Every fall I spend quite a bit of time updating research reports and our knowledge base relative to human resource software products. This spring, a number of HR vendors have been aggressively communicating a number of new capabilities and market successes to me.
In recent weeks, I have or will be briefed by Kenexa, Mercer, Ultimate, SilkRoad and others. Last week, I spoke with Adam Miller, CEO of Cornerstone.
Cornerstone has some interesting statistics, statistics that are particularly interesting to me as they have a software as a service (SaaS) solution. Cornerstone claims to have eight out of the 10 largest HR SaaS deals on record. Seven of these deals have over 150,000 user seats each. One customer alone accounts for 700,000 of their subscribers.
Not everything about Cornerstone is related to the large deal sizes they have closed. In fact, the company has made a concerted effort to move into the SMB market in recent years. Nonetheless, Cornerstone has some 3.5 million users on the same software instance of its application software code. The way Cornerstone implements software as a service, each customer has their own instance of a SQL Server database. As you would infer, the Cornerstone software as a service was built on a Microsoft .Net stack.
Cornerstone currently does not possess any externally accessible platform as a service. Adam Miller indicated that PaaS was “all the rage today and we will get to it”. However, he indicated that their current focus is instead oriented on building a world-class talent management solution.
I asked Adam about what SaaS buyer values exist in the SMB market and were those different from those of large enterprise customers. He indicated that small companies are attracted to software as a service because they often lack the technical staff internally to do software implementations and software upgrades to on-premise products. Mid-market companies often find that the solutions they license do not scale well for their businesses. That said, 75% of the mid-market was, in his opinion, a break/fix market when it comes to acquiring new HR technology.
Cornerstone has been selling SaaS solutions for a number of years. Adam indicated that almost all of their customer base has moved to SaaS except for some government contractors and companies requiring an on premise solution for their own security reasons.
My colleague, Katherine Jones, and I will be interviewing one or more of their customers shortly.
Bottom line: great stats from a HR SaaS provider. We would anticipate that some sort of market consolidation will occur in the HR SaaS arena. There are so many providers currently and market forces (or mergers) will decide who the leaders in the space will be.
