.

Watch for more from us in this exciting and evolving market in 2009.

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Perspectives on the SuccessFactors and Softscape Lawsuit

Posted on March 19, 2008. Filed under: HR Systems, Talent Management | Tags: , , , |

On March 12, two of the leading talent management software vendors went to war.  SuccessFactors, a leading provider of performance management software,  filed a lawsuit against Softscape, a leading provider of integrated talent management software.

The lawsuit, and continuing press releases, claims that Softscape inappropriately logged into SuccessFactors’ internal systems, distributed false and misleading claims about SuccessFactors’ customers and products, and misused SuccessFactors’ name and logo in a presentation distributed to clients.

We have seen both the filing and the presentation in question.  I would characterize it as a very aggressive marketing move by Softscape with a combination of truth, exaggeration, inaccuracies, and salesmanship.  It was cleverly designed to be used by internal Softscape sales representatives but was also designed to look like a SuccessFactors-created document (not a very ethical thing to do).

As an analyst firm, we admire both companies tremendously.  They each have tremendous strengths in their products, their people, and their support.  They have vastly different heritages and strategies, and these differences have likely led to this dispute.

Some Perspectives

I spent almost 10 years of my career in a highly competitive software market – the database industry.  During my tenure as a product, business development, and marketing director at Sybase, I woke up almost every day worrying about one arch rival competitor, Oracle.  This relentless focus on our competitor had its good and bad sides.

On the positive, it helped us gauge the market and make sure that our value proposition was clear and distinct.  On the negative side, however, we found ourselves consumed with internal debates, discussions, and speculation about what was going on across the bay (both companies are in the San Francisco Bay Area).  In fact, our VP of Marketing purchased “The Art of War” by SunTsu for everyone to read, helping us learn how to “outflank” and “outposition” ourselves from our competition.

My perspective now, almost than 1o years later, is that this is not a good way to run a business.  While all companies (particularly software companies) serve markets with many competitors, no long-term sustainable business can develop great products and services with a single-minded focus on their competitors.  Rather, they must take this energy and enthusiasm and focus it on their customers, their market, and their desired position in that market.  While competitors are a wonderful source of ideas and energy (nothing like fear to get you going in the morning), overfocusing on them leads you away from your market, your customers, and your core value proposition.

SuccessFactors is clearly the “marketing leader” in performance and talent management software in the US today.  They are spending 2-3X any other company (and more than 1X revenues) in this area, so clearly they are very visible and present.  Our research indicates that SuccessFactors has more sales people than companies twice their size in revenues.

This strategy, that of trying to build a “first-mover advantage,” is just that, a strategy.  It may or may not succeed in the longrun.  Other companies, like Softscape, have a different approach.  Softscape has built its product over many years and offers a rich, complete, and well proven HR solution – which includes an HRMS as well as modules in every major talent management area.  The company is internally funded and has chosen to grow steadily through internal growth.  The company has invested heavily in consulting to help their clients “implement talent management” not just “implement HR software.”

While bashing the competition may be a common, visceral reaction of any company (and Softscape was clearly in this market long before SuccessFactors), my perspective is that it often takes the “bashing” company in the wrong direction.  Rather what I recommend every software company do is admire your competition.  Learn from them.  And make sure your information is accurate.  It is very easy to “guess” about what your competition is doing – when in reality they are probably having many of the same challenges you are. 

Our recommendation to buyers is to ignore this entire episode.  It is a common thing in hotly contested software markets and both companies are suffering by raising this to such a public level.  It may make good theater, but it does not help either company (or you) succeed.

Our recommendation to other software vendors is to try to avoid this type of focus.  Spend your waking hours talking with your customers and prospects, building offerings that meet their needs, and thinking continuously about your value proposition and how you can find new opportunities to add value.  If you do these things you will find your “niche” and your competitors will wake up one day saying “wow, I wish we had thought of that.”

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Talent Management Suites: Research Launched

Posted on January 16, 2008. Filed under: HR Systems, Talent Management | Tags: , , , , , , , , , , , , , , , , , , , , |

We just released the largest-ever research study on the market for talent management suites.  This research took place over the last 18 months and is the result of an exhaustive analysis of 20 vendors, 800+ HR managers, and in-depth meetings with more than 50 organizations.  Leighanne Levensaler, our principal analyst in this area, is responsible for this tremendous effort.  (Click here to download the table of contents.)

A few key findings: (press release available here)

  • This is a very big market.  We estimate the total market at $2.3 billion in 2008 (this includes software and services for compensation, performance management, learning management, succession management, and recruiting systems), and growing at almost 20% per year.  For an overview of the segments, please click here.
  • There is no real “leader” yet.  As the research points out, several vendors are growing very quickly, but none command enough market share to come close to being the “leader.”  With new vendors continuing to enter (payroll providers, for example), the market will continue to expand before a real “leader” emerges.
  • We evaluated the software solutions using a technique we call “capability charts” – which show you the depth of functionality, experience, growth rate, and market adoption of each product in each functional area.  What these charts show is that each vendor has some very strong areas, some strong areas, and some “emerging” areas.The three vendors with highest ratings include CornerstoneOnDemand, StepStone, and SuccessFactors.  Other important vendors include: Authoria, Halogen Software, HRsmart, Kenexa, Lawson,, Oracle, PeopleSoft, Plateau, Saba, SAP, Softscape, SumTotal, Technomedia, TEDS, Vurv, and Workstream.
  • Our research found that very few organizations have really adopted the end-to-end suite yet.  Large organizations find this very difficult, because of their large tapestry of existing legacy systems.  We do believe that the existence of these new systems is enabling people to map a 3-5 year architecture to converge and combine HR applications. 
  • There truly are many breakthrough new talent management and business applications possible with these systems.  Initiatives like pay for performance, integrated development planning, performance-driven succession management, leadership development, workforce alignment, career development, etc. are all difficult to do without an integrated solution.  We clearly see tremendous business improvements possible with these new systems.

We have many many case studies to share in this area.  We look forward to your comments in this exciting new area of talent management.

You can listen to Leighanne’s overview here.  Download the study overview here.  Purchase the research report here.

If you would like to review some of the other materials on this market, please visit our talent management suites research program or join our membership program.

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