The HCM market trends in 2013 (post Oracle/Taleo, SAP/Salesforce)
For the last few years it was hard attending any major industry event and not hearing whispers about Taleo getting acquired by ______. The buyer changed, but the understanding remained that Taleo wouldn’t be just Taleo for long. With the SAP acquisition of SuccessFactors, the Oracle acquisition of Taleo seemed imminent more from a brand and marketing standpoint than technology. For Oracle, this purchase could be an expensive way solve some issues around their Fusion (SaaS style solution) product and learn to capitalize on marketing to HCM buyers, which Taleo is exceptional in.
With rumors that ADP or SalesForce could announce a major purchase as well in this space – the result will be a very different looking vendor landscape (not product) trends for Human Capital in 18 months.
- ATS becomes the “Hub”: Much like we have already seen with the smaller scale integrated platforms – organizations that have invested in total business technology, will seek out stand alone solutions to manage true best in class solutions. In Recruiting technology for example – the core solutions offered by Taleo, SuccessFactors & Kenexa (The only big one still not acquired) are good. In fact, they are “best in breed” if you ask most analysts. They leave a lot to be desired for how recruiting is actually done if you ask many users. The additional systems out there are starting to integrate more closely and as will only continue to do so as more organizations have to use the “included” system due to larger corporate purchase.
- Stand Alone Solutions Drive the Innovation: As the acquisitions of companies like Jobs2Web and Rypple have shown us – its easier for the big guys to acquire than develop now. (See my Why VC loves HR post) Teams at the big solutions are expansive, intelligent and understand enterprise buyer needs – but the flexibility and speed of delivery often inhibit development of next generation solutions. By comparison, a company only focused on one portion of the process can respond to customer needs in days or weeks with true product depth and usability features often only experienced in consumer tech.
- MidMarket Boom: The leaders of the HCM market (Events, Analysts, Products) notoriously focus almost exclusively on Enterprise only in this space. Vendors have also popped up with a specific focus on small business and big brands like Taleo have acquired products to offer a small business solution. But our space seems to be forgetting all about the companies that are actively buying in the 5,000-25,000 employee category. With major industry consolidation and longer term contracts in total business platforms, the market will have to shift to this largely ignored segment for ongoing growth. The battle for this market is going to heat up – opposite of the enterprise buyer, many of them may shy away from the products they once would have considered due to their affiliation with large ERP solutions.Two vendors that have successfully marketed to this group (ICIMS & Silkroad) never seemed to get the same respect because they weren’t “enterprise competitive” – even though they have amassed a huge number of clients between them.
The acquisitions that have taken place over the last few months have primarily benefited the strength of the “big players” like SAP & Oracle. It has also knocked out direct competition from the enterprise level best in analyst accepted breed products from both Talent Acquisition & Performance Management – moving the industry closer to this idealized concept that one day all companies will buy only one solution. The reality of the next few years will include the one solution purchase – with many standalone external products completing the buyer experience, much like cell phones and apps in the consumer market.