SuccessFactors, maker of SaaS (software as a service) applications for employee performance and talent management, announced Monday that it has landed a global agreement with Siemens, in another sign of the on-demand model's growing acceptance by enterprises.
The San Mateo, California, vendor's software will be rolled out to 420,000 users in 80 countries, and in 20 languages, according to SuccessFactors.
In a statement, Siemens said it went with the vendor in order to standardize on a single platform and separate "strategic execution and management" from its transactional HR systems. Siemens added that it is pursuing a cloud computing strategy in general, believing it can lower IT costs and speed up processes.
"Siemens is a traditional SAP house. For their team to make a big bet on SuccessFactors represents the new type of thinking present among many CIOs and enterprises today," Forrester Research analyst Ray Wang said in an e-mail.
"Their software vendors may not be innovating fast enough to keep up with the enterprise's requirements."
SuccessFactors declined to release the exact price tag on the deal, but said no single customer represents more than 5 percent of its revenue, which was US$35.2 million in the first quarter, a 50 percent increase over the year prior.
The vendor claims to have 2,700 customers and 4.7 million end-users.
While companies worldwide are reining in IT spending as the global recession persists, SuccessFactors occupies an opportune niche, said Paul Albright, chief marketing officer.
"CEOs and CFOs are looking to come out of the economic downturn much faster, with more focus and vigor," he said.
Therefore, companies are investing in software that helps set employee goals and gets top performers "in a position to have the biggest impact," he said.
But industry observers are predicting big growth for SaaS applications overall. The global SaaS market will reach $8 billion this year, up from $6.6 billion in 2008, and it will skyrocket to $16 billion by 2013, according to a recent Gartner report.