A new competitor enters the Social, SaaS HCM marketplace
In a deal of undisclosed size, Salesforce.com (NYSE: CRM) today announced its intentions to acquire social performance vendor Rypple and launch a new HCM division headed by John Wookey, executive vice president, advanced applications. The deal is expected to close by April 30, 2012.
Today, Rypple is positioned as a cloud-based social performance management company, enabling social recognition, coaching, feedback, performance support, and goals (it just released social goals 2.0 this week). It is one of several new entrants to the market in recent years, and one that is transforming traditional HR-centric processes into end-user focused productivity and engagement applications. This approach reflects the vision of Marc Benioff, chairman and CEO of Salesforce.com. “The next generation of HCM is not just about a cloud delivery model,” says Benioff, “it’s about a fundamentally better way to recruit, manage and empower employees in a social world.”
In an exclusive briefing with John Wookey and Daniel Debow, co-CEO and co-founder of Rypple, Constellation Research, Inc. had the opportunity to discuss the transaction in more detail and its potential impacts on the industry. An initial analysis reveals:
- Salesforce.com looks to redefine HCM for the social enterprise. Long a pioneer in CRM for the social enterprise, Salesforce had proven its ability to serve the social enterprise and rethink processes around how companies engage with their customers. As he joined the organization, John Wookey looked to apply that same transformational thinking to the internally facing processes of an organization. His charter was to rethink the core management processes of a company from the standpoint of social networking, enabling a workforce that is focused on driving to the mission of the company. Rypple’s social performance suite, already delivering transformed workforce processes through social networking, was a natural fit to advance John’s charter. Rypple’s social performance management, re-launching as “Successforce”, and adjacent areas such as onboarding, team formation and engagement are the first priorities for the new Salesforce HCM offering. Salesforce.com will expand its HCM focus into other areas where the infusion of social processes can transform the way work gets done and business value is created.
POV:The move from HR-centric to people-centric processes enabled through social technologies is gaining traction amongst many software vendors, including niche players such as Rypple, talent management suite vendors such as Cornerstone OnDemand and even ERP vendors such as SAP, Ultimate and Workday. Rypple’s pure cloud-based approach has positioned them to innovate quickly with social and mobile people processes that were designed from the start to be fun and amplify existing behaviors of collaboration and engagement. This acquisition does not address the core elements of HCM such as basic employee information management, payroll, benefits and rewards; these are not areas of immediate priority for Salesforce. While highly commoditized and readily outsourced, these are areas that competitors such as Workday and SAP address today and hence provide potential advantage to such players.
- Rypple extends the value of Salesforce.com’s existing core products. The acquisition enables Rypple social processes, including recognition, badges and other gamification concepts, to be brought into the salesforce.com platform. Salesforce Chatter is one of the first applications planned for augmentation by Rypple’s capabilities. Other salesforce.com products will likewise benefit from enhanced collaboration capabilities over time.
POV:Amongst vendors in the social performance management space, a commonly requested point of integration by their customers is to leverage the data already housed within Salesforce’s products such as Salesforce Sales Cloud or Salesforce Service Cloud. Rypple already had integration with Salesforce solutions under development, and the acquisition should further ensure delivery of streamlined, integrated solutions. For example, goals in the Rypple solution around marketing campaigns or customer initiatives should benefit from automated validation of the data in the related Salesforce systems, eliminating the need for duplicate data entry and possible error.
- Even more important is the anticipated advances of the salesforce.com person model. The goals, feedback, badges and other elements of social performance suite driven by the Rypple solutions become additional attributes of the employee profile. The acquisition will drive these additional attributes into the salesforce.com person profile, which in turn will drive additional value to other Salesforce applications. For example, Salesforce Chatter will become an even more powerful reputation management and “talent finder” tool once these additional profile elements become searchable and viewable attributes of an individual. The opportunity for Salesforce to grow and leverage this extensive profile beyond the enterprise relationship should appear as something more than a blip on LinkedIn’s radar screen.
What does this mean for current partners of Salesforce.com and Rypple?
Current partnerships, such as the Workday/Salesforce partnership or Rypple/Jive for collaboration, are slated to continue uninterrupted, and in fact, Salesforce emphatically states the ongoing need for such partnerships. Not all customers will choose Salesforce Chatter, for example, and a partnership with Jive or others provides necessary integration support between Salesforce applications and external social collaboration tools. Obviously, the nature of these relationships will become more competitive after the close of the transaction, and changes should be expected despite the current positioning.
What does this mean for current customers?
In the immediate term, current Salesforce customers will benefit from advanced collaboration and an advanced person profile in their salesforce.com applications. Joint customers of Rypple and Salesforce will benefit from improved integration and data flows. It is expected that Daniel Debow and David Stein, the co-founders and co-CEOs of Rypple, will remain onboard and actively engaged with Wookey and team, as they continue to bring their innovation to bear on the next generation of socially enabled people processes as delivered through Successforce and other salesforce.com applications.
This deal also signals to the HR-buyer that social, cloud-based HCM is becoming mainstream. The adoption of social processes within the enterprise has been steadily growing over recent years, yet the adoption by HR departments has lagged. Rypple’s Debow grew its customer base by taking a page out of the salesforce.com playbook and sold directly to the Line of Business owners (heads of sales or services, for example) delivering a strong value proposition addressing specific business challenges. In recent months, Rypple has seen more and more HR-driven interest in their solutions, indicating that HR buyers are ready for these new people-centric approaches to traditional HCM processes. Now, as part of the larger Salesforce suite, these social HCM processes are positioned for more rapid acceptance in the enterprise.
What does this mean for HCM vendors?
Just as with the momentum of the SaaS-only Workday offering, and the recent SAP/SuccessFactors acquisition announcement, this deal is yet another validation of the social HCM marketplace delivered in the Cloud. Many HCM vendors have been aggressively incorporating social networking into their platforms (through development, acquisition or partnership), but are at various stages of maturity with regard to actual process transformation, Additionally, many have added public cloud delivery to their on-premise capability, for portions if not all of their HCM solutions. This move by Salesforce is a call to action for all strategic HCM vendors that people-centric, not HR-centric, processes are the future of work. The winners in this increasingly competitive market will be those vendors that can leverage social networking concepts to rethink traditional processes and enable new ways of working, and do so in the Cloud.
Filed under: Cloud, Global HCM, Mobile/Social, Salesforce.com, Social, Talent Management Tagged: | Cloud, constellation research, future of work, gamification, HCM, Next Generation, Next Generation apps, Rypple, SaaS, salesforce.com, Social, Talent Management, yvette cameron