As has been widely expected, Oracle have moved to purchase publicly listed Taleo for their cloud-based talent acquisition/recruitment, performance management, learning and development, and compensation management offerings. The speed of roll ups by the old guard is accelerating in a great checkers game as the established ERP vendors guard their flanks from more innovative and of-the-moment competitors. Larry Dignan hit the high points here on ZDNet, the Twitter peanut gallery has had a busy day and Bill Kutik's HR Tech Linked In group has had a useful flow of comments.
I spoke to Cornerstone on Demand strategy VP Jason Corsello and Saba COO Shawn Farshchi today to get some industry perspectives on Oracle's move, which appears intended to put pressure on Workday, who of course have been going like gangbusters recently. Before I get to Corsello and Farshchi's comments it's worth noting just how much the Human Capital Management space has evolved and mutated in the last eighteen months or so. What has been a relatively sleepy industry focused on corporate payroll, recruiting and training needs, with a tradition of clunky and brittle technology that does the job so why upgrade.. thinking by users has been revitalized by two business trends: cloud computing/Software as a Service and the need to explore collaborative networking value for competitive advantage across businesses.
Substantial firms like SuccessFactors and Taleo have become significant enough to threaten the incumbents, who are rooted in previous technology generations and customer relationships. SAP and Oracle respectively have now made moves to acquire cloud competency dna and components to add to their offerings while taking competition off the playing board, while adding their customers and revenue. The big dogs can do that sort of thing. However, as David Arella CEO/Founder at 4Spires said on the HRTech LinkedIn thread "while they're integrating, others are innovating"...and this is a neat summary of the task ahead for Oracle who will have to weave Taleo's products into their Fusion roadmap. I'm sure Oracle's Fusion Strategy VP Gretchen Alarcon has been working on this particular jigsaw puzzle for months but meanwhile the various other players on the field can innovate to keep the momentum of change going. It seems likely that other vendors in the space will be rolled up in the coming months, a similar
Cornerstone on Demand have been experiencing 60% growth according to Corsello, who sees the current climate as being similar to the Customer relationship Management space a few years ago, when Salesforce and others really started putting the cat amongst the pigeons. Cornerstone are true multi tenant in their architecture, and some of their appeal to customers and prospects is sure to be the SaaS advantages of pushing out updates painlessly, as opposed to endless patch Tuesdays and upgrades many in the marketplace have past war wounds from. Nasdaq listed Cornerstone, who have been quietly growing and hit a billion dollar market cap after ipo'ing last year (incidentally a peak Jive Software briefly hit this week in the pure play collaboration space), and I'm sure are being eyed along with other mid market players such as Ultimate and Saba in the great enterprise roll up show, although all strenuously deny this when asked - as did Taleo until the announcement (they were running inappropriate press ads in the Wall Street Journal this week about M&A distractions).
The big question in my mind, having been in the trenches doing strategy work with real enterprise business users, is how much of the current cloud stratosphere is what customers are actually going to move onto in the near term and how much is IT fashion and financial market prevailing winds. Saba's Farshchi, who knows the enterprise world well, is proud of their independent status with 'no relation to ERP's). Saba, like the Enterprise 2.0 world is a believer in 'bottom up' Human Resource Management, something their soon to be announced 'People Cloud' aims to enable.
Workday, the financial and human capital management software vendor who are widely expected to IPO this year, was of course founded by Peoplesoft founder and former CEO David Duffield and former PeopleSoft chief strategist Aneel Bhusri. (Peoplesoft was acquired in an acrimonious hostile takeover in 2004 and is an important facet and components of the upcoming Oracle Fusion integrations). Workday are currently leading the HCM pelaton, to use a cycle racing analogy, with their fresh cloud products unencumbered by legacy obligations to older customers - like Cornerstone they are able to push out updates with minimum pain to their user base.
Workday are meat and potatoes for the new generation of cloud integrators, often being woven into Salesforce's Force.com platform ( a potential Workday acquirer...) and other enterprise software in the cloud. That seemingly timeless phrase "while they're integrating, others are innovating" comes to the fore again - we're at a very interesting cross roads for the customers and end users of HCM and cloud technologies where strategic decisions need to be made on all sorts of levels particularly around compliance (often internationally, a sometimes fiendishly complex area) and efficiency against limitations of clunky software and integrations. Despite the hype there's plenty of very clunky cloud software, as you quickly find out if you talk to people who live in it in their cubes during their working week.
Times are good for those who continue to innovate in the HCM space and this year is sure to have several entertaining business events. The bigger challenge will be to prove that the rather conservative HR marketplace actually wants to upgrade to all these whizzy new products - demonstrating business value is particularly important in a down economy despite the financial market cloud flavor of the month tail winds...