"It's quiet...too quiet"

Indeed too quiet in HCM/Talent Technology.
SuccessFactors swims in cash.
Today, so does Taleo.
Unexpected players loom on the sides of the pitch.
The strong get stronger.
The weak get weaker.
Valuations may peak.
All await the first move.
The wheels will soon go in to motion.
Sides will be picked.
Those left will wail.
Teeth will gnash.
Eyes will open wet...
with joy and dread.
Winners will gird for the journey ahead.
It is coming.

What will happen to second tier ATS providers?

Finally, after a lengthy holiday from both the blog and work, I have a chance to hit the blog again. The subject, ATS providers, also known as recruiting software providers.

As our global economy stabilises somewhat, we are all now beginning see the real trends in HR software reemerge. The ATS space has a rather interesting situation, that is, only a single first tier global provider, namely Taleo. Now, I am not saying that there are not equally good ATS providers out there, but the reality is that Taleo is in a clearly dominant position, when in years past it was merely in a leading position relative to other providers. What makes this question especially interesting is that many of the other ATS providers ostensibly should have the ability to complete very well with Taleo, but thusfar they do not appear to be affecting Taleo's momentum in any serious way.

So here is my rundown of the many second tier ATS providers with some commentary on each. I am certain to be incomplete in my understanding of the providers listed, so I encourage my meager readership to add any insights about any of these providers. I'll update the post based on any feedback.

Authoria - This talent management suite vendor has practically vanished after its acquisition by private equity firm Bedford Funding over one year ago. The Hire.com platform was considered a solid platform. I have no knowledge of any current momentum regarding Authoria in ATS, or anything else for that matter.

HRSmart - Small private HR/Talent management software company with decent recruiting platform. Seems to be a likeable company with happy customers, but is it anything more than a boutique? The company looks the same to me now as it did three years ago.

iCIMS - Company has a strong and broad technology platform with particular historical strength in the mid-market ATS segment. It seems to have very strong customer satisfaction, but for some reason the company has never really broken out, although they seem to be doing well, albeit on a smaller scale. They have recent begun expansion into the UK.

JobPartners - ATS focused talent management suite vendor in Europe. Looked like a promising company a few years ago, but seems to have stalled for a while. Still hanging around.

Kenexa - With the acquisition of Brass Ring a few years ago, Kenexa seemed poised to make a big share gain in ATS, given its limited native offering. Unfortunately, muddy corporate strategy, an unending desire to be all things for all customers, and a seeming total lack of technology competence has collectively ensured that their position in ATS has not advanced at all. Too bad, because Brass Ring was reputed to be a very solid platform, if getting a little dated. A new technology platform is rumored to be pending, but I have no knowledge of its status.

Kronos - This is a large solid company in the workforce scheduling space that acquired Unicru and Deploy Solutions a few years ago to bolster its hourly worker strategy. Everyone seems to respect this company, but it seems to be absent from the broad corporate ATS market.

Mr. Ted - Pure ATS company focused on European market. Very solid large enterprise capabilities, but growth appears to be limited. About one year ago, launched smartrecruiters.com a free small company ATS platform designed to generate revenue via partner job posting fees. Willing to be aggressive, seems to be respected, might be a good pick-up for a company looking to add credible ATS capability.

PeopleClick - In 2005, this company looked like it could be the ATS winner. But, poor technology and product execution really held them back. Founder was brought back as CEO a couple of years ago, and word is that PeopleClick has stabilised. Nice enterprise customer base in North America and Europe. But can it return to growth?

StepStone - The leading European talent management suite and job board provider has two acquired solutions for ATS, i-GRasp for larger enterprises and EasyCruit for small companies. While the products are a bit dated, StepStone's large job board business in Europe provides great synergies relative to its ATS. Recent attempts to more broadly penetrate the North American market have been less than successful however. Just last week, a majority interest in StepStone was acquired by German publisher Axel Springer AG, with a stated intent to acquire the balance. Axel Springer has over EUR 2.7 billion in annual revenue. Curious to see what happens here.

SuccessFactors - The outright employee performance management leader invested in a bespoke ATS technology a couple of years ago. Despite its rapid global expansion, which has leveled off recently, SuccessFactors ATS is considered primitive and not really competitive. Can they get it right and really put pressure on Taleo?

Virtual Edge/ADP - Does ADP have a kiss of death for acquisitions? I think it's possible. Virtual Edge seems to have dropped off the map, except perhaps in the small company market that is ADP's core focus.

Open Source Competitors - There is a rise in open source competitors in the ATS market like Mamook, RecruitPro, and CATS, plus others. Is the core ATS functionality so uniform that open source ultimately wins? A trend definitely worth watching.

By a healthy margin, the ATS market is currently being lead by Taleo. The broader recruiting market though, which includes recruiting outsourcing, job boards, and other niche technologies, seems to be at an all-time high state of flux, with new capital coming in and legacy giants, e.g. Monster, wavering. This alone makes it entertaining and instructive to watch. Where will the ATS be in two years?

I am sure I missed a number of other companies, but feel free to fill in the blanks, correct my factual mistakes, or challenge my conclusions. You can use profanity if you like.

It's all over but the crying - SumTotal now a private company

Well, after all the drama, SumTotal is now a private company firmly in the hands of Vista Equity Partners. Vista wasted no time in removing CEO Arun Chandra and replacing him with Barabara Stinnett, formerly of i2, HP and others, but notably as President, not CEO. I don't know if this distinction is noteworthy or not, or could portend another move. It will be interesting to see what happens. So, let's say "goodbye" to SumTotal's abysmal run as a public company and let the lovely Shirley Manson have the final word today.

Curses! I am again censored

Our blogging chum, Jason Corsello, a.k.a. Human Capitalist http://www.humancapitalist.com/, decided not to publish my comment to his recent post regarding SuccessFactors http://humancapitalist.com/?p=696. I am not sure why someone so in love with social interaction via the web would decline to publish what I still think is a very fair comment to his original post. I did call out certain factual inaccuracies and lack of diligence on his part, and for these perhaps he is a little embarrassed, or perhaps he viewed my anonymous commentary as unfair, or worse, malicious. I can assure you that neither of those things is the case. I simply believe that if one is willing to discuss a topic in an open forum, one should also be willing to accept critical analysis. If not, the behaviour is a little like a government saying it supports free speech, unless it's critical of the government.

Now, I can be critised on the fact that I post anonymously, despite a long tradition of anonymous authors including notably, Herbert W. Lovelace - The Secret CIO, who published a great column for years in Information Week. However, I am not going to duck a passionate debate when the reader, in theory at least, benefits from a great discussion. If my commentary was factually incorrect or logically flawed, why not call me out and tell me why my arguments are flawed or unfair? If Jason thinks I am being unfair, I am happy to publish his remarks, whatever they are, here. Now with full disclosure, following is the exact text of the comment still awaiting final moderation on the Human Capitalist blog:


5. Techsphinx June 17th, 2009 at 5:27 am

Your comment is awaiting moderation.

The different data that you and Grandpa had prompted me to do some research. Sad to say but Jason, I am shocked that you do not know how to read financial statements given your job.

You neglected to add cost of revenue for SF FY2004, which was $4.3m making for $15.4m in total expenses on the income statement. Add back estimated capital expenditures and deferred commissions, it’s probably very close to $17m in TOTAL expenses.

Also, Success Acquisition Corp. was the recapitalisation entity used by Greylock when they recapped the company in 2001 and brought Lars in. The company had operated as Success Factor Systems, Inc. since 1993! As evidence http://web.archive.org/web/19980612175043/www.successfactors.com/aboutsfs/ From SF’s 1998 web page, see the bottom of the page.

While technically it was a new entity, it was simply a restructuring of an already existing company. Your logic would be like saying Authoria was founded in 2008, because that is when Beford Funding bought the IP from “old Authoria” and brought in a new management team to run the company.

Last, I would like point out two of the most important “factors” that I consider when thinking about this company. 1) Lars has created loads of value for his shareholders since taking over in 2001, like him or not, and company is very well positioned in the space, 2) SuccessFactors blatantly lied about its financial performance to the analyst community and the media prior to the filing of its S-1. Surely, you remember the furor surrounding SF when everyone found out what the real numbers were. Tread carefully in all things.

One mark for Grandpa.

My new favorite blog, Twitter Backlash

After commenting on Jason Corsello's blog a few days ago (http://humancapitalist.com/?p=695) in which I complained that his recent use of Twitter, instead of his blog, devalued his content, I considered a lengthy post here ranting about the ridiculous hype and lack of real value regarding Twitter.

In my opinion, Twitter is the Paris Hilton of web technologies, i.e. initially attractive, distracting, but ultimately almost devoid of value. And, like the lovely Ms. Hilton, it demands far more attention and fuss than it could possibly warrant.

But, rather than go on-and-on here, the blog Twitter Backlash (http://twitterbacklash.squarespace.com/) provides a thorough and thoughtful set of commentary about Twitter. Of particular value is the following post, http://twitterbacklash.squarespace.com/journal/2009/5/4/the-medium-is-the-message.html, wherein Twitter is examined in the context of the groundbreaking work of Marshall McLuhan relating to media. Now THAT is good blogging.

Last, every time I think of McLuhan, this following epic scene from Woody Allen's Annie Hall immediately comes to mind. Wait until the end...it's worth it.

Kenexa rebrands its website

Kenexa rebranded this week launching a new website and logo. I must say, it is a tremendous improvement is most regards. Kenexa's previous site was seriously ugly and not very helpful for those interested in the company. I can't seem to mention this enough but, the Lawson website is still the world champion for awful websites in HCM technology.

While I really like the new colors and logo for Kenexa, I am not so sure about their "i x e = s" concept. It is really gross oversimplification, and Kenexa's explanation of the concept, and reference to Martin Luther King therein, is a bit of bullshit. I mean really, is it in anyway appropriate to associate a company with someone of the stature of Martin Luther King and the American civil rights movement? On the other hand, given the restricted amount of neurons that the universe has seen fit to distribute to HR professionals, perhaps this is a shrewd marketing decision and the HR folks will lap it up and forget to ask Kenexa any probing questions about their technology.

It was an overdue makeover, but good for Kenexa in finally undertaking it.

Vista to buy SumTotal after all

In what appears to be the end of a bizarre auction process, Vista Equity Partners has triumphed, outbidding Accel-KKR for SumTotal Systems. The price ended up at $160 million or $4.85 per share, a respectable increase from Vista's original $3.25 per share offer. Accel-KKR can hardly be described as a loser though, after somehow convincing SumTotal's nitwit board of directors to double the break-up fee in their last bid to $6.67 million. I can imagine the Accel-KKR directors holding up the cheque saying, "Well lads, looks like we lost! The beer's on me!"