A Gem of a Deal: SuccessFactors and Plateau Come Together

A major announcement in the human capital management (HCM) world occurred on April 26, 2011. SuccessFactors, a top vendor in performance management, announced its intention to purchase Plateau Systems, a leading learning management system (LMS) vendor. Although both vendors have competing products in the talent management space, Plateau had something SuccessFactors needed: an LMS. With the loss of GeoLearning, SuccessFactors’ former LMS partner, which was acquired by SumTotal in January 2011, SuccessFactors was left with a gaping hole in its solution set. Although SuccessFactors executives believe that the future of learning is more in the informal and social realms, organizations need and want LMSes to manage their increasing compliance training needs while keeping a close eye on the whole social and informal learning market. Organizations also have formal courses and simulated and role-play learning that the LMS tracks and reports on. The word is that SuccessFactors’ sales staff have been bemoaning the lack of an LMS to help them close deals. Today, organizations are much more interested in getting multiple HRM functionality from one vendor. Often this suite approach includes performance, compensation, learning, and even recruiting (for more details, see my “Four Pillars of Talent Management” research report). SuccessFactors now has a very strong and complete “four-pillar” solution.

Plateau fetched a nice price: $290 million — $145 million in cash and $145 million in stock. SuccessFactors’ definitive agreement to acquire Plateau is expected to be complete in the summer of 2011. SuccessFactors will have two major US offices: one in San Mateo, California, its current headquarters, and the other in Arlington, Virginia, Plateau’s current headquarters. With aggressive integration of the products, the Plateau Systems name will eventually disappear. Most of Plateau’s core staff, including CEO Paul Sparta, will remain on board and help shepherd the integration of the two technologies into a unified offering. Both companies’ products are built on Java EE, and although work lies ahead, the unification of the platforms will be much faster than other recent acquisitions in the HRM space.

What does the planned acquisition mean for customers? One issue that comes up immediately is the future of Plateau’s installed customer base, since SuccessFactors is SaaS-only. SuccessFactors will continue to support Plateau’s installed base. This provides good maintenance revenue, and although many of these installed customers are considering a change to SaaS, there are some large customers that will most likely want to remain on-premises. They will be supported, but I can’t imagine many upgrades or new features aimed at the installed base. I expect SuccessFactors will work to bring over these customers. So SuccessFactors can’t claim that it is SaaS-only — at least for a while. The question that does not have a clear answer is what happens to Plateau’s talent management offerings in performance, succession, career development, and compensation. My guess is that SuccessFactors will look closely at Plateau’s  offerings, integrate those features that shine, and other Plateau offerings in these areas will quietly fade. This will be an issue for Plateau’s performance customers, but I think that in the end they will have a best-in-class product by moving to SuccessFactors’ SaaS offering.

This planned acquisition is a win all around. SuccessFactors will have a complete suite, including learning management, as well as a real leg up in the growing social and informal learning segment with the integration of CubeTree and Jambok, both recent SuccessFactors acquisitions. Plateau becomes part of a growing state-of-the-art HRM solution and adds its best-in-class LMS to the mix. Plateau’s SaaS customers have the opportunity to examine new functionality from a company that certainly is a SaaS leader, while SuccessFactors’ customers get a very robust LMS to add to their rich solution set.