Nearly a decade after the dot-com bubble burst with the recession of 2001, another dot-com era appears to be coming to an end. Deals were announced last week that will take talent management vendors Salary.com and Learn.com off the market.
Kenexa launched the first salvo on Sept. 1 when the company announced plans to acquire Salary.com for approximately $80 million. A day later, Taleo announced its deal to acquire Learn.com for approximately $125 million.
There’s a race among vendors to be one of the top players in the talent management market, said Jason Corsello, vice president of Knowledge Infusion, an HR consulting and advisory services firm.
“There’s going to be three large, dominant vendors,” Corsello said. “The question is who is that going to be?”
Consolidations in the HR services industry offer a useful comparison. With Aon’s deal earlier this summer to acquire HR consultancy Hewitt, that market is now dominated by three big companies: Aon/Hewitt, Towers Watson and Mercer.
While there will continue to be niche players, a similar trend is playing out in the talent management vendor market. In January, recruitment specialist PeopleClick and talent management vendor Authoria joined forces. SuccessFactors made a deal for business analytics specialist Inform Business Impact in February. Last month, U.K.-based StepStone Solutions acquired recruitment specialist MrTed and ADP completed its acquisition of Workscape.
The ongoing deal-making is a positive for the talent management industry as vendors round out their products and offer buyers a tighter set of offerings, said Mark Smith, CEO and executive vice president of Ventana Research, a research and advisory services firm.
“Consolidation is a good thing,” he said. “It helps make sure we actually get a better selection of integrated solution sets.”
Kenexa will fill a gap in its portfolio of products and bolster its traditional strength in talent acquisition, on-boarding and retention by adding Salary.com’s compensation software and competency management capability. Smith said the addition also aligns well with Kenexa’s new technology platform, Kenexa 2x.
“They can take the compensation and performance [products] of Salary.com, layer it on top of their new platform and get into the market,” Smith said.
Taleo adds Learn.com’s learning management platform to its end-to-end talent management platform. Smith said the acquisition also allows Taleo to further penetrate the mid-market by tapping into the mid-sized companies that are a large part of Learn.com’s customer base.
While vendor consolidation brings multiple applications together into one interface and allows easier exchange of data amongst them, it can also open up challenges. New owners may stop supporting existing applications, leaving the acquired companies’ customers in a tough spot. Corsello recommended that buyers include opt-out clauses and terms of services protections into vendor contracts.
“If they can start putting some protections in place today when they start signing those contracts that gives them some leverage to say, ‘Hey, if our vendor gets acquired, [here are] the things we can have.’”
This summer’s deals likely won’t be the end of the market consolidation in talent management. Buyers can expect to see continued action as sellers continue to look for ways to round out their product offerings and respond to the increasing sophistication of talent management today, including workforce analytics and planning.
“There are a circle of things that are important to doing talent management,” Smith said. “The buyers have got to mature and realize that one-offs are not going to be the best path in the future and the suppliers are going to have to get better with an integrated solution set.”
Corsello said that buyers will have a hard time keeping up with the consolidation and should tap into outside expertise to keep track of the rapidly changing market.
“There’s a handful of good folks out there that have a good pulse on the marketplace and that’s probably needed more than ever so companies can map what they’re doing, what their strategy is and how their technology lines up, and who are the vendors they want to place some bets on,” he said.
by Mike Prokopeak | Talent Management
[About the Author: Mike Prokopeak is editorial director for Talent Management magazine.]
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Is there any way to find out what the domains cost on their own? Salary.com and Learn.com are both pretty big single-word domains and I suspect they could quite comfortably fetch six digits on their own.