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SuccessFactors-Softscape rivalry has gotten personal.
Beyond a series of lawsuits between the two vendors
of human resources software, their respective chief executives are trading barbs.
In a recent interview, SuccessFactors CEO Lars
Dalgaard called Softscape a "very uninteresting story." Noting that four members
of the Watkins family—CEO Dave Watkins along with his father, mother and
brother—have roles at Softscape, Dalgaard said: "That’s just nepotism
to a degree that’s obnoxious."
Watkins, who founded Softscape in 1995 along with
his father and brother, declined to respond directly to the nepotism remark.
But he says Dalgaard may be envious of Softscape’s profitability. Thanks
partly to heavy spending on sales and marketing, SuccessFactors has been reporting
net losses. "I’m sure there’s a bit of jealousy on his side," Watkins
says.
Softscape and SuccessFactors are among some 20
vendors selling talent management software—applications for such key HR
tasks as recruiting, performance management and compensation management.
Both vendors in the fast-growing market are highly
regarded. A Forrester Research study last year of 10 integrated performance
and compensation management products named four leaders: SuccessFactors, Softscape,
Plateau Systems and Authoria.
Softscape sued SuccessFactors in 2005 in connection
with a former Softscape employee who had joined SuccessFactors. That suit resulted
in a settlement in which both companies agreed not to solicit each other’s
employees for a six-month period that began in June 2007.
In March, SuccessFactors sued Softscape, accusing
it of false advertising, unfair competition and other alleged misdeeds associated
with the circulation of a PowerPoint presentation that was highly critical of
SuccessFactors. Softscape has said it authored the document but that it was
for internal use only.
A judge issued a preliminary injunction that bars
Softscape from disseminating or "affirming the purported truth or accuracy of"
the presentation.
Then in June, Softscape sued SuccessFactors again,
alleging "deceptive and unlawful conduct" to gain detailed proprietary information
on Softscape’s software products.
SuccessFactors called that suit an attempt to divert
attention from Softscape’s "illegal and reprehensible conduct."
As the lawsuits proceed in court, the two firms
keep battling in the marketplace. And their CEOs continue to duel.
Dalgaard dismisses the idea that he’s jealous
about Softscape being in the black.
"SuccessFactors can be profitable tomorrow," he
says. "Anyone who understands the model would be able to see that. SuccessFactors
has chosen to continue investment as long as the opportunity is rewarding."
SuccessFactors has snagged more of the limelight
over the past few years, partly thanks to rapid growth. Its annual revenue jumped
95 percent in 2007, to $63.4 million.
Watkins concedes his firm is both smaller and growing
more slowly than Dalgaard’s, with annual revenue in the range of $33 million
to $50 million and growth last year of slightly more than 20 percent. But Watkins
says he has landed prominent customers such as Procter & Gamble, KPMG and
Unilever—Dalgaard’s former employer.
Watkins frames the rivalry with Dalgaard in terms
of the tortoise and the hare—with Watkins playing the tortoise. "What
happened," he asks, "in the end of that wonderful, proverbial children’s
story?"
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