Success Factors: Unethical Activities and Legal Troubles

This report discusses the illegal financial procedures of Success Factors, a cloud computing company, and the legal troubles it faces. It also provides recommendations for an internal and external investigation.

Running time: ETHICAL AND PROFESSIONAL PRACTICE
Ethics and professional practice
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Executive Summary
Success Factors is one of the major corporations of United States in the sector of Cloud
Computing. These sectors has smoothened the buying and selling of human resource software in
US. However, it was accused for its illicit activities in the sectors of finance, contracting and
investor handling. All these problems has led to a probe after being reported by the whistle
blowers. This report is about the current situation of the Success Factors.

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Table of Contents
Introduction......................................................................................................................................3
Illegal activities of Success Factors.................................................................................................3
Conclusion.......................................................................................................................................4
Recommendation.............................................................................................................................4
References........................................................................................................................................5

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Introduction
Success Factors is one of the most popular companies, which provides software application. It is
an MNC based in US, which is primarily related to cloud-based human resource applications
(Soliman 2016). It generates revenue over $200 million annually. Since the beginning of the
milleniium, Success Factors has been incurring heavy losses. Even before Success Factors was
bought by SAP the whistle blowers who reported its illegal financial procedures accused it (W.
Reynolds, 2017).
Illegal activities of Success Factors
Success Factors was accused of reporting the revenue to the people who are investing through
SEC filings (Chegg.com2017 ). According to Business Insider, the company was developing
false contracts to grow faster in the market. In 2009, the company ended the reporting of the
‘backlog’ number. Since then, SEC made multiple accusations on Success Factors. In 2011, the
company stated that the reported revenue of 2.9 million dollars were unreal. After acquiring
Success Factors in 2011-12, with the eight times more money than its yearly revenue, SAP
predicted 502 million dollars revenue (Bort 2017).
However, SAP has released a statement of internal investigation. The moral of the story is that
the investors should try and understand the situation. There is an urgent need of increase in
revenue in the company. To achieve a better status, the company should enhance the workforce
with skilled labour and should try to solve all the legal troubles (Forbes.com 2017). The
unethical use of finance and the illegal methods of controlling the company has lead Success
Factors to doom. The business of cloud computing has hit a low due to such activities in Success

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Factors. A whistle blower according to Forbes reports the false accounting systems (Howlett
2017). According to several ex-employees of the company the sales sector of the company was
so weak that they rewrote the previous year contracts as new multiyear contracts to gain extra
commissions. All these factors like not reporting the backlog figure, presenting illicit figures of
revenue and falsification of contracts were monitored my SEC and that has led to trouble
(SFGate 2017).
Conclusion
SEC has monitors all the illicit activities of Success factors. As cloud-computing has become an
upcoming business opportunity, various fraud and illegal activities are present in the field.
Success Factors illegal ways to acquire new investors and customers has led them down.
Recommendation
According to the facts, SAP will investigate the matter internally, US Securities and Exchange
Commission should also investigate the matter. There should be an external investigation along
with an internal probe.

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References
Bort, J. (2017). Whistleblower Explains One Way Cloud Companies Can Cook Their Books.
[online] Business Insider. Available at: http://www.businessinsider.com/successfactors-
accounting-whistleblower-speaks-2012-10?IR=T [Accessed 20 May 2017].
Chegg.com. (2017). Chegg.com. [online] Available at:
http://www.chegg.com/homework-help/whistle-blower-claims-accounting-shenanigans-
successfactorss-chapter-2-problem-1c-solution-9781305142992-exc [Accessed 20 May 2017].
Forbes.com. (2017). Forbes Welcome. [online] Available at:
https://www.forbes.com/sites/joshbersin/2017/05/15/successfactors-by-sap-growth-and-
innovation-continues/ [Accessed 20 May 2017].
Howlett, D. (2017). Did SAP pay $3.4 billion for an out of control pup? | ZDNet. [online]
ZDNet. Available at: http://www.zdnet.com/article/did-sap-pay-3-4-billion-for-an-out-of-
control-pup/ [Accessed 20 May 2017].
SFGate. (2017). SAP buys SuccessFactors for $3.4 billion. [online] Available at:
http://www.sfgate.com/business/article/SAP-buys-SuccessFactors-for-3-4-billion-
2346823.php#ixzz29ljTqya0 [Accessed 20 May 2017].
Soliman, F., 2016. Evaluation of Cloud System Success Factors in Supply-Demand Chains.
W. Reynolds, G. (2017). Ethics in Information Technology. 5th ed.

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