The Human Capital Management (HCM) software market was always set to be a turbulent place in 2012 as Oracle rolled out its next generation Fusion applications and Software as a Service pureplay Workday sought to steal away ageing PeopleSoft customers from under Oracle’s nose.
But last week the stakes were significantly upped and the battle for the hearts, minds and wallets of HRDs everywhere took another turn when German software giant SAP swooped on HCM and talent management firm SuccessFactors in a $3.4 billion takeover bid that changes…well, everything.
HCM applications have been installed with HR departments for a long time now, with PeopleSoft emerging as the most installed dominant provider. PeopleSoft was taken over by Oracle way back in 2005 and while SAP has made inroads with its own HCM offerings, the market has been relatively stable since then.
What’s changed this is the Cloud. It’s already revolutionised the Customer Relationship Management market; now it’s the turn of HCM. Workday and SuccessFactors - along with Taleo - have been posing some serious challenges to the HCM software old guard of Oracle and SAP.
Workday is essentially the old PeopleSoft management team reborn and as such started life targeting its old contact book while two years ago SuccessFactors stunned the market by stealing SAP’s global HCM contract with Siemens from under its nose.
But now both Oracle and SAP have skin in the SaaS game and this week’s SAP bid for SuccessFactors emphasises that HR Directors (HRD) are going to be hearing a lot about Cloud Computing and HCM in the coming months.
But is this a good thing? Does the Cloud generation finally offer HCM systems that HRDs want to use? And which vendor horse should HRDs be backing in what is likely to become a vicious marketing battle?
Ray Wang, founder of Constellation Research, can understand the rationale behind the bid by SAP:
But those deployments were suffering in comparison to the new world of the Cloud, observes Wang:
Just buying SuccessFactors and adding it to its portfolio isn’t in itself going to guarantee SAP success, notes Angela Eager of IT research firm TechMarketView:
She adds:
On the other hand, Thomas Otter, VP over at rival research firm Gartner, reckons:
But it’s a high price to pay, he adds noting that:
But Otter does agree with Eager that SAP now has to make some decisions about what constitutes its HCM strategy:
Ultimately Otter’s advice to customers or prospective customers is simple:
For talent management customers, the message is ‘look before you leap’ as Otter cautions:
Meanwhile he predicts some limited short term disruption for users of SAP HCM offerings:
The overall message from all the analysts seems simple enough: the HCM applications market is heating up for a long-overdue shake-up. The major vendors want to win over HRDs to their causes. Now is the perfect time to strike a good deal for your organisation, but as ever, it’s a case of buyer beware.
