Vendors: Here Today, Maybe Tomorrow

In the 21st century, technology touches all aspects of work as companies strive to find and leverage the next big thing. James Holincheck, managing vice president of research at Gartner, a technology research firm, shared his insights into what aspects of technology have the most impact on human capital management and the vendor community. Emerging technologies such as cloud computing and social networking are driving many larger vendors to tap the savvy and innovation of smaller start-ups that may have their ears closer to the ground.

What is the most important role of a human capital vendor from a talent manager’s perspective?

Most human capital management vendors, of software at least, [provide] technology to help talent managers be more successful in managing talent. That’s the obvious thing. But some certainly do more than that. Some provide various different professional services that help those customers get more out of their investments in technology, or they partner with third parties that can help with that. A technology solution in and of itself is necessary but not necessarily sufficient to be a successful talent manager.

Which company or companies are emerging in importance?

There are certainly vendors that have distinguished themselves in different areas of talent management. Vendors like Taleo and Kenexa in recruiting for larger enterprises. In the mid-market you have vendors like SilkRoad and iCIMS that have been pretty strong. In performance management SuccessFactors is a pretty strong player, with others like Peoplefluent and Halogen from a mid-market perspective being significant. You have vendors coming from the learning domain like Cornerstone OnDemand. All of them are trying to either build or buy or partner to have a broader suite of talent solutions to meet the needs of the talent managers.?

Then you also have vendors of broader human capital solutions. [Enterprise resource planning] vendors such as Oracle and SAP, software service providers like Workday and Ultimate Software that are adding talent management functionality to their solutions. There’s a lot of different types of providers that are significant out there, and customers are looking for these types of solutions.

What factors are driving merger and acquisition activity?

There were a few things. One is that building of the suites that I talked about. If you look at acquisitions like SuccessFactors and Plateau, and maybe to a lesser extent Jobs2Web, but also Taleo acquiring Learn.com, those are certainly examples of filling the hole in a talent management suite. But you also have others like the acquisition of SuccessFactors by SAP where you have a bigger vendor trying to take a leadership position in talent management. And so the acquisitions that happened towards the end of the year were about bigger players trying to put their stamp on how the human capital management market’s going to evolve, specifically how talent management is going to evolve, and as well as the impact of cloud [technology].?

For SAP, the SuccessFactors acquisition not only was about the HCM capabilities but also about getting some street cred, if you will, in the cloud computing and software as a service [field]. The Salesforce.com acquisition of Rypple was about not moving beyond, for them, customer relationship management into another application area that is very willing to consider software as a service solution, but a big desire to leverage social capabilities as well. Those are two areas that Salesforce has been focused on, and so Rypple gives them an entr?e there. I think what we’re going to see in 2012 is those forces of cloud computing and social information as well, so things like workforce planning and analysis will start to drive some of the broader market activity.

So cloud technology and social media are the biggest trends you see in human capital management?

Those along with mobile computing are going to be the major drivers at least from a technology perspective in how the market evolves. It’s sort of a rare circumstance in some respects that you have so many major forces like that impacting the technology world. When you have that set of forces happening, it can also cause a lot of change. Mergers and acquisitions is one manifestation of that, but you also see a lot of innovation unleashed by smaller vendors that have new ideas and rethink some of the sacred cows that exist out there with some of the technological opportunities that exist.

Are there lesser-known technological forces that you see affecting this down the road?

There are some other technologies that are in their more nascent stage that may be used in combination with some of these things. An example I like to use is something like telepresence. We have a lot of video chat now, but it’s relatively low bandwidth, and it’s not necessarily a replacement for face-to-face meeting. You have some of the social networks like Google+ with their “hang out” capability as a way to integrate some of that together and as a way to augment the social experience.?

Something like that, when you look five to 10 years down the road, as costs come down and the quality relative to the cost improves, it has an opportunity to become more ubiquitous and change quite a bit how we work together and what it means to interact on a social network. For vendors offering technology, let’s say in recruiting, that may be a huge difference — not having to bring somebody in for an interview or series of interviews to a specific physical location. People talk a lot about video interviewing today, and this would be another stage in the evolution around that. That’s one example of something that’s different where an emerging technology may cause people to rethink some of the existing processes.?

How common is video interviewing?

I wouldn’t say it’s exactly commonplace certainly, but there’s a lot of vendors that offer solutions for video interviewing. You’d be surprised. But I guess that’s part of the point I was going back to in terms of innovation. Because you have all these forces, you have small vendors trying a lot of different things to take advantage of new technology. In one respect it’s pretty exciting you have that going on. On the other hand you also have the consolidation stuff going on, on the other end of it. The SuccessFactors of the world were pioneering software as a service and performance management solutions a decade ago. A decade from now, some of the ones that we’re talking about that are small, scrappy start-ups may be big enough that they get acquired by the big fish, whoever those are at the time. That cycle continuously repeats itself.?

Jessica Krinke is a former intern at Talent Management magazine. She can be reached at editor@TalentMgt.com.