If anyone was curious as to whether the HCM technology pendulum was swinging toward either consolidation or individual solutions, you have your answer. The big news around town is that Skillsoft is acquiring SumTotal. I don’t know why, but these kinds of announcements still surprise me. I should be used to it by now. Consolidation in this market has been going on ever since there was a market.
The Rule of Three suggests that only three players will ever really dominate the market, and this could be the next biggest step toward that inevitability. While on one hand this will create yet another 800- pound gorilla in the talent technology market, not everybody is looking to buy from the biggest guy on the block. There will be some great opportunities for the more nimble, niche players to carve out some more space.
In reality, this is all part of the ebb and flow of this particular market. As buyers lean toward more end-to-end, one-stop-shop solutions, vendors will tend to buy the pieces they haven’t already built. At the other end of the spectrum, buyers decide that the big vendors can’t meet their specific needs, so they seek out smaller, best-of-breed solutions.
Don’t get me wrong, consolidation is not necessarily a bad thing. Clients of both companies should see some added value pretty quickly. In fact, one of the things our research keeps telling us is that organizations want an expanding portfolio of talent management solutions and they want them all to work together seamlessly. However, this starts the countdown to sunset for one of the two LMS solutions. Someday, there will be a user group notified that they will need to change systems, and it will be hard to keep them happy.
The challenge here will for the resulting company to remain customer-focused and not get too wrapped up in what’s happening internally. Mergers and acquisitions are historically challenging, with failure rates sometimes estimated around 70%. Mitigating the potential negative impact the change has on organizations — which have invested significant time and money into their HCM solutions — is critical.
There are also questions around Skillsoft’s partner network. There are a lot of LMS platforms pushing out Skillsoft content, not to mention a vast array of talent management partners. This will have a big impact on the market, and it will be interesting to see where all of these partnerships and rivalries end up. So enjoy the roller coaster ride that is the HCM technology market as it crests another incline and prepares to hurl you through a loop-de-loop.
–David Wentworth, Senior Learning Analyst, Brandon Hall Group
