Last week, Oracle, an enterprise application software vendor, announced the acquisition of Taleo, a cloud-based human capital management (HCM) solutions provider, for $1.9 billion and a little over five times the projected 2012 revenue for Taleo. Members of HRchitect’s executive team – Matt Lafata, Rick Fletcher, Ron Hanscome, John Hinojos, Tom LaMarre and Alex Tellez – met to discuss the transaction, on the implications to the talent management marketplace, during the most recent Market Minute. Audio from the discussion is available here. Key takeaways are always posted to The Puzzling World of HRtechnology blog and appear below.
- It makes sense long term to have Integrated Human Capital Management.
- The continued consolidation and acquisition of best-of-breed vendors by the ERP’s may create a commoditization of talent management features in the industry.
- We may see an opportunity cost of integration over innovation. Internal thrashing and energy that would be spent on innovating each of the particular product suites may instead be spend on providing good integration paths between the Oracle core products and Taleo capabilities.
- How will products that currently integrate to Taleo be affected?
- What does the product roadmap look like? Oracle has historically had a tightly controlled approach to talking about product releases until they are almost out the door. It may be hard for customers to get a good understanding in advance of what the roadmaps look like and what the impact will be on their own organization’s strategy.
- How will Fusion and the Fusion applications be reconciled with the deeper, in many respects, best-of-breed / talent management capabilities that Taleo brings to the table?
- A year ago the industry was seeing the talent management vendors consolidating and moving toward the suite vendors going after the mid-sized core HR vendors to create a whole human capital suite. Over the last couple of months, the ERP vendors who have a lot of cash, have been picking these players up, largely because acquisition is an easy way to add cloud / SaaS capabilities to their product offerings.
Should existing Taleo customers be concerned about the acquisition?
- Clients who are not Oracle shops are already expressing concern. However, Taleo’s integration tools are agnostic – they currently work well with a number of HR systems – so there will be limited impact there.
- Don’t panic. No immediate changes will happen to the Taleo product offering or support are expected.
With this move by Oracle, and SAP’s previous acquisition of SuccessFactors, what about Workday?
- Workday has build out talent management (performance, career development, succession planning and compensation) and for a first or second-version offering, is really very strong and all delivered within the context of an integrated HCM application. However, recruiting and learning are the two remaining outliers. Workday has chosen not to build these out. The question remains if they will go outside of their organic approach and acquire someone, or will they continue to partner in the delivery of recruiting and learning? The next few months should prove important in them determining that strategy.
- As with all acquisitions, intent or strategy around it is one thing, execution is an entirely different thing. The success of this acquisition will depend on how well the strategies are thrashed out, and how well they are executed.
- The HR technology marketplace continues to move and shake with mergers and acquisitions. It is always wise to go into an evaluation of an HR system with eyes wide open and consider all of the decision drivers that are most important to your organization, before deciding on any vendor