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Saba's recovery will take real talent from the management to push customers to the cloud

Stuart Lauchlan Profile picture for user slauchlan July 15, 2014
Summary:
Saba Software was delisted from NASDAQ last year following the resignation of its founder and news of financial reporting issues. Since then, interim CEO Shawn Farshchi has been trying to put the pieces back together again.

 

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Shawn Farshchi

Last March Saba Software lost its founder and CEO Bobby Yazdani, the most public sign of problems that had built up inside the cloud firm for several years before the skeletons came tumbling out of the closet.

Back in 2012, the firm had postponed a quarterly filing while it conducted a review of internal accounting practices. This resulted in the need to restate filings for fiscal years 2008 thru 2011, while the company was delisted from NASDAQ in April last year.

Since then, interim CEO Shawn Farshchi has been at the helm, trying to put the pieces back together again. But the challenge of getting a delisted firm back on track is a major one, as he acknowledged this week when he provided a progress report:

After seating in the [CEO] seat for a few months, it became clear to me that what was needed for Saba was to emerge as the leader in the talent management space.

I needed to change the company and its culture in pursuit of a clearly defined and focused strategy and I knew a change in the culture would bring about a change in the company.

While I did not just want to change the culture at the executive management level, I wanted to make sure that changes would have a positive impact for every employee, especially for those employees at the line level.

I wanted to empower every employee, no matter where they were in the organization to bring about change that could further the company's strategy.

That strategy, he explains is built on three planks:

  • Increased business philosophy to help improve sales execution to grow bookings.
  • Product innovation to drive the company from a product-focused approach to a market-centric approach, with a single product strategy in the shape of Saba Cloud.
  • Offer best-in-class service to boost customer satisfaction.

Simple, huh?

While Farshchi is extremely careful in what he says and claims for the company - understandably enought under the circumstances - he points to some key indicators that progress is being made on several fronts. These include :

  • New cloud bookings in the fourth quarter hitting an all time high.
  • New cloud bookings growth of 76% for Q2, Q3 and Q4 of fiscal year '14 over Q2, Q3, Q4 of fiscal year '13, which exceeded guidance of 60%.
  • A healthy SMB business in the US with 60 new customers brought on board in the fourth quarter.
  • A customer win rate on an opportunity and dollar basis that has increased quarter on quarter in fiscal year '14 with a total of 174 new customers added in fiscal year '14,including Bank of New York Mellon, Virgin Atlantic, Northwestern University and Blue Care.
  • A record number of customers migrating to Saba Cloud in Q4, including Intel and Standard Chartered Bank.

With those numbers under his belt, Farshchi predicts a year-on-year increase in bookings in excess of 30% in fiscal 2015.

Getting in gear for 2015

But there are a number of things that need to be addressed to make that happen, not least getting the Saba brand out there in front of decison-makers in an increasingly febrile cloud HCM and talent management sector.

So first up, is increased spend on marketing to raise the company profile and get through the door at prospects:

We just need to make sure we get invited to more and more of these deals.

Our marketing initiative for fiscal year 2015 will focus on increasing the demand and awareness of Saba amongst the talent management buyers.

Assuming that works and interest levels are raised, Farshchi plans to up the sales force headcount, with a penchant for poaching talent - and their contact books - from other talent management firms.


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What they will be pushing will be Saba Cloud, not just to new customers but getting existing Saba users to migrate. This is facilitated by exposure to the cloud platform, argues Farshchi:

Once our behind-the-firewall customers were exposed to our Saba Cloud platform, with service level agreements at top of the industry at three nines, their interest in moving to Saba Cloud was sparked.

We are one of the few vendors in talent management space that can offer the customers three nine service level which has proven to be quite a competitive differentiator and has contributed to winning a number of deals.

We [have] experienced a record number of customers migrating to cloud and we are still in a very early innings of the ballgame. Remember, we have a tremendous installed base of customers behind the firewall and their interest is creating a healthy pipeline.

Farshchi also wants to grow his SMB footprint, expanding the dedicated sales resource operating in that sector which Saba defines as being firms with 2000-7000 employees:

Having the confidence that we came up with a right formula to penetrate markets beyond the large enterprise space, where we dominate, we plan to focus our efforts into penetrating the mid-market.

We have created another dedicated sales force to address this segment and a number of new quota-carrying sales reps were hired to complete this team. Their focus will be to lead with full talent suite and cross-sell talent suite into the mid-market installed base.

Finally, Farshchi is eyeing up the opportunities offered by pushing into specialist vertical markets:

In fiscal year '15, we have planned to focus on a number of these industries and higher subject matter experts for specific verticals.

Subject matter experts will have a wealth of knowledge and experience in a particular industry and we will be best suited to address the talent management challenges of that vertical and how our solution can help them overcome those obstacles.

As for the wider talent management amibitions, Farshchi inevitably pitches Saba’s Intelligent Talent Management platform as a winning offering that can take on the installed base competition:

While we are one of the new comers in this market, we leapfrogged the incumbents with our video recruiting solution and by adding machine learning to source candidates externally as well as internally.

Our recruiting solutions also offers customers with the ability to create a recruiting workgroup that allows interviewers to collaborate on feedback for various candidates, a patent pending SmartHire Assistant that rate and ranks every candidate on an advanced candidate assessment that allows for pretesting of candidates.

As an example of the kind of innovation he wants to see more of, Farshchi points to Marketplace, a single drag-and-drop integration for numerous applications across recruiting, talent, assessment learning and HRMS with a single interface:

While we’ve integrated with hundreds of different vendors over the years, what makes Marketplace different is that it eliminates the need for any involvement from IT or third-party consultants. With Marketplace, we have revolutionized the way customers integrate with applications much the same way Apple revolutionized how customers buy music.

We plan to continue to build our marketplace by increasing the number of drag-and-drop integrations that we have with third-party applications.

We recently announced the addition of OpenSesame for content and HireRight for employee screening, adding to our diverse ecosystem of third-party applications from TalentBin, SimplyHired and Broadbean for recruiting, Monster and LinkedIn for sourcing, Salesforce and Microsoft Dynamics for CRM and Workday for HRIS.

Even though we have hundreds of vendors in our content ecosystem that we can help customers integrate with through the help of IT consultants, our goal is to one day move them all into a simple drag-and-drop capability that customer can access through our Marketplace.

Back on track?

Clearly there's a long way to go to clean house completely, but the direction in which Farshchi is pitching the company seems to be on the right track. Certainly it's meeting with some cautious approval from industry analysts, albeit with provisos.

For example, Stephan Millard, VP and Research Director at Ventana Research, recently noted:

Overall, Saba is broadening the functionality of its suite, adding predictive capabilities, enhancing collaborative and mobile capabilities and more generally moving the applications to the cloud. These steps should help it remain competitive in the human capital management market.

However, Saba faces challenges with its financial management from years past and resulting management changes. As a result of these setbacks, Saba has had challenges in its growth while having the products and services readily available. It is competing in a crowded market and to be successful Saba needs to grow with more new customers and continued retention and cross-sales of new products to existing customers.

But it's a crowded market, if an exploding one, and the competition is fierce and made tougher when you're having to rebuild a company and get it back on track (and on Wall Street).

Getting the Saba name back out there and not in the context of problems and scandals is going to be critical. In fact, it's going to take real talent from the  management.

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