It has been a big year for equity groups and investors, with large amounts of cash dropped into the market, but the acquisition plays over the past year have been a bit light at this point in the current market cycle.
Today, both Workday and Ultimate Software announced acquisitions that will have a positive impact on their user base and move the technology forward:
- Workday acquires Stories.bi – For the 4th year in a row, Workday (WDAY) continued its mid-summer acquisition trend with Stories.bi. You likely don’t know Stories.bi but they were one of the new crop of products on the business performance market – specializing in augmented analytics – this isn’t your standard HCM reporting tool. It uses machine learning and artificial intelligence to not only analyze current data but deliver business insights (Predictive behaviors) that helps connect HR to business. This acquisition follows their June 2018 RallyTeam and January 2018 Skipflag adds – both expanding their ML and AI functionality and if integrated as I would hope, significantly improve the recruiting and internal mobility functionality among other areas.
- Ultimate Software acquires PeopleDoc. (ULTI) You may remember my comments on Peopledoc from May – while not the sexiest product category (HR Service Delivery) their global scope and advanced robotic technology makes them a huge win for Ultimate. While not massive, People Doc isn’t a small startup with a high valuation. They are an established player out of France with clients in 180 countries, global client list and retention rates that would make any vendor swoon. With culture and people that should seemingly integrate well – this could be an exciting move for Ultimate…a company that has typically chosen to innovate from within and has been less aggressive in the acquisition market. I’m closing watching this as a signal we will see a global market run from Ultimate shortly.
It is time for more acquisitions.
Unfortunately over the last 5-8 years, many enterprise HCM players got comfortable with their relied on quadrant rankings of past years vs. looking to the future need. In doing so, they missed vital roadmap and buy/build decisions that would have alleviated the technical challenges they are facing integrating or making what they consider “new” functionality. The insular approach to product self-assessment allowed many of them to underestimate the impact that nimble, product-first start-ups were going to have on not just their mid-market and SMB clients, but the impact on Enterprise and F1000 clients as well.
With many best in breed products – recruiting, text, ai, engagement – out shopping for a sale over the past six months we should see a lot more movement before the end of the year. If we don’t, we may hear more questions on how serious legacy vendors (anything build pre-2010) are about competing in today’s market vs. merely playing. This factor is especially true when you consider the easiest targets on the market right now are the most significant gaps in the enterprise solution set and in-house builds could take 2-3 years under perfect circumstances.
While some of these vendors are privately and actively re-evaluating their current product roadmaps compared to best in class solutions and making aggressive buy/build decisions for the next 12 months – others seem to be comfortable relying on their brand legacy with little interest in actually fixing their products to today’s standards, let alone being innovative for the future. They instead release nuggets for sales to use a few buzzwords and refresh a UI that doesn’t make things better for the user.
A decade ago, smart companies bought the safe choice.
Today, the safe choice could get you fired.
Smart buyers understand there is a difference between product functionality and feature set, know the need for high adoption rates and stickiness internally, why your hr team and employees need a responsive client services and support team and that marketing is…well, marketing.
It is time ALL buyers had the resources available to be smart buyers.
If you are a buyer in HR tech right now realize that the product functionality gap is about to widen in a way we have not seen since the early/ mid-2000’s. Whom you pick, their product strategy and growth approach will make a difference.