The four horsemen of SaaS

Taleo's acquisition of Vurv, announced today, is a clear play by the SaaS vendor for breakout leadership of the people management sector — one of the hottest segments of the enterprise SaaS landscape, populated by fast-growing startups such as recent Nasdaq entrant SuccessFactors along with privately held Authoria, Cornerstone OnDemand, UK-based StepStone and others.

Once the deal closes in June or thereabouts, Taleo will become one of four vendors whose revenues and reach puts them head-and-shoulders above other publicly quoted pureplay SaaS vendors serving the enterprise software market. These four horsemen of SaaS are:

• Salesforce.com — the giant of the pack and runaway SaaS leader in CRM. Expects $1 billion revenues this financial year.
• Omniture — secured its leadership in enterprise web analytics after closing its acquisition of Visual Sciences (formerly WebSideStory) in January this year. Expects $295 to $300 millon revenues this year.
• Concur — consolidated its leadership in travel and expense management with its acquisition of smaller rival Gelco last year. Expects revenues of $211 million for the current financial year.
• Taleo — acquiring Vurv will confirm its position as the leading talent management SaaS pureplay. Adding Vurv's annual revenues of around $40 million to Taleo's existing guidance brings its expected revenues for the current year to just under $200 million.

Taleo's move on Vurv (previously known as Recruitmax) is an out-and-out expansion play: "It's really about scale and positioning Taleo for the next stage of growth," chief marketing officer Al Campa told me earlier today. Vurv brings no new products to Taleo's portfolio, he admitted, and over the next eighteen months the Vurv product set will be converged onto Taleo's recently refreshed application platform. Nor does it add any new marketplaces, although Vurv is a little stronger in Europe and has data centers both there and in Asia-Pac, which Taleo does not. The acquisition is simply about bulking up Taleo's customer base, its talent pool and its revenues.

"You're starting to see the next generation of SaaS vendors taking shape," said Campa, who is very comfortable to have Taleo ranked alongside the other SaaS horsemen. "This [acquisition] creates one of the largest SaaS companies in the world," he added. Let's hope it stays that way — Taleo now has to show it can digest the acquisition while retaining Vurv's talent, at the same time as maintaining its own recent strong growth trajectory.

UPDATE [added 00:56 May 7th]: In an interview with fellow Enterprise Irregular Bob Warfield yesterday, Concur CEO Steve Singh says, "I'm a big fan of Salesforce, Taleo, and Omniture. There’s a good group of SaaS companies that’s starting to emerge from the pack and really show what's possible and what the future will bring." Not quite a coincidence — I also spoke to Steve yesterday and he mentioned the other three companies to me too. When Al Campa later on mentioned the same set of companies, the 'four horses' analogy began to take shape in my mind.

Also worth noting: Another EI, Jason Corsello, is hosting an online debate about the acquisition and also promises to write more about it. "This acquisition immediately changes the game and landscape in talent management," says Jason, a leading authority on human capital management software. "The acquisition also changes the course of history for Taleo who has typically focused on the combination of organic development and smaller, more incremental acquisitions."