Talent Management Technology: The Next Generation
After talking with several colleagues about the SAP/SuccessFactors acquisition news, I am not the only one who thinks this is the beginning of a new wave of consolidation.
I have heard that some people are calling it "the end of talent management." But I think it will just mark the beginning of The Next Generation.
The Old Generation
It is hard to believe I am calling it the old generation already. It seems like yesterday these products were on the cutting edge. They have done so much better than their predecessors (Resumix, ResTrac, Personic), it is a little sad to see them go. But just like the Baby Boomers I expect they will linger around for a long time to come.
SuccessFactors, Taleo, Kenexa, and several of the other Tier One vendors have a few things in common.
- They started out as single function product, an inch wide and a mile deep. Nimble, flexible, and better than the same module offered by the behemoth ERP/HRMS.
- As the vision for integrated talent management gained momentum, they expanded their scope.
- Organically growing functionality only got them so far. They realized that it would take many years to get the new modules to same maturity level as their flagship. They needed to increase speed to market.
- They made acquisitions to broaden their functionality, and in some cases take out competitors, or to buy customers.
- They have really big marquee accounts who place big demands on them for new features and functions.
- Their clients pay a premium and only use a small fraction of the product's capability, yet they still do not have everything they need.
- They try to be all things to all people, but at the same time dealing with multiple code bases, integration of company cultures, and an enhancement request list that would choke an elephant.
- Not to mention trying to transform from Application Service Provider to a true SaaS environment.
The Next Generation
Even during the horizontal expansion of the last six years there has been an emergence of a new best of breed. As the old generation attempted to incorporate Social and Mobile into their legacy systems, these new products come with web 2.0 built into the core.
Much of the proliferation has been in the Recruiting space, point solutions for Sourcing, CRM, hybrids like OneWire and Jobvite that combine job posting, social sourcing, and some applicant tracking.
But what about a Talent Management Suite?
Cornerstone is pretty well positioned, having stepped up as a top three Tier One contender. They are 100% organically grown and created some serious momentum with the ADP relationship and then fended off an acquisition by going public. Kind of like when Jean Luc Picard avoided being assimilated by the Borg....
But I think whoever takes the lead as a The Next Generation Talent Management Suite will need to offer a more open platform to create sustainability. Rather than try to be all things to all people, create a killer foundation and framework for each of the functional disciplines, and then open up the API's so developers can create everything from basic applications to highly sophisticated modules. Make it easy for a customer to only pay for the functionality they want, and get everything they need.
So this wave of consolidation is by no stretch the end of anything. It's really just the beginning.
Here's to you Jean Luc!
About the Author
Ed Newman
Chief Analyst
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Comments (59)
Naomi Bloom
That said, especially for larger companies with a big investment in their ERP/HRMSs, they're getting a great "stay with your current partner" story (Oracle with Fusion TM and now SAP with SFSF). Some will decide to "rethink, rip & replace," and Workday, for example, is ready to take these folks on. Some will stay with their ERP/HRMS vendor and pick up TM from that same vendor -- with a lot more SAP shops doing that now, perhaps taking share from other TM vendors who've sold into that SAP installed base. And some will continue to augment their ERP/HRMS with an added talent management suite -- but there's going to be less momentum here than there has been previously.
As to your wish for a more open platform, at the center of achieving that is having an industry-standard HRM domain conceptual object model, at least for those objects that are at the crossroads of so much HRM activity. Discussions to achieve this are underway, and I look forward to reporting on those discussions when they are far enough along for me to have confidence in the outcome. But absent that model, the semantic differences across applications is VERY difficult to bridge.
Happy holidays, Naomi
Ed
I really do not have that much depth on CSOD and would not suggest they meet the definition of true SaaS. It is just that out of the remaining Tier One TM vendors, they have created the broadest footprint without making an acquisition, of course we are all anxiously waiting to see the recruiting product. I would give them the best shot at stepping up as the next generation. But I agree there is a road to hoe.
I think the threat of further consolidations could certainly give pause to companies in the midst of evaluating their HCM infrastructure, but these decisions are not made over night. There will be a lot of wait and see while staying the current course.
I look forward to hearing more from you on the industry standards, because I do think the platform play is the way of the future, and it sounds like that object model will determine how fast we get there.
Brian
Ed
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