The Definition of the Integrated Talent Management Software Market

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Sitting on the 12 floor of a large corporate building; It was a Monday morning when my very first manager came and asked me if I would be able to come up with a way to use forums, newsletters and other similar tools to track top performing graduates and retain them post-graduation… HR was evolving to serve the purpose of serving the business and supporting the employee experience as a whole, software vendors smelled an opportunity and jumped in. Companies that sold standalone tools for recruitment, performance management and learning management (SuccessFactors in Performance Management, Taleo in Recruiting, SumTotal or Saba in Learning) suddenly realized that they could or should have everything. So there was a very exciting 8 year period of consolidation.

This was quite exciting for all of us. Do you remember reading of all these news on LinkedIn? Some of the deals included:

  • Authoria purchased several small companies and was later purchased and became PeopleFluent.
  • Taleo acquired Learn.com and was later acquired by Oracle. Oracle later purchased SelectMinds to expand its recruitment offering.
  • SuccessFactors acquired Plateau and was later acquired by SAP.
  • ADP acquired Workstream and built out its own LMS and talent paltform, and has since launched integrated analytics and benchmarking as part of its talent management solution.
  • CornerstoneOnDemand expanded from LMS to talent management and later acquired Sonar6 and then Evolve (analytics).
  • Stepstone acquired a variety of software companies, extended itself into end-to-end talent management, and renamed itself to Lumesse.
  • Silkroad acquired a variety of companies including an HRMS company and built out a suite, pioneering the idea of the HRMS being part of this “suite.”
  • Saba and SumTotal (LMS companies) acquired smaller companies to build out their end to end talent suites.
  • Halogen Software, Kenexa, and many others went down this path – creating an industry of “integrated talent management software” companies.
  • IBM acquired Kenexa and is going down this path now, and Salesforce has made some efforts through their acquisition of Rypple and launch of work.com (which has been repositioned for sales forces today).

This entire industry has become huge, with more than $9 billion of total product revenues in the market each year. Today the whole concept of a “suite” is going away and the ERP vendors have jumped in. Almost all the ERP vendors have built or bought similar products to integrate with core HR systems (HRMS).

If you who work in the software industry you know, this is the food chain of software companies. As a market evolves, bigger vendors with larger sales forces and lots of existing customers buy up smaller companies because they can quickly put these new products into their sales channel, rapidly growing that market.
Over these 10 years this market “defined itself.” Vendors grew and many went public (most were acquired). The ones remaining are still looking for exit strategies to become acquired, go public, or find ways to keep growing. In a sense what happened to “talent management software” is identical to what happened to CRM software – the original markets of “sales force automation” and “marketing automation” were converged into a new category, which eventually became dominated by major players.

I believe, by the way, that the evolution of this market has been very good for business. Today, while the market is more commodity like than ever, companies can buy an integrated talent suite quite easily and most of it will work pretty well (still lots of little holes here and there).

As the core features of these systems have commoditized, innovation is threatening the space again. Today vendors are building embedded analytics, mobile tools, time and labor management, and soon employee engagement monitoring and management tools embedded into the suite.

And here we are… How will HR and Technology add up to make their clients successful?

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