SAP and Cloud Computing in 2012 and Beyond SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of SAP and Cloud Computing in 2012 and Beyond
In 2012, after several failed attempts at establishing a cloud computing solution for its entire Enterprise Resource Planning (ERP) suite, SAP announced two major acquisitions: SuccessFactors, a major SaaS provider for Human Resources software and Ariba, a major SaaS provider of supply chain software. The first acquisition was for $3.4 billion, with a 52 percent premium over SuccessFactors' market value. The second was for $4.3 billion, with a 20 percent premium. The industry press and bloggers saluted this as a strategic shift in SAP's approach to cloud computing. In May 2012, Lars Dalgaard, CEO of SuccessFactors, was appointed head of SAP's Cloud Business, in charge of the entire SAP SaaS strategy. This case explores the decisions, tactics and strategies pursued to turn SAP into a major cloud computing company.
Authors :: Robert A. Burgelman, Jean-Bernard Rolland
Swot Analysis of "SAP and Cloud Computing in 2012 and Beyond" written by Robert A. Burgelman, Jean-Bernard Rolland includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Successfactors Cloud facing as an external strategic factors. Some of the topics covered in SAP and Cloud Computing in 2012 and Beyond case study are - Strategic Management Strategies, Mergers & acquisitions, Pricing and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the SAP and Cloud Computing in 2012 and Beyond casestudy better are - – there is backlash against globalization, talent flight as more people leaving formal jobs, technology disruption, supply chains are disrupted by pandemic , increasing transportation and logistics costs, increasing household debt because of falling income levels, geopolitical disruptions,
increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of SAP and Cloud Computing in 2012 and Beyond
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in SAP and Cloud Computing in 2012 and Beyond case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Successfactors Cloud, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Successfactors Cloud operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of SAP and Cloud Computing in 2012 and Beyond can be done for the following purposes –
1. Strategic planning using facts provided in SAP and Cloud Computing in 2012 and Beyond case study
2. Improving business portfolio management of Successfactors Cloud
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Successfactors Cloud
Strengths SAP and Cloud Computing in 2012 and Beyond | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Successfactors Cloud in SAP and Cloud Computing in 2012 and Beyond Harvard Business Review case study are -
Diverse revenue streams
– Successfactors Cloud is present in almost all the verticals within the industry. This has provided firm in SAP and Cloud Computing in 2012 and Beyond case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Successfactors Cloud in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Successfactors Cloud in the sector have low bargaining power. SAP and Cloud Computing in 2012 and Beyond has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Successfactors Cloud to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Successfactors Cloud has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in SAP and Cloud Computing in 2012 and Beyond HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Leadership & Managing People industry
– SAP and Cloud Computing in 2012 and Beyond firm has clearly differentiated products in the market place. This has enabled Successfactors Cloud to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Successfactors Cloud to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Successfactors Cloud are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Successfactors Cloud is one of the most innovative firm in sector. Manager in SAP and Cloud Computing in 2012 and Beyond Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Successfactors Cloud digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Successfactors Cloud has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Analytics focus
– Successfactors Cloud is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Robert A. Burgelman, Jean-Bernard Rolland can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Operational resilience
– The operational resilience strategy in the SAP and Cloud Computing in 2012 and Beyond Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Successfactors Cloud has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to lead change in Leadership & Managing People field
– Successfactors Cloud is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Successfactors Cloud in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses SAP and Cloud Computing in 2012 and Beyond | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SAP and Cloud Computing in 2012 and Beyond are -
Slow decision making process
– As mentioned earlier in the report, Successfactors Cloud has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Successfactors Cloud even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Increasing silos among functional specialists
– The organizational structure of Successfactors Cloud is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Successfactors Cloud needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Successfactors Cloud to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As SAP and Cloud Computing in 2012 and Beyond HBR case study mentions - Successfactors Cloud takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the SAP and Cloud Computing in 2012 and Beyond HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Successfactors Cloud has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study SAP and Cloud Computing in 2012 and Beyond, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Interest costs
– Compare to the competition, Successfactors Cloud has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Successfactors Cloud supply chain. Even after few cautionary changes mentioned in the HBR case study - SAP and Cloud Computing in 2012 and Beyond, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Successfactors Cloud vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Successfactors Cloud has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Workers concerns about automation
– As automation is fast increasing in the segment, Successfactors Cloud needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Successfactors Cloud products
– To increase the profitability and margins on the products, Successfactors Cloud needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Successfactors Cloud has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities SAP and Cloud Computing in 2012 and Beyond | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study SAP and Cloud Computing in 2012 and Beyond are -
Creating value in data economy
– The success of analytics program of Successfactors Cloud has opened avenues for new revenue streams for the organization in the industry. This can help Successfactors Cloud to build a more holistic ecosystem as suggested in the SAP and Cloud Computing in 2012 and Beyond case study. Successfactors Cloud can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Successfactors Cloud is facing challenges because of the dominance of functional experts in the organization. SAP and Cloud Computing in 2012 and Beyond case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Successfactors Cloud can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Successfactors Cloud in the consumer business. Now Successfactors Cloud can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Successfactors Cloud can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Successfactors Cloud can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Successfactors Cloud can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. SAP and Cloud Computing in 2012 and Beyond suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Successfactors Cloud has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study SAP and Cloud Computing in 2012 and Beyond - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Successfactors Cloud to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Successfactors Cloud has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Successfactors Cloud to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Successfactors Cloud to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Successfactors Cloud can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Better consumer reach
– The expansion of the 5G network will help Successfactors Cloud to increase its market reach. Successfactors Cloud will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, Successfactors Cloud can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Successfactors Cloud can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, SAP and Cloud Computing in 2012 and Beyond, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats SAP and Cloud Computing in 2012 and Beyond External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study SAP and Cloud Computing in 2012 and Beyond are -
Stagnating economy with rate increase
– Successfactors Cloud can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Successfactors Cloud can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Successfactors Cloud.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Successfactors Cloud in the Leadership & Managing People sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Successfactors Cloud with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Successfactors Cloud can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study SAP and Cloud Computing in 2012 and Beyond .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Successfactors Cloud business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Successfactors Cloud has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Successfactors Cloud needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– Successfactors Cloud needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Successfactors Cloud will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study SAP and Cloud Computing in 2012 and Beyond, Successfactors Cloud may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Weighted SWOT Analysis of SAP and Cloud Computing in 2012 and Beyond Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study SAP and Cloud Computing in 2012 and Beyond needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study SAP and Cloud Computing in 2012 and Beyond is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study SAP and Cloud Computing in 2012 and Beyond is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of SAP and Cloud Computing in 2012 and Beyond is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Successfactors Cloud needs to make to build a sustainable competitive advantage.
