News Analysis: Infor Adds SaaS LMS with Acquisition of CERTPOINT

Proving it has not lost its appetite for acquisitions, on March 4th, 2013, Infor announced its planned acquisition of New York based CERTPOINT Systems, Inc., a SaaS provider of global learning management software (LMS) and learning content management software (LCMS).

CERTPOINT backgroundinforcertpoint

Founded in 1996, CERTPOINT (formerly Vuepoint) offers comprehensive learning solutions including LMS, LCMS, content authoring, competency management, integrated web conferencing, mobile access and social learning to more than 1300 clients across more than 80 countries.  Marquis customers include Toyota, Honda, Motorola, Ralph Lauren, LANCOME and Weightwatchers. Like Infor, it boasts a hybrid offering, delivering on-premises, hosted and SaaS-based offerings; the majority of its clients, however, utilize the SaaS applications, consistent with adoption trends in the human capital management (HCM) market.  CERTPOINT also provides consulting services including content development, implementation and strategic consulting.  It currently employs approximately 50 staff, most based in New York.

The acquisition expands two key areas for Infor:

  • With the CERTPOINT acquisition, the Infor Human Capital Management (HCM) suite delivers a comprehensive end-to-end offering. Tarik Taman, the GM of Infor HCM, noted that, “The acquisition of CERTPOINT will enable Infor to offer customers an end-to-end HCM solution, delivered to help maximize access and business insight and achieve breakthrough performance. In addition to complementary functionality, the acquisition of CERTPOINT sends the signal that Infor intends to be atop the leaderboard of SaaS Enterprise Human Capital Management solution providers.”
  • Point of View (POV): As Infor continues to move its HCM suite of products fully to the cloud (watch for their announcements in this area in the Summer of 2013), the acquisition of SaaS-based CERTPOINT completes the suite with solid LMS capabilities. And in today’s global, virtual and mobile work environments, CERTPOINT’s delivery of personalized electronic content to mobile devices is precisely the type of capability required for business performance.  Integration via Infor’s technology framework, Infor ION, will focus on the HCM products (Lawson HRM, Talent Management and Service Delivery), but will also extend to other Infor solutions to meet strategic opportunities. WebEx Communications is the current partner to CERTPOINT for delivering integrated web training and conferencing; Infor does not currently have a competing offering but I expect this to be an area of development for the Infor ION team in the future. From an end-to-end perspective, Infor is one of the few providers of HR Service Delivery (having acquired this from Lawson/Enwisen in 2011).  The Infor Enwisen platform has served as a unifying solution across all Infor Lawson HCM products, delivering portal, knowledgebase and multi-tiered support across the suite. Integration with Enwisen will bring rapid value-add to CERTPOINT customers.

  • CERTPOINT fortifies Infor Healthcare solutions with critical learning capabilities. Certification and compliance training are mission critical activities in the healthcare industry.  Combined with the verticalized solution for Healthcare from Infor HCM, clients will be able to move beyond certification and compliance to the creation of high performing healthcare organizations.
  • Point of View (POV):  Infor gained a major presence in Healthcare with the acquisition of Lawson software in 2011, and so CERTPOINT’s Healthcare industry solution is a natural launch point for showcasing the combined offering. Infor has, in fact has already begun this push, as it positions richer capabilities for the Healthcare industry as well as increased thought leadership with the hiring of a Chief Medical Information Officer (CMIO) to oversee the Infor Healthcare suite. Other industries such as Automotive, Food & Hospitality and Manufacturing  will be early solution targets as well. One of Infor’s points of differentiation is its micro-vertical strategy: beyond the standard 21 or so industry vertical classifications, Infor recognizes the unique needs coming from more than 2000 micro-verticals within these broader industries. CERTPOINT clients will benefit over time from Infor’s micro-vertical focus as this specialized knowledge infuses and expands the capabilities of its nine current vertical offerings.

Bottom Line:  Infor Advances its Move to the Cloud

Today,  Infor is the third largest provider of enterprise applications and services, with a valuation of $16B and five consecutive quarters of double-digit license revenue growth. It doesn’t just compete with Oracle and SAP, however; it increasingly competes with the likes of Workday and Ultimate as clients look to the cloud for Enterprise HCM.  The acquisition of CERTPOINT not only completes the Infor HCM suite, it does so through a SaaS offering that enables rapid, low cost deployment and frequent innovations in a business-critical area.  Additionally, CERTPOINT provides support for the extended enterprise – training for partners, suppliers and customers – including eCommerce capabilities for companies that deliver training for profit. With Infor Ming.le, Infor’s social platform still in development, CERTPOINT’s social learning will also be a welcome and timely addition to the Infor HCM suite.

As always, the devil is in the details, but given that CERTPOINT today integrates with many HCM solutions (including its strategic partner, Ultimate Software), the initial phase of the Infor/CERTPOINT integration should come to market quickly, with more strategic points of leverage following in subsequent iterations.  Infor clients will benefit from this acquisition through the additional depth of learning capabilities; CERTPOINT clients will have a new, integrated path to consider as they evaluate the upgrade or replacement of their current HCM infrastructures.

Related posts:

Event Report: #InforSummit Reveals More Than a Redesigned Infor

Seven Ways Infor is Advancing HCM (Hint: Lawson is but One)

Ceridian Claims its Seat at the SaaS HCM Table

With its acquisition of Dayforce now complete, Ceridian becomes the latest entrant in the SaaS HCM marketplace. Timely execution of strategies and leveraging its differentiators to retain and eventually migrate Ceridian customers to the new platform will be critical factors of success in Ceridian’s transformation from a portfolio-based services bureau company to a leading provider of SaaS HCM.

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Seven Ways Infor Is Advancing HCM (Hint: Lawson is But One)

Summary: HCM growth gains prominence at Infor as investments across infrastructure and technologies combine to create a solid foundation for HCM growth. With a focus on complete vertical solutions, a consumer grade user experience and flexibility, Infor is poised to capitalize on its position as the third largest ERP vendor in the world.

infor logoLet’s face it: in previous years, if you were thinking about leading Human Capital Management (HCM) technologies, the name “Infor” just didn’t bubble to the surface. A collection of more than 30 acquisitions, Infor’s HR capabilities were largely delivered in the context of industry vertical-focused solutions, bringing solid HR functionality into the suite, but certainly not on any watch lists for best-in-class HCM technology. Last year, Infor acquired a market leader in HCM, Lawson Software, and the market held its breath while it waited to see if, indeed, this was “the end of Lawson HCM.”

It’s time to release that breath.

Infor is investing heavily in their HCM portfolio, and in fact positions growth in HCM as a strategic initiative for the organization. The last 6 months have seen a series of product and technology releases across the Infor and Lawson platforms. Infor has also been busy under the covers, making operational changes to improve efficiencies, speed innovation, improve scale, and refine their go to market approach.

I have spoken with executives and HCM leadership across Infor over the past few months. At the highest levels, CEO Charles Phillips speaks of Infor’s focus on delivering complete industry suites, delivering functionality with a consumer grade user experience, and “reimagining the management of software” for maximum flexibility. These tenets are manifest in the current and future directions articulated by the Infor HCM leadership team, headed up by Tarik Taman, General Manager HCM.

With the strength of Lawson HCM at its core, coupled with the latest Infor-led technologies for interoperability, collaboration and mobility, Infor is well on its way to capitalizing on its market position as the third largest ERP provider in the world, second only to SAP and Oracle.  As Infor prepares for its first user conference following the Lawson acquisition (Inforum 2012), it’s worthwhile to review the latest technology and infrastructure investments – I’ve summarized seven below – that are laying the foundation for growth across Infor HCM.

1. Infor10: Infor’s Platform for Innovation

September 2011 saw the launch of Infor10, Infor’s new platform for innovation. Infor10 is also the umbrella brand covering all of Infor’s current enterprise applications (including ERP, CRM, HCM, FIN, business intelligence and others); the ION suite of middleware; the Workspace graphical client; its Cloudsuite application suite; and its latest mobility platform, Infor10 Motion.

An in-depth analysis by my colleague Ray Wang, published at the time of the launch, provides details across these Infor10 components, all of which are applicable to the Infor HCM strategy moving forward.

The most immediate and critical of these components to the HCM strategy is the release of Infor ION: Infor’s platform for the social, mobile and flexible enterprise. Infor believes the path to the future lies in a loosely coupled architecture that easily accommodates change and plug-ins. “Enterprises need the flexibility to change components when needed and without loss of integration” said Phillips, explaining why he stopped Infor’s previous plans to standardize on Microsoft technology and instead embrace more open technology stack. This is where Infor’s ION platform comes in. Infor ION is the glue to Infor’s overall strategy – and the counter maneuver to Oracle’s Fusion middleware and SAP’s Netweaver middleware. The primary focus of Infor ION is to ensure complete communication and interoperability across all Infor solutions, as well as connecting Infor applications to third party solutions.

Integration is a lynchpin for success to HCM technologies, and as such, getting the Infor HCM solutions to leverage the ION platform is a top priority. Integration of Lawson HRM solutions with the Infor ION platform is scheduled for release next month, with the Lawson Talent Management suite to follow.

Infor10 also includes a new mobility platform, launched in January 2012, called Infor10 Motion. This platform plugs into Infor’s ERP, CRM, SCM and other applications through Infor ION, bringing real-time, mobile solutions to users when and where needed. While Lawson already has a collection of ERP and HCM mobile applications, further efforts across Lawson HRM, Talent Management, Enwisen HR Service Delivery and Infor Workforce Management have mostly been sidelined in favor of leveraging this new Infor10 Motion platform in the coming year. The trade off for customers is less rapid delivery of new mobile solutions in exchange for improved Infor10 interoperability via the new Motion platform.

2. Lawson HCM: The Destination Platform for HCM

Infor acquired mid-market industry leader Lawson Software in July 2011. The Lawson HCM suite is comprised of Lawson HRM (which includes HR recordkeeping, benefits, payroll, absence management, employee and manager self service and select vertical functionality), Lawson Talent Management (including performance, goals, compensation, succession, learning, talent acquisition and competency management), and the Lawson HR Service Delivery platform (acquired from Enwisen in 2010, delivering knowledgebase, case management, on- and off-boarding and Total Rewards).

These Lawson HCM solutions and Infor’s Workforce Management solution (acquired in 2007 from Workbrain) combine to form the Infor Human Capital Management Suite. According to Tarik Taman, General Manager of Infor HCM, Infor’s strategy is to make this the destination HCM platform for their more than 70,000 customers, through continued innovation and improved interoperability across the HCM platform and by leveraging the Infor’s technology and infrastructure investments.

Following the acquisition, Infor added more than 90 headcount to the Lawson HCM division and significantly ramped up its development efforts. The first post-acquisition release occurred in December 2011, with the delivery of the Infor 10 Lawson S3 release(Lawson S3 10), delivering advances in functionality, integration and user experience.

The Lawson S3 10 release was not without its challenges. For example, customers are vexed by questions of when to use Lawson’s Smart Office (LSO) capabilities vs. Infor’s new Workspace, both of which provide collaboration capabilities but functionality and deployment options (desktop vs. mobile and web based) vary. Additionally, integration between the modules still lags, but starting in March 2012, a series of releases will begin to change this. Taman and members of his leadership team laid out an aggressive HCM roadmap beginning next month demonstrating Lawson HRM integration with Infor ION; Infor Workspaces extending across Talent Management; ongoing vertical enrichment and expansion; and later this year, mobile advances on the new Infor Motion platform across all the Infor HCM solutions.

3. Infor Workforce Management: Completing the HCM Suite

Upon the Lawson acquisition, one of the top identified priorities was the rapid integration of Infor Workforce Management (WFM) solution – which provides comprehensive labor management support and optimization – with the Lawson HCM solutions. The first of such integrations is targeted for delivery in March 2012, and should be on display at the upcoming Inforum 2012 conference in April. Infor also sees tremendous synergy between the Lawson HR Service Delivery platform and the Infor Workforce Management technologies for targeted industries and processes, and as such, deeper integrations between these two technologies are planned in the near future.

4. Lawson HR Service Delivery (Enwisen): Unifying HCM with Knowledge and Process Support

To date, integration between the Lawson, Enwisen and Workbrain platforms has been limited. The going forward strategy is to leverage Enwisen as a unification tool to wrap all the HCM applications together with knowledge and process support, seamlessly moving users across the various solutions with single sign-on. This makes sense for many organizations, as knowledge-enablement has proven to reduce costs and streamline processes while enabling HR to refocus its efforts on providing higher-value services to the business. However, this model isn’t necessarily warranted for all sized organizations, it doesn’t address the different look/feel of the Lawson, Enwisen and Workbrain technologies nor does it bring in the collaboration/social aspects available from the Infor10 platform.

In upcoming months, I will be looking for greater clarity on planned use of the Infor ION platform within this Enwisen unification strategy. Meanwhile, the ERP-agnostic Enwisen solution has 80% of its customers using SAP or Oracle HCM today; a great Trojan horse into hundreds of competitors’ customers as the value proposition for Enwisen and the rest of Infor HCM is enriched.

5. Complete Vertical Solutions with Leading Talent Management

According to Infor, 42% of ERP customizations are performed to address industry gaps. Infor seeks to minimize or eliminate the need for such customizations through a vertically focused go-to-market approach spanning sales, products and services. The Infor HCM roadmap includes continued vertical specialization across all HCM solution components. One area of potential mismatch, however, is with Infor Workforce Management, where more than 50% of its customers are in the retail industry, yet there is no associated strategy to build out retail-specific capabilities within Lawson HCM applications.

Infor is also committed to Lawson Talent Management as a competitive stand-alone offering in the market, moving Infor beyond its legacy of “good enough” HCM within its vertical suites. Infor spoke of their continued innovations in this area as well as improving integration with 3rd-party systems of record, reinforcing Infor’s message of flexibility, while also solidifying the up-sell opportunity of Lawson Talent, Workforce and HRSD solutions into Infor’s more than 75,000 clients regardless of core HRM solutions in place. (Note that the Workbrain and Enwisen solutions are already ERP/HR/Payroll system agnostic).

6. Infrastructure Investments for Scale and Value-Add

Infor hired almost 500 additional developers in 2011, bringing the total to 3400 individuals worldwide who are developing applications at Infor. They also centralized their development in common technology areas to increase agility and innovation, allowing the solution areas to staff up with deep industry and domain expertise. Infor has also created a new Value Analysis (VA) team, whose job it is to build out a reference architecture for customers and prospects so that a personalized ROI analysis can be developed, and in the future, upon which industry benchmarking will be provided. The vision is not unlike that of SAP’s Value Engineering organization, and this will be a beneficial service for Infor HCM clients over time as the team and HCM engagement experience grows.

7. “Purposefully Hybrid” Deployment

Infor has adopted a “purposefully hybrid” strategy, allowing customers to deploy in the cloud, on-premises or a combination of the two. Phillips sees only advantages in this hybrid approach and says this is the company’s long-term strategy to ensure maximum customer choice, not a stopgap measure on the way to pure Cloud.

There are obvious complexities for a hybrid model, and Infor is not immune to them. Product overlap is one immediate challenge. The Lawson HR, Lawson TM, Enwisen (SaaS only) and Workbrain solutions comprise the “destination platform” for Infor10 HCM, but additional HCM solutions continue to be offered that pull product, sales, services and support resources away from the core:

Overall, the hybrid strategy enables Infor to sell into a broader market than pure-play SaaS providers, as many customers are not yet ready to embrace HCM in the cloud. (However, the lack of an on-premise offering does not seem to be slowing the growth rates of vendors like Ultimate Software and Workday.) When competing against SAP and Oracle, Infor is at least on equal footing in this area, as their support for both on premise and cloud aligns with the approaches adopted by SAP, Oracle and others as they manage the realities of solution platforms comprised of multiple acquisitions. Success can follow if they are able to keep on premise customers current with the latest releases, maintain a rapid pace of innovation and truly make solution interoperability seamless and painless for their clients (still an aspirational goal at this point).

The Bottom Line

The changes effected across operations and products over the past 12-18 months seem to be working for Infor, as evidenced by their claim in January 2012 of 17% license growth and four consecutive quarters of double-digit growth, with growth in the HCM area especially strong. (Note Infor is a privately held enterprise and as such does not publish financial statements.) Infor is touting an operating model that allows them to remain private, but they did not rule out going public when the time was right. Charles Phillips also indicated that additional acquisitions would take place, most likely in the area of deep industry requirements.

It’s been fewer than 8 months since the acquisition of Lawson, not much time to make significant changes in product, but enough to demonstrate continued commitment. Infor has a good start in this area, and delivering on planned releases in upcoming months will be an important confirmation of that commitment.

In April, I’ll be at the Infor Lawson Users Conference, Inforum 2012, where I’ll look forward to more details and proof points demonstrating how the Lawson HCM suite is capitalizing on the Infor10 suite innovations deliver the next generation of Infor HCM. If you are not attending Inforum 2012 yourself, I am happy to serve as your proxy, taking your questions forward and providing a follow-up post after April’s event.

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News Analysis: SAP and SuccessFactors Unveil Early Roadmap for HCM

This morning, SAP and SuccessFactors, an SAP company, issued a press release in which their unified Human Capital Management (HCM) product roadmap was unveiled.  The primary message is that SAP has adopted a hybrid strategy for HCM:  the SuccessFactors portfolio for Cloud HCM, and the current SAP ERP Human Capital Management portfolio for on premise. Details on this and other facets of the announcement are discussed below:

Employee Central becomes the HR System of Record for the cloud.

SuccessFactors Employee Central solution is the go-forward core human resources (HR) offering in the cloud. Backed by more than 25 years of experience from SAP in core HR, the solution is poised to grow exponentially as SAP will boldly invest in it. SAP will continue to offer the SAP® ERP Human Capital Management (SAP ERP HCM) solution on premise for core HR, now with regulatory support for 51 countries around the globe and an innovation road map of significant investments in functionality, user-experience, mobile and in-memory technology capabilities in the future.

My Point of View (POV):  Employee Central, used today by about 100 SuccessFactors customers, will be rapidly built out to meet the demands of a fully globalized core HR solution in the cloud.  A significant number of SAP resources will be redeployed to this effort.  It is important to note that an end-to-end cloud HCM offering is still elusive, however, as there is no immediate clarity on how payroll, benefits and workforce Management will be delivered in the cloud. According to David Ludlow, SAP’s Group Vice President of HR s Solutions, “These will all be considered as part of the acceleration within Employee Central. We need to look at what kind of re-use of the SAP payroll [and other] assets can have in the Cloud offering.” SAP will want to leverage the 51 payroll country solutions and 31 partner solutions existing today, but the “how” is still to be determined. The interim strategy is for SAP to deliver pre-packaged integrations between the SuccessFactors cloud offerings and the SAP HCM on premise offerings to bridge these gaps.

Core SAP HR customers will continue to receive support and innovations across many areas,  but with so many SAP resources redeployed or co-assigned to the Employee Central and other SuccessFactors initiatives, the anticipated pace and volume of innovation will decline.  One previously announced advance that is set to continue:  running SAP ERP HCM on SAP HANA for improved processing speeds and analytical capabilities.  Additionally, a brief reference is made to mobile investments but without details. Today SAP has a mobile store, where many SAP-built mobile applications are available for download, including six across the SAP ERP HCM platform; how this will be leveraged and augmented moving forward is to be determined.

SuccessFactors is the go-to platform for Talent Management.

For talent management, SuccessFactors Performance Management, SuccessFactors Compensation Management, SuccessFactors Recruiting and SuccessFactors Learning Management with social learning from SuccessFactors Jam will be the go-forward solutions. Talent management components from SAP ERP HCM will be continued with selected innovations for the next decade.

My Point of View (POV):  With this announcement, the real future of SAP HCM is placed squarely on the shoulders of the SuccessFactors Cloud platform.  SuccessFactors talent management solutions will be positioned to all new HCM customers and to current SAP customers who have not yet invested in talent management.  Current customers of SAP Talent Management products will continue to receive support and “selected innovations” through 2022, but those seeking significant innovation in those areas will need to look to the cloud (and do so expecting a different user experience as well as integration requirements).  SAP will assist customers in migrations or cloud adoption with pre-delivered integration support and services (full details are planned for announcement in May, at SAP’s SAPPPHIRE Now conference).  As expected, and in alignment with this new strategy, development on SAP’s Career onDemand has ceased.

As with the limited data on mobile, the path to social HCM is incomplete: SuccessFactors Jam is the solution for social learning in the cloud, but broader leverage of this or other social networking tools such as SAP Streamwork remains unclear.

Business Intelligence and Big Data are Prioritized

Analytics will continue as an important focus area within both SAP ERP HCM and the SuccessFactors product portfolios, leveraging significant assets such as SuccessFactors Workforce Analytics, SuccessFactors Workforce Planning, the SAP HANA platform and solutions from the SAP BusinessObjects portfolio. People analytics will be revolutionized by putting SuccessFactors Workforce Analytics on SAP HANA. Together SAP and SuccessFactors can make unparalleled aggregate HR benchmark insights available in the cloud to hundreds of thousands of customers. The combination of SuccessFactors software and SAP HANA is one of the key priority areas for development of the BizX Suite, as it will help increase customer value by dramatically speeding existing processes, enabling access to large amounts of data in shorter periods of time and providing real-time access to information tailored to individual requirements.

My Point of View (POV):  Both SAP and SuccessFactors have significant business intelligence assets, some overlapping, and all of which can be bolstered by the SAP HANA platform.  Unfortunately the good work done to date on SAP’s Strategic Workforce Planning (the first HANA-enabled SAP HCM solution) has been stopped, and those efforts will shift instead to augmenting the SuccessFactors Workforce Planning solution. Customers can expect a hybrid BI model moving forward, accessing different capabilities through a combination of on premise and on demand offerings from a combination of SAP and SuccessFactors-led technologies.  Leveraging SAP HANA to improve performance and enable real time analytics within the SuccessFactors BizX suite makes complete sense, and aligns to SAP’s plans to run SAP ERP on HANA by the end of 2012.

Open Integration for All Customers

SuccessFactors will continue to support an open approach to connecting with third-party solution providers. Approximately fourteen percent of SuccessFactors customers currently run their systems side-by-side with SAP. In addition to providing enhanced value for joint customers, SAP and SuccessFactors will accelerate the development of integration solutions with third-party solution providers. For SAP customers, the two companies intend to deliver integration packages between the two offerings: Cloud-based talent, core HR, recruiting, learning and social solutions, and workforce planning and analytics solutions from SuccessFactors; and On-premise core HR from SAP.

My Point of View (POV):  Integration is a key focal point, not just for SAP and SuccessFactors, but also across an increasingly complex HCM landscape, and so accelerating offerings in this area is paramount.  The planned integration packs between SuccessFactors and SAP are obvious requirements.  In keeping with their fist comment about openness and interoperability, and in recognition of the complex HCM landscapes of most organizations today, SAP would be well served to productize these 3rd party connectors as well; ease of interoperability is really the secret sauce in software (and platform) as a service.

One approach SAP has used in the past to manage rapid implementation, migration and integration is through their Rapid Deployment Solutions  (RDS), which consist of pre-packaged software, services and content.  Today there are three RDS solutions for SAP HCM, and new RDS solutions should follow quickly in support of those customers using solutions spanning the SuccessFactors cloud portfolio and SAP on premise HCM products.

Bottom Line:

Acceleration has been the consistent theme of this acquisition, from the first day it was announced, to the “Day 1” customer letter from Lars, to the press release issued this morning.  Acceleration of SAP cloud offerings.  Acceleration of synergies between SAP and SuccessFactors technologies.  Acceleration of customer value. The strategy articulated today by SAP and SuccessFactors provides a clear and immediate path forward for HCM customers and prospects.

For SuccessFactors customers, it’s all upside,  with accelerated investment across the entire portfolio. Where gaps exist in the portfolio (such as the current lack of a  cloud based offering in global payroll or benefits), integrations will be fully supported by SAP.

For SAP customers, the communicated strategy presents a more complex result. To their advantage is SAP’s commitment to supporting both on premise and cloud HCM, offering customers choice between the two or a hybrid model;  a SAP-supported path to best of breed talent management from SuccessFactors; and improvements across in-memory processing and business intelligence (although some of this may be available only in the cloud). The obvious downsides include reduced pace and volume of innovation across the current  SAP on premise solutions and the fact that the clock has started ticking on SAP on premise talent management.

There are still many questions (pricing, depth/quality of the integration and RDS solutions, specifically which “targeted innovations” will find their way into the on premise offerings, to name a few).  As SAP writes at the end of today’s press release, “Execution is the Difference.”  SAP will need to execute quickly, especially in the area of integration, to ensure this is a winning strategy for all of its customers, not just customers of SuccessFactors.

News Analysis: Further HCM Industry Consolidation as Oracle buys Talent Management Vendor Taleo for $1.9B

Following moves by rivals SAP and Salesforce.com, Oracle expands its offering in Cloud-based HCM with competitive acquisition of leading recruiting and talent management vendor Taleo.

Event: Today Oracle Corporation (NASDAQ: ORCL), the world’s second largest business applications maker, announced its intentions to acquire Taleo Corporation (NASDAQ: TLEO) for $46.00 per share, or an equivalent of $1.9B. This purchase price represents an 18% premium over prior closing price of $38.94, and values Taleo at almost 5 times its estimated sales for the year. (A sizeable premium, but not as high as SAP’s payment of almost 7.5 times SuccessFactors’ estimated annual sales). The deal is expected to close mid-2012. This latest acquisition brings the total to more than $40B that Oracle has spent across 70+ acquisitions.

Taleo, founded in 1999, is a leading provider of cloud-based talent management solutions to over 5000 enterprises worldwide. Its heritage solution is recruiting software, and today it is a clear leader in the talent acquisition market, managing 15% of all US hires and processing up 74M transactions per day. Over the years Taleo has expanded beyond its heritage to deliver a comprehensive talent management suite including performance and goal management, succession planning, compensation management (which it acquired in 2009 through Worldwide Compensation), and learning and development (also acquired in 2010 from Learn.com).

Analysis: This acquisition is the latest in a string of moves by major players, among the most significant in recent months being SAP’s announcement in December to acquire SuccessFactors for $3.4B and Salesforce.com’s announcement in December to create an HCM Business Unit headed by industry veteran John Wookey. In a market which, according to IDC, is expected to reach $8.1B by 2015, these moves make sense as players look to consolidate market share and capitalize on the shift in deployment preferences from on-premise to cloud-based services. An initial analysis of this transaction reveals:

“Taleo brings complimentary solutions to the Oracle Public Cloud.”

Point of View (POV): Taleo’s strength in recruiting and learning fills a significant gap in the Oracle HCM portfolio, which, despite investments over the years, has been unable to attain a market-leading position. Other areas of the Taleo suite face significant overlap with Oracle’s core and Fusion offerings. Taleo was already in the midst of consolidating its various platforms, and this acquisition only adds to the number of platforms under Oracle’s management. I expect Oracle will continue most planned investments in their on-premise solutions (across Oracle EBS, and Oracle PeopleSoft) while accelerating integration between Fusion and Taleo for a more complete cloud offering.

From a cloud perspective, we have witnessed Larry Ellison move from denouncing cloud computing as “nonsense” in 2010 to investing $1.5B in 2011 to acquire RightNow Technologies (cloud-based CRM solution aimed at combating Oracle rival Salesforce.com) and announcing Oracle’s Public Cloud. With this acquisition of Taleo, Oracle adds new and duplicative cloud-based HCM to its stack, and receives much needed expertise in the area of managing a cloud-based business. The image below demonstrates Oracle’s positioning of this acquisition.

With the acquisition, Oracle has a viable alternative to SaaS-based Workday, enabling it to deliver market-competitive SaaS solutions across the people management spectrum, and hopefully stemming the tide of PeopleSoft HCM customers moving to Workday or other SaaS vendors in lieu of a complex upgrade and Fusion integration.

“The Oracle/Taleo combination delivers powerful intelligence and a complete social experience.”

Point of View (POV): The combination of business intelligence from Taleo’s suite coupled with Oracle’s latest analytics functionality can make for a highly differentiated offering in the market. Additionally, Oracle’s Social Networking (and specifically Fusion Network at Work) capabilities can bring much needed social collaboration into the Taleo suite, filling its most pressing competitive gap across its talent management stack. Taleo’s product roadmap prioritized investments in social technologies at the platform level and in turn at the product level to transform traditional processes into highly collaborative solutions focused on end-users. With this acquisition, I expect these investments will cease or at least take a back seat to the integration of Oracle’s social technologies with the Taleo stack. Oracle’s challenge will be to deliver integration that enables innovation beyond simple connectivity between the two technologies.

“The Oracle/Taleo merger improves the employee experience…simplifies on boarding and quickly aligns employees to company goals, and empowers employees with access to learning and career management tools.”

Point of View (POV): The resulting end-user experience will, for the foreseeable future, be a combination of the Taleo and Oracle capabilities, and as such will depend upon integration. Core data integration (HR data with Taleo’s talent data) is straightforward. What will really improve the employee experience will be a unified user experience (common look & feel, integrated and seamless process flows). Oracle does not have a good history in this area, electing to keep its HCM acquisitions largely silod and relying instead upon emerging Fusion applications to provide that unification layer.

For its part, Taleo comes into the acquisition with its own series of disparate solutions. The Learn.com platform is not yet fully incorporated into the Taleo platform, and other solutions aimed at different recruiting markets continue to run essentially in silos. Clearly, there is a tremendous amount of work ahead for the Oracle/Taleo teams, not only in defining an innovative and market leading roadmap, but also in rationalizing a now broader collection of technologies.

Bottom Line for Customers and Prospects: Proceed with Caution.

According to the press release, “Oracle is currently reviewing the existing Taleo product roadmap and will be providing guidance to customers in accordance with Oracle’s standard product communication policies. Any resulting features and timing of release of such features as determined by Oracle’s review of Taleo’s product roadmap are at the sole discretion of Oracle.” As a result, customers and prospects should consider the following:

  • Taleo will continue to operate as an independent vendor until the transaction closes. Current Taleo customers are advised to lock in maintenance and subscription rates as far out as possible, and ensure they are not reliant upon future functionality promises to deliver on business imperatives, as the future pace of innovation on this stack is currently unclear.
  • Following the closure of the acquisition, Oracle will be that single “throat to choke” with regard to product, service and integration issues.  Joint Oracle and Taleo customers should apply pressure appropriately to ensure that seamless interoperability is high priority in the future roadmap.
  • For current Oracle customers, this acquisition brings market leading recruiting functionality and robust learning capabilities to the Oracle stack, as well as comprehensive SaaS-based talent management suite. Oracle customers, especially those PeopleSoft customers considering upgrading to latest releases of PeopleSoft or implementing Fusion, will soon have a viable alternative to moving to a 3rd party solution. However achieving a fully unified HCM/TM solution in the cloud is likely years away, compared to the pure-play Saas vendors like Workday and Ultimate, which are building this combined functionality natively rather than through acquisition and subsequent integration. Weigh your needs for integration, functionality and a simplified technology stack in light of the new risks and opportunities from this acquisition.

Bottom line for the HCM Market: Talent Management as a category is disappearing

The HCM market is shifting away from a feature/functionality focus to integrated HCM, with the remaining talent management vendors competing for a shrinking opportunity in light of the moving market. While Oracle (like SAP) lost HCM revenues to best of breed talent management suites in previous years, an increasing number of customers are looking back to their core ERP vendors to re-evaluate their options for an integrated suite. Over time, acquiring Taleo will give Oracle the best of both worlds – market leading functionality delivered in an integrated environment, delivered from a single vendor.

We’ve now heard from market leaders SAP and Oracle. Infor (the #3 ERP vendor) made its move last year to acquire Lawson, including its market leading HCM technology. SuccessFactors has announced its move into the HCM marketplace. Workday continues its drum beat of increasing momentum, and others such as Ultimate and ADP continue to add pressure around SaaS HCM. We can expect further consolidation in this space, perhaps from organizations such as IBM or Salesforce.com making additional acquisitions. Who are the likely targets? Certainly the few remaining publicly-traded companies offering cloud-based solutions, such as Saba, Kenexa, Cornerstone OnDemand and Ultimate. Other privately-held vendors are also potential targets, including an emerging breed of players focused on helping organizations “get work done” every day through SaaS-based productivity tools.

Today’s Oracle/Taleo announcement may herald the end of talent management as a separate category of HCM technology, but on its heels may be emerging a new category of vendor, launching again the cycle of innovation, growth and consolidation.

Your POV:

This acquisition has been rumored for some time. Are you surprised by it? Are you a Taleo customer? What is your reaction? Will you embrace Fusion to achieve advanced workforce analytics or social capabilities? Oracle customers: will you move to Taleo’s recruiting solutions, and how might this impact your adoption of Fusion technologies?

M&A in Talent Management Continues: My POV on Strategia and Peoplefluent

StrategiaLogoPeoplefluent logo

On January 30, 2011, Peoplefluent, a leading provider of integrated talent management technology, announced that it was acquiring Canadian-based Strategia Communications. Financial details were not disclosed.

This is certainly important news for the marketplace, with yet another leading Strategic HCM vendor filling a gap in an otherwise well-developed talent management suite by making an acquisition. As Learning is, for the most part, considered a key element of any integrated talent management initiative, it is not surprising that Peoplefluent would make the jump to purchase their current partner, as ownership trumps partnership when you’re talking integrated suites.

Peoplefluent can now check all the boxes across the integrated suite, leaving vendors such as Cornerstone and Saba among the final few that have yet to complete their suites. (Both have announced planned releases in the near term to close on these very gaps.)

The Tweetosphere, which would normally be abuzz with conversation about this type of deal, has been relatively quiet.

Is this because of the anonymity of Strategia, or is it because of the paucity of press release information from the two companies themselves? Regardless of the reason, if the solution is indeed solid (as you would expect given customers like Yoplait, Ontario Ministry of Finance, Transport Canada and others), Peoplefluent should be congratulated on this strategic move.

While the market awaits additional information on Strategia, its solutions and planned integrations, I’ve provided my thoughts on the acquisition (with an overall positive or negative indicator) based on the available facts.

What we know about Strategia:

  • On the first day following the announcement, the only conversation I could find on LinkedIn started, “I haven’t come across Strategia…Anyone familiar?” The responses were not overwhelming. (-)
  • Strategia has been in operation since 1999. Their marquis customers are predominantly Canadian, and showcase Strategia’s industry strength in manufacturing, aerospace, public sector and others. The press release touts close customer relationships, one of which may be evidenced by the work between Strategia and their Compliance Management client Timco Aviation Services, back in 2008. Working closely with Timco to understand needs of the aviation and MRO (Maintenance Repair and Overhaul) industries, Strategia was able to design and launch a compliance dashboard aimed at the very complex requirements of validating worker certifications for job scheduling purposes. In an interview with Aircraft Magazine at the time of the launch, President and CEO Romain Gagnon said, “A single aircraft maintenance worker must be certified on multiple levels to perform even simple tasks. This complexity is becoming a challenge for MRO operators who are trying to maintain or increase their turn-times at the same time as accurately managing workers’ certification.” It is reassuring to know that Strategia has been meeting the highly complex needs of aerospace and other MRO customers since at least 2008. (+)
  • Their website, www.Strategia.ca/en, reports fewer than 50 employees (which is great from an agile M&A perspective), but contains no other personnel information (nothing on leadership, partners or others.) Likewise, there is limited product information: beyond text on screens, there are no product screen shots, demo videos, brochures or whitepapers. After 12 years in the industry, this lack of marketing collateral raises red flags for me. (-)
  • Peoplefluent positions Strategia as an existing learning partner, and so basic integration between the two platforms should already be understood and facilitate a rapid first drop on the unified roadmap. (+). Interestingly, I don’t see Strategia listed as a partner on their website. Perhaps they have been removed already?  (-)
  • Based on the available product descriptions, Strategia’s Learning Suite, Ed, would appear to have sufficient functionality to meet common learning use cases. The modules in Ed include the LMS (with instructor-led training, eLearning, virtual classrooms and blended learning), Content Management, Skills and Compliance Management (including an assessment engine), social learning, reporting and eCommerce. This latter component – eCommerce for commercial or for-profit learning – is a strategic differentiator against some LMS competitors, as it is not universally offered. (+)
  • Peoplefluent now has an offering in one of the hottest growth areas: Social Learning.(+)  As a vendor in social learning, why isn’t Strategia on Twitter? (-)
  • In September 2011, roughly three months before this acquisition announcement, a new SaaS application called “HR in the Cloud” was launched. HR in the Cloud was the result of the association of four HR vendors, their solutions unified through the creation of a common point of entry, to deliver end-to-end HCM functionality. Strategia was the LMS component of that offering. HR in the Cloud is as much or more of an unknown as Strategia. I am not sure if the affiliation is seeing any traction or will be seeking a new LMS to plug into their offering, but their engagement in this association is at least worthy of comment. (neutral)

What we can surmise about product impacts:

  • Learning is a fundamental requirement for integrated talent management, both augmenting and benefitting from each of the modules within a comprehensive suite. With Ed, Peoplefluent ostensibly will have the breadth of technologies to:
    • Achieve excellence in the new hire experience both before and after Day 1 with development programs and collaboration integrated with Peoplefluent onboarding processes (including the onboarding of contractors through Peoplefluent’s Vendor Management System);
    • Foster the creation and sharing of knowledge across the enterprise for better outcomes with Strategia Social Learning;
    • Close on skill and competency gaps (take action within an integrated system) identified during performance or succession planning;
    • Plan and execute leadership development programs for high potential and high performing employees as identified during the talent calibration process;
    • Enhance and link assessments to the recruiting process and close gaps after hire;
    • The list of opportunities continues at length from here.
    • (+)
  • Will current Peoplefluent customers that are using another LMS consider switching to a relative unknown in exchange for the benefits of an integrated offering? Research shows that almost one out of every three companies are willing to forgo functionality in exchange for an integrated suite, but will Strategia’s functionality be enough for Peoplefluent’s diverse customer base? (-)
  • Will this acquisition play out in the global market? Are Strategia’s solutions applicable globally? Are they translated, and if so into which languages? Do they support EMEA data privacy requirements and the unique regulations of different regions? I expect gaps in this area of global capability. (-)
  • The press release talks about “new synergies across the uniquely differentiating components of…Workforce Analytics, Workforce Compliance and Diversity, and Vendor Management System“. It’s the last point that really intrigues me. Peoplefluent’s Vendor Management System (VMS), which is already a differentiator for them, helps organizations streamline and manage processes around sourcing and managing contract labor. The VMS has capabilities spanning services procurement, contingent management, compliance & risk management, and reporting and analytics. Ed could advance Peoplefluent’s assessment capabilities, accelerate contractor onboarding, facilitate content creation and new levels of collaboration between contractors and staff, and more. Ultimately, only the roadmap will tell; I look forward to seeing it soon. (+)

Should the market be buzzing? Yes. We just need more data.

While there are many plusses and minuses based on what we know and can anticipate, on balance, this acquisition can only be perceived as a very positive move for Peoplefluent and its customers.

Many technology vendors come to market with v1 solutions that perhaps meet only certain use cases, or bring “good enough” capabilities for the time being. I do not know at this point how Strategia’s solutions will fare in the analysis: good enough for some, market competitive, or even market leading in certain areas. What I do know is that upon completion, Peoplefluent will lay claim to an end-to-end talent management suite; it will have a learning platform from which to grow; and that learning platform will force the consideration of new process flows and new thinking across the rest of the solution portfolio.

Sounds like a win in my book.

Congratulations, Peoplefluent. Now, when can you share the details?

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