SuccessFactors Services: A Growth Market That Requires Strategic Thinking

This report outlines client buying behavior and preferences in the SuccessFactors service market. We spoke with more than 20 reference clients to understand their experience with working with service providers to deploy and support the SuccessFactors applications (see Exhibit 1). Refer to the HfS Blueprint Report HfS Blueprint Report: SuccessFactors Services 2017 for a detailed analysis on the capabilities and vision of SuccessFactors service partners. Here, we outline some of the key buyer trends that emerged from this study and provide recommendations for buyer enterprises embarking on SuccessFactors service engagements.

Exhibit 1: Study Demographics

Source: HfS Research, n=23
 

The key findings of this study are:

• To date, the most common deployments are for SuccessFactors Employee Central and Performance and Goals modules. Clients are considering or evaluating most of the SAP SuccessFactors modules for deployment and increasingly linking these to the overall HR strategy.
• Enterprises using SAP for their ERP processes are likely to opt for SAP SuccessFactors for their HR solution to simplify integration efforts.
• The majority of the current SuccessFactors services market is focused on implementation services, but we expect consulting and ongoing support services to see robust growth in the next few years.
• Clients are satisfied with delivery capabilities of SuccessFactors service providers but find that a holistic and long-term view is often missing.

Stronger Alignment with HR Strategy

Clients shared the modules they are currently implementing and have already deployed, depicted in Exhibit 2. Several clients are considering and analyzing additional modules for future deployments. Deployments vary between global roll-outs and regional deployments.

Most of the clients we spoke with have implemented or are implementing Employee Central and Performance and Goals. Employee Central is the flagship application that most enterprises start with. However, some clients deployed it as a standalone module with little integration with the rest of the HR strategy. These clients are now implementing Employee Central again, with a stronger alignment with the overall HR strategy.

Exhibit 2: Which SAP SuccessFactors Applications Did You Implement?

Source: HfS Research, n=23
 

SAP ERP Is the Main Reason Clients Select SuccessFactors

Most of the clients we spoke with said the top reason they selected SAP SuccessFactors was that they were running SAP in the back office. Enterprises already using SAP for their ERP processes are likely to opt for a corporate SAP strategy for simplicity of integration. Most of the opportunity for SAP SuccessFactors is therefore with existing SAP ERP clients. However, product functionality of specific modules, such as Learning, and the ability to scale globally (compared with Workday, which tends to be stronger in a few geographies) are also important reasons for selecting SAP SuccessFactors.

Exhibit 3: Reasons Clients Select SAP SuccessFactors

Source: HfS Research, n=23
  

SAP SuccessFactors Service Opportunities Across the Value Chain

In terms of services, the SAP SuccessFactors service partners have developed consulting, implementation, and support services to assist clients in their deployment journeys. These align with the HfS SAP SuccessFactors services Value Chain of services (see Exhibit 4).

Exhibit 4: What percentage of current SAP SuccessFactors Services business is from the following services?

Source: HfS Research, n=13 SuccessFactors service providers

More than 50% of the current SAP SuccessFactors service market is dominated by implementation projects. Most service providers expect consulting and post-deployment support services to increase at the expense implementation services in the next few years.

Existing Relationship Still Main Reason for Service Provider Selection

Clients shared their main reasons for selecting their service provider. Exhibit 5 shows the selection criteria that were mentioned at least twice.

Exhibit 5: How Did You Select Your SuccessFactors Service Provider?

Source: HfS Research, n=23

Clients consider current service provider relationships when selecting a partner for a SuccessFactors service project. In fact, this is always one of the leading reasons clients select new service providers for any IT service project. It is important to compare capabilities and experience between service providers. However, ultimately, the success of the project depends on how well the service provider understands the client’s business and the cultural alignment between the two entities. Clients therefore at least include existing service provider relationships in the RFI process, even if the service provider is working in a completely different department in the enterprise.

Execution Better Than Vision

Clients rated SAP SuccessFactors service providers highest for their flexibility and incorporating client feedback, quality of account management, and geographic footprint and scale. They rated the service providers lowest for their ability to deliver best practice consulting capabilities and to provide a holistic, long-term view.

Exhibit 6: Client Satisfaction with SuccessFactors Services

1 – Flexibility and incorporating client feedback
2 – Quality of account management team
3 – Geographic footprint and scale
4 – Quality of project management team
5 – Availability and strength of resources
6 – Scale and experience of services
7 – Experience delivering industry-specific services and solutions
8 – Assistance to help clients move to the cloud
9 – Best practice consulting capabilities
10 – Ability to adopt holistic, long-term view

Source: HfS Research, n=23
 

• Flexibility: The top strength noted was flexibility and incorporating client feedback. One client highlighted that the service provider “asked for our feedback, good or bad, so that they could improve.” Several clients noted that flexibility typically increases as the engagement with the service provider progresses. Clients appreciate service providers that do not constantly refer to the contract and do not always charge for extra resources when they are required. In addition, while a strong, detailed and strict implementation methodology is a strength of many service providers, they should build in some flexibility to adapt to client specifics. One client said of the methodology, “We owned it and leveraged their expertise.”
• Account management: Clients appreciated service providers’ efforts to form a strong relationship. Several clients named and praised their account managers. One said that their account manager was “very good at establishing a relationship” and that “this is definitely a partnership compared with other service provider relationships we have.”

• Geographical footprint and scale: Several clients prioritized global presence and capabilities when selecting their SuccessFactors service provider. A service provider with an Indian delivery center in the same city as a client office, for example, was also a strong selection reason. Most service providers scored well on this criterion in the Blueprint, and, as one client summed it up “had feet on the ground where we wanted them.” For most of the clients, the SuccessFactors deployment was driven from the central headquarter site, but even they agreed that the nearshore and offshore resources were critical to project success. Good availability of relevant skills and the ability to work in the same time zone as the client were strengths for the nearshore and offshore teams. Clients also highlighted the importance of factoring in delays in the project due to delays in visa requirements of any offshore or nearshore resources coming onsite.

The top three scoring criteria were followed by the quality of the project management team and the availability and strength of resources. Generally, clients were impressed with service providers’ strong technical capabilities and team spirit. One client highlighted that “the project manager really did a great job keeping stressed-out resources calm and functioning.” However, there were also challenges with project managers and resources in general. Some clients also noted that the enterprise should take responsibility for project timings, and actively book progression meetings with the service provider. Many clients complained of mixed skillsets and experience in the team. One client said, “Some of the (service provider) team members were extraordinary. Some were subpar. We didn’t realize which was which until too late in the process.” Communication with offshore team members was also sometimes challenging. One client insisted that the service provider offshore team visit the client onsite to personally meet the end-users and gather requirements. This enabled the team to feel more connected with the client as well as reduce errors in communicating requirements.

We also asked client references to identify the main strengths and challenges of their SuccessFactors service partners. Table 1 presents the top strengths and service provider opportunities mentioned by reference clients. These are listed in order of client mentions. 

Table 1: SuccessFactors Services Market – Strengths and Development Opportunities

Source: HfS Research, n=23
 

Measures Customers Must Take to Achieve Their Desired Outcomes

1 – Be demanding but reasonable: Ensure that the service provider can provide all the skills you require. This may include HR business consultants and technical experts for each of the modules you are implementing. However, note that there is a shortage of SAP SuccessFactors service resources in the market, so you will likely get a team of mixed experienced consultants. If any of these are unsatisfactory, ask your service provider to swap them out. All the service providers in this Blueprint have been flexible to do this when requested.

2 – Listen to business advice: Listen to best practice advice when the service provider offers it, for example about organizational change management implications and likely post deployment support requirements. We spoke with several clients who did not heed the advice, either because they thought they had enough in-house experience, or because they thought the service provider was simply trying to sell them more services. These clients admitted that they regretted this, and wish they had listened to advice earlier in the deployment.

3 – Involve end-users in the software selection (but only if they can affect the decision): When selecting the software (in this research, the decision was most often between SAP SuccessFactors and Workday), involve the end-users. For ultimate success, it needs to be extensively used by employees, so it’s a good idea to get their feedback early on. They can test the user interface, flexibility, and ease of use of the product. However, this is not necessarily a useful exercise if the decision will be made by business managers. One reference we spoke with tested the products with employees, who selected Workday. However, this was overturned by the IT department, which had a corporate SAP strategy. In such situations, it may be better to let employees only test the selected product.

4 – Understand the pros and cons of joint software and services RFPs: It may be a good idea to ask a service provider to present their chosen HR application in your RFP process. You will be able to better understand the complete solution potential, rather than the individual software modules and the service offerings separately. However, software and services salespeople do not often have the same focus, resulting in a confusing presentation that may actually fall short of explaining the full potential of the solution to meet your needs. Clearly explain your business requirements and plans to RFP respondents to ensure that they remain focused on these.

5 – Do not underestimate change management! Change management is one of the most important process in all SaaS services engagements, yet it is also one of the most commonly overlooked. Most clients are focused on fast deployments that radically change the HR process, sometimes corporation-wide. The question you must ask is: is your enterprise ready for it? Focus less on the functionality and testing of the product, and focus more on the impact of change on people and processes. Distribute the SAP SuccessFactors modules to employees as soon as possible to elicit feedback. Ensure that your service provider also focuses on your end users rather than the product. You can oversee change management internally, but ensure that you have the right skills in place. Some service providers also provide best practice advice for clients who want to keep this in-house.

6 – Contract consulting services: Consider the consulting and advisory services offered by your service provider, especially if you are embarking upon an enterprise-wide SAP SuccessFactors deployment. As well as change management, service providers can offer cloud readiness services, SaaS business case development services, HR strategy consulting, governance consulting, project management planning services, and much more. Clients who initially deployed a few modules with a fast implementation approach and therefore often little alignment to the business are increasingly considering consulting services before their phase-two deployments.

7- Have a plan for ongoing support services: You must ensure that you have an ongoing support services strategy, whether in-house or with a service provider. The myth that SaaS products do not require any support services because they are so easy and intuitive to use and update has caught out many enterprises. In fact, because of the regular updates, business managers and employees need to understand the implications of all changes. Many service providers offer a flexible support services model with remote or onsite assistance as and when you need it. It is difficult to plan for this if using in-house resources, so using a service provider, either solely or in addition, is often a good idea.

8 – Decide if you are undergoing a transformation or a re-platforming: Many clients are simply re-platforming their current HR process to the cloud, using the same tools as they did for the on-premise solution. This in itself is of little business benefit in the long term. In a transformation project, you should re-think the entire process and be prepared to make changes to it, then use the technology to facilitate the change.

Bottom Line: A Growth Area That Requires Strategic Thinking

We expect the SuccessFactors service market to enjoy good growth over the next few years. Service providers in the Blueprint research report an average of 60% growth of SAP SuccessFactors services business in the last fiscal year and expect an average growth of 68% in the next fiscal year. From a client perspective, it’s important for you to continue to communicate with SuccessFactors service providers and peer enterprises to ensure best practice methodology in this fast growth market. Current deployments are still largely focused on fast, tactical implementations. To ensure a successful SuccessFactors journey, the project should be aligned to the corporate HR strategy and your service provider should be able to share best practices, taking into consideration future state.

HfS premium subscribers can access the full blueprint report here.