Closing the book on StepStone

Today marks the official end of listing for StepStone ASA, which now renders StepStone a wholly owned subsidiary of Axel Springer AG. While Axel Springer is a public company trading on the Frankfurt Stock Exchange, StepStone's business will make up such a small portion of Axel Springer that the rest of the world will have no financial visibility into the former StepStone business.

Of course, what those of us in the the HCM technology business want to know is, what will become of StepStone's HCM solutions business? If the, now rampant, rumors are to be given creedance, SuccessFactors has these assets squarely in their gunsights. And why not? I strongly suspect Axel Springer is, at best, ambivalent about them, and SuccessFactors badly needs to increase its market share in both recruiting/applicant tracking and Europe in general. The StepStone solutions business (the HCM software part) was a breakeven proposition with relatively slow growth. As SuccessFactors struggles with identifying where it will grow next, buying market share in Europe and Recruiting in one fell swoop would seem most attractive to me if I were Lars Daalgard. The kicker would be the ability to sell its newfound assets into SF's existing North American customer base, especially if it were at Taleo's expense.

The challenge of this scenario for SF is that the StepStone recruiting products, iGrasp and EasyCruit, are dated technologies and questionably functional products. It would also leave SF with three recruiting software assets, and some technology decisions to make. On the plus side, SF has a substantial software development organisation and lots of cash, so unifying the technology should not be that difficult. I would think that the ETWeb assets should fold far more easily into SF's software portfolio.

If there is truth to this rumor, then the next question, "what does Taleo then do?", is quite the head scratcher. Some the companies I mentioned in my previous post on second-tier ATS providers could come into play, but other analysts and bloggers have posited that Taleo might respond with several "disruptive" small acquisitions. Certainly they have the cash resources to do so. Kenexa also has strong access to cash, so they could stir things up even more.

Let us all touch wood and be thankful that our industry is enmeshed in such a dynamic phase.