Talent Analytics Drive Vendor Activity

All’s been relatively quiet in the HR vendor market lately. Since SAP and Oracle shook up the market starting at the end of 2011 with the purchase of SuccessFactors and Taleo, respectively, and their subsequent moves and counter-moves to pick up data analytics and cloud-based service technologies, there’s been relatively little M&A activity.

The annual SHRM conference came and went without a large splash. There were a few notable announcements, such as the launch of Monster’s new semantic search product, 6Sense, aimed at helping recruiters sift through resumes to find quality candidates, but all in all it was a relatively quiet period. That came to an end last week when the Corporate Executive Board (CEB) announced it will acquire employee assessment provider SHL in a deal worth $660 million.

It’s an interesting move for several reasons. First, SHL is relatively fresh off its own merger with Previsor last year that created a a measurement and analytics juggernaut, pairing Previsor’s traditional strength in pre-employment screening and assessment in North America with U.K.-based SHL’s global data and experience with post-hire assessments. But it also says quite a bit about the talent management market and the talent practitioner by extension.

State of the Market

The market is rapidly evolving in three distinct areas. First is “ERP-plus,” with business software giants like SAP and Oracle buying up HR products to incorporate into their range of business process and enterprise resource planning products. Their customers tend to be large enterprises and implementations can span the globe. Salesforce.com is playing the role of dark horse in this race, snapping up social performance management tool Rypple along with a number of data analytics firms.

The second is the “pure-play” talent management provider who in most cases develops a suite of talent management products from recruiting to learning and performance and succession in house. Think Cornerstone OnDemand, SilkRoad Technology, Ultimate Software and other players like Peoplefluent and Lumesse (who both did their share of M&A to build their product suite, too). These players offer sophisticated technology to a range of customers, large and small, and are the traditional drivers of innovation in the product market.

The third interesting point about this deal is what is says about HR services companies and consultants. Groups like CEB, a 30-year old membership organization that provides research and benchmarking services to approximately 5,000 client companies and more than 200,000 individuals, are building a technology component to enhance their traditional consulting offerings. Mercer, another consultancy, announced the launch of its iKnow application earlier this year to help clients make sense of all their data (and presumably be able to sell them consulting and advisory services around analysis of all those numbers).

CEB’s acquisition of SHL falls into that story line. SHL’s recently developed Talent Analytics platform, which takes SHL’s 30 years of assessment data and creates a database that allows users to benchmark their potential and performance against other companies, gives CEB a powerful tool to build services and consulting around. Some interesting products are coming out to help talent managers make sense of the rich possibilities of the Era of Big Data, as we reported last fall, and as the CEB/SHL deal shows, consulting and HR services firms don’t want to be left out of the party.

Tom Monahan, CEB’s chairman and CEO, made that very point when I was able to catch up with him this week as he rode the train from New York City to Washington.

“Companies are seeking to manage talent assets with the same amount of rigor and depth as they manage other corporate assets,” he said. “People are going to demand more insight into talent and they’re going to need tools to do it and that’s going to lead to richer, more predictive data sets.”

Monahan sees several business opportunities in the deal. SHL, which will retain its executive leadership and corporate identity, will help CEB, which Monahan said already sells into 50 markets globally and supports members in 100, get deeper into markets outside the U.S. He anticipates CEB’s strength in North America will also be a boon for SHL as it expands its client base on this side of the Atlantic.

It’s also an opportunity to boost CEB’s HR practice. The HR market, served through CEB’s Corporate Leadership Council, goes back 20 years and is one of the company’s oldest and largest practice areas. With SHL, Monahan envisions CEB will be able to offer additional services to existing clients as well as bring new ones into the fold.

Perhaps more interestingly, he also sees opportunity to sell SHL assessment services to their other practice areas such as sales and marketing, finance and IT.

“We see considerable demand for senior functional executives outside of HR for tools and analysis and assessment to help them manage the people equation inside their own organization,” Monahan said. “It’s not just the HR end market story that we think is compelling. The other funcational executives we support have similar needs to select, enrich and deploy talent.”

Rejoice, Talent Manager

And that, in the end, is the most interesting aspect of this deal and what it says about the practice of talent management.

Beyond the era of big data and the rising importance of tools to gather and analyze that flood of data, it’s the critical need to better understand, develop and deploy talent that is driving a lot of vendor activity, whether it’s CEB and Mercer, talent management software companies such as SilkRoad and Cornerstone, or ERP vendors like SAP and Oracle.

Talent management isn’t just your job. It’s everybody’s job, and that’s good news for the profession.