Taleo beefs up with performance management

When people talk about leading SaaS vendors, they rarely cite Taleo, but that's an oversight. Its reported revenues make it the third-largest SaaS pureplay, beaten only by Salesforce.com and Concur. This is a recent jump from fifth place, helped by Cisco's taking WebEx out of the pureplay ranks and RightNow Technologies' decision to shift to a wholly subscription revenue model this year, which after calculating trailing twelve month revenues as at 30th June helped Taleo with $111.1 million squeak past RightNow's $111.0 million by a whisker. Taleo looks set to consolidate its position in coming quarters, having put in a healthy year-on-year growth rate of 28.4%.

Yesterday, the talent management vendor announced an expansion of its product set to embrace performance management. Adding one of the fastest-growing aspects of people management ought to further stoke its growth rate, appealing to existing customers as an add-on while opening up opportunities with prospects. Taleo Performance will be on limited release to selected customers from October, with general availability set for Q1 next year.

Rather than acquiring one of the many existing vendors offering performance management, Taleo has chosen to develop the new functionality in-house. The company made that choice because it regards the current generation of performance management products as flawed. These '1.0' products are built around compliance and record-keeping, says Taleo, rather than actively supporting day-to-day management and development of staff. In contrast, the new Taleo product is a Web 2.0 take on performance management.

The look-and-feel of the application is similar to demonstrations I've seen of products from new-kid-on-the-block Workday and some of the concepts emerging from SuccessFactors NEXT Labs. The interface has been developed using Adobe Flex, which allows for a very user-friendly, highly graphical interface, with action menus embedded in the information presented on screen for rapid clickthrough to the desired outcome (see screenshot below). The objective is to encourage usage throughout the year, by both employees and managers, rather than simply providing a means of collating annual or quarterly performance reviews. An important feature in support of this is integration with Outlook, designed to bring email communications into the workflow of using the application, both to record supporting material (eg linking to an email recording the success of a project) or to initiate requests for information or other actions.

The other strong suit of Taleo Performance is the way that it's fully integrated with other Taleo functionality. For example, in the screenshot shown above of the manager's view, one of the positions is vacant. Clicking through on that vacancy brings up a job description from the recruitment process, and the manager can initiate succession planning for the new position — even weighing up potential internal applicants while waiting for the position to get budgetary sign-off. Similarly, applicants using the recruitment process (whether from inside or outside the organization) can be given access to performance management functions, such as viewing the potential career paths within the organization that map out from a current vacancy.

The demonstration I saw was a persuasive illustration of how the application can support managers in actually doing the job of employee evaluation and development. That's clearly a step up from earlier generations of software that were more designed from the point of view of the HR department, focussed around aggregating information from a top-down perspective. There were also some interesting notions of using historic information to, for example, generate career paths based on the actual moves people had made within the organization, rather than simply showing the hierarchies built into the org chart.

I was left wanting to see more of the employees' view, though, which is the part of the application that has the most development work still to be completed. This will have all the usual 2.0 goodness of social networking, tagging, user-owned content, and so on. But I'm not sure that anyone is really clear yet exactly how those features will help employees manage their career development. In the Web 2.0 era, do employees even want to manage something as individual as that within an application that belongs not to them but to their current employer?

It will be interesting to see how the final version of Taleo Performance delivers relevance to employees — and also whether it will tackle any of those wider questions about career ownership. I guess the latter point will be determined by how Taleo's customers choose to face up to such issues (they may well choose to ignore them for the moment, of course). From Taleo's point of view what's important is to have a distinctive new performance management product that should help it continue its growth and will give rivals like IPO-bound SuccessFactors, already-public Workstream and others some serious new competition.