The Human Capitalist

My Analogy of Workday and On-Demand

I own a 1999 Audi A4.  It has been a great car.  The car has over 130K miles and has traveled from the Bay Area to Boston with ease. 

I put the roof-racks on the car when I need it.  I stopped using the CD-changer when I purchased an iTrip.  I've changed the tires a few times, replaced the front fender after a friend of mine backed into me, and take it in for maintenance and a wash every-so-often.

The problem is...I don't drive the car that much anymore.  Not that I've outgrown it...just doesn't meet my needs anymore.  Going through downtown Boston, and the Big Dig everyday, is a nightmare.  Gas, of course, is expensive.   But more-so, I have taken a liking to riding the train.  Efficient (actually faster than driving), cost-effective ($4.50 each way), and it's got almost everything I need (wireless connection would be nice but I would expect that in a future upgrade).  In addition, I don't have to worry about patches....errr....repairs nor do I have to worry about maintaining and servicing the expensive equipment.   Yeah...it may be late every-so-often but I am cool with that.  I won't be replacing the trusty Audi anytime soon but have changed my habits in how I use it.

I hope, by now, you are getting my analogy.  Things grow old.  Needs change.  Changing environments affect decisions.  But most importantly, people...errr...customers must adapt to what makes sense for them now and in the future.

The Launch of Workday

As many of you know, the long-anticipated wrapping of Workday will come off with the formal launch this Monday.  I don't need to repeat the story or evolution of the company as it is already well apparent, but in case you are interested in more details, I have written about them here and here in the past and BusinessWeek has a feature story in this week's edition.

Just a few weeks ago, I wrote about their appearance at the HR Technology Conference and the buzz around the booth.  Needless to say, I have been receiving a tremendous amount in interest and client inquiry around what they are doing and I have spend a good amount of time with the Workday folks to get under the covers a little bit.  I have also spoken with some early prospects and gotten feedback into what they liked about the product and what they want to see in the future.  Look for some additional commentary next week and more formal upcoming research (of course for Yankee Group clients only) in the near future.  Of course, if anyone has any questions or would like to share any thoughts, please feel free to contact me at the email listed on my about page.

M&A Activity in Talent Management

The talent management market is hot.  With a heated market comes constant speculation on who's buying who.  As one executive recently stated, "...there's lot of petting going on but not a whole lot of sex!"  In an effort to create some mild controversy, I am throwing out some thoughts on the vendors active in the M&A discussion:

Unicru - It seems like a question of not "if" but "when" and "to who".  Though it probably won't happen, I think Unicru and Workbrain would be a good match.

SuccessFactors - Continues to be on the radar screen of almost every vendor.  Their continued market success though has created a price tag that is most likely too high for any current vendor to consume.  Would be surprised if they added recruitment functionality via acquisition this year.  VirtualEdge?

Vurv (formerly Recruitmax) - Probably the most savvy when it comes to understanding the M&A market.  I'm expecting an S-1 filing before any acquisition news.

Workstream - Has announced seeking "strategic alternatives".  Lots of speculation on the investor message board about a Kenexa acquisition.  I'm not buying anything on the boards as those speculators don't truly understand the market.  I don't foresee any significant announcement soon.

Taleo - Their patience is admirable.  As stated in an earlier post, the market has yet to significantly adopt the talent management suite approach.  That said, stand-alone performance management is growth at significant rates and an acquisition of available solutions are become harder to come by.  Nonetheless, the market is expecting them to pull the trigger on an acquisition soon.  SuccessFactors or Plateau would be a tremendous long-term fit...but of course at a significant near-term cost. 

ADP - Wants to play in talent management.  Active in the discussions and even got close to pulling the trigger on one deal.  Their conservative nature will ensure the deal passes muster on all fronts.

Saba - Based in Redwood Shores...could they be moving across the street?

SumTotal - They have performance management via SuccessFactors.  Is this the long-term solution?

Kronos - Seems to be kicking the tires...even putting formal offers on the table.  Next to ADP, Kronos has significant available capital and is ready to spend it. 

The HR Research Initiative

Seems like every vendor these days is launching a research group.  The most recent entrants are SuccessFactors and Monster, who announced today a newly created Monster Intelligence research arm.

• Taleo Research
• SuccessFactors
• Monster Intelligence
• Vurv Education

I'm a big fan of the initiatives.  Many on-demand vendors maintain valuable data across hundreds and thousands of companies.  The ability to mine that data and identify industry trends, practices, and key success elements strengths the value proposition and showcase how HR can actually affect the two key metrics of any business: revenue generation and cost containment.  In SuccessFactors case, having the ability to identify the competencies and core elements of high performers, is...can I say...groundbreaking?

UPDATE: Forgot to mention Softscape who also has a Management Consulting and Benchmark Services practice.

News & Notes from Taleo World

Last week I attended two industry events worth noting.  The second will be in a follow-on entry.  The first was Taleo World.

A world-class event and probably the largest HR vendor conference of its kind today.  Considering the competitive landscape, Taleo has the highest caliber of clients and executives in attendance at their conference.  Companies including Starbucks, UnitedHealth, Dow Chemical, J&J, Deliotte, etc.  I had a chance to sit on Bill Kutik's 52nd (or something like that) panel along with my colleagues from Gartner, IDC and AMR, to share our insights on everything talent management.  Bill is a tremendous moderator...well-prepared, witty, opinionated, and most importantly, extremely knowledgeable. 

I also got to enjoy a dinner with among others, Divesh Sisodraker, Taleo's CFO.  I typically don't interact with CFOs but I have to tell you that Divesh is one of the sharpest CFOs out there -- a rare combination of Wall St. knowledge, market expertise, and even product depth (also important to note that he is well-respected among Taleo's covering analysts).

One of the big themes in talent management right now is around usability and simplification.  Taleo is doing some interesting things with AJAX that both simplifies the recruiting process while enhancing the user experience.  All in all, a great conference. 

Forgot to mention...Carly Fiorini was a keynote speaker.  Got a round of applause from her and the audience for asking the first question.  Didn't think she liked it though.  After her talk about leadership and the generally good experiences at HP, I asked her, if offered the HP CEO job today, would she take it.  Although she said all the right things (including a statement about "being carried out of there on her shield"), I sensed the wounds are still very fresh.

Investors View of Talent Management Vendors

I think we would all agree, investors are riding a nice bull market right now.  How are talent management vendors faring on Wall Street?  A six-month review of losely defined "talent management" stocks shows significant market capitalization growth among the vendor base.  The winners during the past six months are clearly Kenexa, Saba and Sumtotal with 110%, 70%, and 45% growth in stock price respectively.  SAP's stock has grown a solid 30% during the same period with Oracle and Taleo stock price growing about 12%.  Workstream lags the group with about a 10% decrease in stock price. 

Kenexa has established a high benchmark in the talent management market.  With healthy margins of 17%, strong revenue growth of 60+%, and a customer base that continues to increase their spend with the company, Kenexa has justifiably been rewarded by Wall Street.  Keep in mind, this is not necessarily an "apples-to-apples" comparison as these vendors listed above have widely different business models and product/service portfolios, but at least a good point of reference for this exciting market.

The Downside of SaaS - A Customer Perspective

I am a Software-As-A-Service (SaaS) customer.  TypePad happens to be the service provider behind this blog.  Needless to say, I am an unhappy customer.  Although the product is simple and easy to use, the issues relating to downtime have exhausted my patience (no use paying for a service if it is frequently unavailable, right?)

Let me be clear, I am a strong advocate for SaaS.  My problem with TypePad in this particular instance is that I feel my customer relationship has been hijacked.  I bought into their SaaS model due to its low cost and simplified use.  The downside of this relationship is that TypePad controls my content and is rendered useless when the service goes down which has happened no less than 5 times in 6 months, with outages of over 12 hours at a time.  I could end the relationship tomorrow (another benefit of SaaS) with no penalty but the pain and time required to migrate platforms has forced me to stay.  I have expressed these concerns with the CEO and he has kindly and seriously listened.  Unfortunately the service continues to degrade and his promises are now going on deaf ears not only with me but with a longer list of TypePad customers. 

I guess what I am trying to say…do your homework before blindly buying into the SaaS model both individual and enterprise users!  Talk to the respective vendors' customers, hosting providers, and users.  Most on-demand talent management vendors have done a superb job managing the security, performance and delivery of their products.  Keep up the great work.