Talent Management Blog

Just a few short hours ago, Oracle dropped the news that the company is acquiring integrated talent management software provider Taleo in a deal worth $1.9 billion. That follows on the news last December that SAP picked up Taleo competitor SuccessFactors for $3.4 billion.

The announcement set all of us who cover the industry a-twitter, speculating on everything from what it means for Oracle and Taleo customers, the strategy behind the move, what SAP’s executives must be thinking, who’s next to fall in the acquisition market, who knew about the deal first to what Oracle boss Larry Ellison had for lunch.

What It Means for Oracle

This is pretty clear: It’s the cloud, stupid. Talentmgt.com associate editor Frank Kalman found as much as he picked up some quick reactions to the news this morning. Oracle and its main competitor SAP have become two of the world’s richest and most powerful companies by building incredibly profitable businesses around hosted, on-premise business software. That size and scope can be both asset and liability. Whatever the reason, they’ve been slow to enter the cloud game, where software is delivered over the Internet and data housed on the web, and have been feeling the pinch. SAP said as much when it picked up SuccessFactors.

Oracle’s response has been more homegrown until now. The company recently upped the pace of its Peoplesoft product releases from annually to quarterly to mimic the ability of SaaS-based software to deliver upgrades to customers more quickly and seamlessly. At the same time, the development of the Fusion HCM suite of products was a further step along the way to a true cloud-based product.

But evidently that move wasn’t happening fast enough. Picking up Taleo appears to bolster that cloud capability. Taleo’s traditional strength in recruiting won’t hurt either and will be a nice complement. Regardless, how Taleo’s suite of services in recruiting, performance management and employee development among others, gets integrated into Oracle’s products remains a messy question that I’m sure will be debated in the coming weeks.

What It Means for the Market

It’s pretty clear that consolidation is at a new level. During the last couple of years, we’ve been treated to a steady diet of acquisitions among and between the integrated talent management suites. In fact, Taleo itself was one of the main players in the arms race to build or buy the integrated, end-to-end talent management suite. But SAP’s SuccessFactors move, Salesforce.com picking up Rypple last December and the Oracle/Taleo news are taking it to a new level.

This is not just consolidation of distinct talent management products in areas like talent acquisition, on-boarding, development, performance and succession planning into a single, integrated platform. It’s the construction of a whole human capital management ecosystem. For comparison, think how Apple’s tightly integrated suite of services and products have made the company a world beater. If all your music, photos and personal data are housed in iTunes, the iCloud and easily accessible and delivered through your iPad and iPhone and Mac, why would you consider switching to another platform?

With their connection to broader business applications and strength in ERP, that’s what Oracle and SAP hope to promise: a tightly integrated system of data and delivery applications that provide end users a seamless experience.

What It Means for Talent Managers

Your choices are both richer and more limited. The analytic capabilities resulting from the marriage of data and application is powerful and part of a longer term trend in talent management that promises to push talent management to the holy land: the seat at the table.

Sure, this takes some competition out of the market, but you can still pursue a best of breed approach to your HR technology if that’s your hankering. In fact, consolidation can open up new opportunities for innovation, as young companies carve out lucrative niches in specific applications or market positions. I wrote about this in the L&D market for Talent Management’s sister publication last year.

The momentum behind integrated talent management suites hasn’t slowed in the meantime. Case in point: Kenexa picked up L&D provider Outstart this week, Peoplefluent announced the acquisition of its L&D partner Strategia and Lumesse made plenty of noise last fall. They all seem to be doing just fine and offer talent managers a healthy range of choices.

Who’s Next?

This is the question everybody loves to ask. Commentators quickly pointed to Cornerstone OnDemand, Ultimate Software, Workday and others, often with little evidence. I can’t speculate. What I do know is that it is increasingly looking like the next move is Salesforce’s to make. If they’re serious about their entrance into the human capital market and the acquisition of performance management specialist Rypple was meant to make more than just a shallow splash, they seem like the next big player to make a move.

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About The Author

Mike Prokopeak

Mike Prokopeak is editorial director of Talent Management magazine. Mike brings a wide range of experience in journalism, publishing, and marketing along with a proven track record of editorial achievement to MediaTec. After joining Mountain Living Magazine in Flagstaff, Ariz., as a reporter, he worked his way up to editor in chief, eventually taking on general manager responsibilities for the magazine and its sister publication, Flagstaff Live, both owned by Pulitzer Newspapers Inc. He directed the editorial, design, advertising and events departments and successfully led a complete redesign of the publications. Mike has also worked with leading educational publishing companies, including Houghton Mifflin Harcourt and the Great Books Foundation. A former teacher and Peace Corps volunteer, Mike brings in-depth experience in continuing education and training to MediaTec. He can be reached at mikep@TalentMgt.com.

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