I'm pleased to host the following post from IDC Research VP and leading HCM expert Lisa Rowan:
2012 was a bigger year than normal on the mergers and acquisitions front in HCM -- perhaps not in pure numbers of deals but certainly in prominence. Deals ranged from the expected to the jaw dropping and everything in between. Reviewing the activity I see that the actions taken fit into three general themes that ran throughout the year: the push to the cloud, socializing HCM, and Workday. Workday gets its own theme because so much of the activity was influenced by them.
'All in' on SaaS
The spate of consolidation actually began with a bang a year ago in December, 2011, with the announcement of SAP's intent to acquire SuccessFactors (SFSF). The deal was closed in February of this year. With this acquisition, SAP put a firm stake in the ground on SaaS. This particular move in HCM was a surprise at the time in that SAP had made much of its next generation Career OnDemand talent and performance applications built on the Business ByDesign SaaS framework. Instead SAP veered course to the SuccessFactors architecture under the leadership of SuccessFactor's chief, Lars Dalgaard.
The other shoe dropped in a less surprising move when in February Oracle announced its intent to acquire Taleo. Where SAP's move with SFSF brought a new SaaS strategy to SAP, the Oracle acquisition of Taleo was more about filling functional gaps in the Oracle Fusion Application portfolio. With Taleo, Oracle picked up the leading talent acquisition offering and a respectable learning management system – neither of which were yet included in Oracle Public Cloud. Beyond that there remain overlaps across Taleo and Oracle’s other HCM products such as in employee performance management which is available across EBS, PeopleSoft, and Oracle Fusion Applications.
Also in February, Ceridian announced its intent to acquire Dayforce (completed in April) a leading cloud-based workforce management supplier. The two firms had formed a tight relationship prior to the full acquisition. Once the deal was completed, Ceridian put former Dayforce chief David Ossip in the key role overseeing new SaaS product development at Ceridian. Ossip was the brains behind Dayforce’s SaaS platform. The development effort follows the mixed market reception of Ceridian's InView and looks to incorporate talent management, compensation and performance with HR on a new single-platform solution by 2013. Previously, rival ADP announced its new-from-the-ground-up SaaS HR solution, Vantage HCM, in October 2011.
In March, Kronos acquired New Jersey-based SaaShr.com, a fully SaaS-based provider of workforce management software for small-to-midsized businesses. This acquisition helps Kronos further penetrate the SMB and gave them a multi-tenant platform for prospects looking for pure SaaS. In addition, Kronos gained access to an extensive network of partners and resellers.
It's all about Social
The social wave of M&A also commenced in December of 2011 with Salesforce.com's (SFDC) acquisition of social performance management pioneer, Rypple. Rypple was founded in 2008 by former executives of Workbrain to create a social approach to improve upon the oft-maligned annual performance appraisal process. Rypple uses cloud computing to power continuous social feedback among peers and management. Additional socially focused HCM solutions will likely come out of SFDC with former SAP- executive John Wookey in charge. Under Wookey's leadership SFDC's HCM initiatives have been branded Work.com. For now the use of Work.com performance feedback is targeted at workers already using SFDC in sales, marketing, and service.
In May, Peoplefluent (via parent Bedford Funding) announced a leadership investment in Socialtext. Socialtext delivers enterprise social networking products including microblogging, blogs, wikis, profiles and social spreadsheets. The two firms will remain independent under the Bedford umbrella and will together work to deliver a socialized approach to talent management.
In June, Silkroad announced general availability of Point, a social software solution that unites talent management processes. Going beyond SFDC's Work.com, Point offers collaboration across multiple talent areas, not just feedback. With social graphing, Point can identify areas of expertise as well as centers of connectivity. In addition, Point powers collaboration, social learning, and content sharing. Silkroad may be a smaller company but Point may dramatically up their profile.
In August IBM announced its intent to acquire talent-management vendor, Kenexa (acquisition closed on December, 5th). This deal has many facets but a major impetus for the acquisition is to fuel IBM's Smarter Workforce initiative. Smarter Workforce is designed to bring consulting expertise together with IBM's social technology and the Kenexa talent management suite with the goal of delivering socialized solutions to workforce-related business challenges.
Furthering its investment in social technology, Oracle acquired SelectMinds in September. SelectMinds is a provider of cloud-based social talent sourcing and corporate alumni management applications. SelectMinds’ applications enable organizations to leverage social connections to distribute job opportunities, source employee referrals, and manage corporate alumni relationships. SelectMinds' legacy is in powering alumni networks for well known professional services firms.
The Power of Workday
Despite the flurry of activity already mentioned, when reviewing 2012, the top story is Workday. It is a fair bet that the drive to SaaS on the part of both SAP and Oracle, and others no doubt, is in direct response to the meteoric success enjoyed by Workday. Workday itself is not acquisitive opting rather to build than to buy. But market consolidation has occurred around Workday in the professional services arena:
In March, Deloitte acquired Agressor, a small business and IT consulting firm that focuses exclusively on providing deployment services for Workday solutions. This acquisition augments the resources Deloitte already had in place in its Workday practice.
In October, Aon Hewitt acquired Omnipoint another Workday implementation partner. An outsourcing services provider, Aon Hewitt found itself being called upon more and more for implementation work. At the same time Aon Hewitt was seeing a sharp uptick in interest in Workday as a platform for HR BPO; they report 3 HR BPO clients already. Aon Hewitt will keep Omnipoint independent to continue to pursue standalone implementation deals.
Also in October, Appirio an IT services firm focused on mobile, social, and cloud-based systems acquired Knowledge Infusion, a highly regarded boutique HR business process consultancy. This move provides Appirio with the front-end services it lacks in competing with the strategy/technical mashups à la Deloitte-Agressor and Aon Hewitt–OmniPoint.Last but not least on the Workday front, they completed their successful IPO on Friday, October 12.
…And a few more
Less easy to categorize, there were many more acquisitions, releases, and partnerships announced. Notables include:
In March, Cornerstone OnDemand (CSOD) acquired New Zealand-based innovator Sonar6. Known for organically developing all of its own solutions, CSOD is not generally an acquisitive firm. But, the innovative way in which Sonar6 presents performance management was very appealing. The Sonar6 solution will remain independent targeted to employers with fewer than 500 employees. At the same time, CSOD is rolling some of Sonar6' innovation into the up market product line.
In what is perhaps the oddest acquisition in my view, in July the Corporate Executive Board (CEB) acquired SHL-Previsor , the market leader in pre- and post-hire assessments. This puts CEB, an otherwise independent body, in competition with the likes of IBM and the assessment IP it acquired through Kenexa.
Looking Forward to 2013
2012 isn't quite over so we may yet see another deal in the waning days of the year. But no doubt we will see our fair share of announcements in 2013. Social will be hot on the list for every supplier and I hope the use cases and benefits of social start to reach and resonate with HR buyers. Talent acquisition may prove a hot bed of activity in 2013 with so many specialty products that have sprung up around sourcing. Also interesting things are popping up in assessment and fit analysis, especially in specific functions like sales. The only certainty is that we will be surprised yet again.