Is Bigger Always Better?

In the last few weeks I’ve had a chance to speak with many of our Brandon Hall Group research members, learning more about each of them and listening closely to their insights and questions.  These individuals along with their teams hold significant responsibility for improving the performance of their organizations, and in support of these roles they are constantly looking for market insights concerning the learning and talent technologies they’ve selected to help them with those goals.

In our conversations their most frequent questions focused on the continued merger and acquisition activity among the long-standing learning and talent management vendors.  If you’ve been following the learning and talent technology chatter at all in the last year then you’ll already be aware of the recent round of M&A activity that is concerning the user community. Starting with Taleo’s early acquisition of for $125 million and SuccessFactors $290 million dollar purchase of Plateau in June of this year, then adding SumTotal’s acquisitions of GeoLearning in January, as well as their recent pick up of  the Payroll system vendor Accero and Workforce Management solution CyberShift , the market has been shifting.   Add to that the March IPO of Cornerstone OnDemand leading to their raising of $136.5 million dollars, and you can see why both the learning and talent management communities have a lot of questions concerning focus and options in today’s market.

Commonly asked questions:
  • Will these larger more complex solution providers continue to stay focused on my company’s individual needs?
  • If I’m a large organization looking for a learning or talent solution today, do I need to look further than the newly combined giants in this market space?
  • My ERP system has been slow to make innovative upgrades; will this now be the case with these much larger – often share-holder focused mega Talent Management suites as well?

We had an opportunity to speak with SumTotal following their recent M&A announcement. What many felt this deal did for SumTotal in terms of products and offerings, was to put them one step ahead of many of their competitors with integration plans for workforce management, and a limited offering in payroll.  I personally would take more note of how they plan to integrate CyberShift’s practical on-the-ground workforce management solution and mobile technology; these will be real benefits for SumTotal clients over time if integrated well. Where this deal will probably have the greatest impact in the short term is in the continued stretch of the support, operations, and research work within the growing organization, an organization that is already supporting multiple legacy systems.

In our briefing they shared a positive outlook on their integration plans, pointing out recent accomplishments in last September’s quick and effective integration of the Softscape organization. They also shared strong growth numbers, both in new clients and in their expanded ability to cross-sell within the organization. A common theme of the entire conversation was focused on growth and stability. They continued to point out that they will not force existing clients on legacy platforms to transition to the new SumTotal platform, noting that the legacy platforms would continue to have great support but limited upgrades.

We’ve had similar briefings from our friends at Cornerstone OnDemand and SuccessFactors, and we agree that they are all making efforts to quickly refocus their energies on the client needs and away from recent discussions of IPO and M&A activities. In good faith all of these companies are working on meeting client needs, but there is no doubt that the road will be bumpy.

As an existing talent or learning solution customer, or even if you are a buyer new to the market here are few things to keep in mind as you traverse these shifting waters.

Legacy System Customers

Create a transition plan. If your current platform is labeled a legacy system even if you just purchased it, begin developing a transition plan immediately. Over time legacy systems will receive less attention, resources, and definitely less focus.  You should have a plan for either moving to your solution providers current platform or looking externally again within the next two years. This should be a thoughtful exercise undertaken with good planning, versus a rash decision made two years down the road when you become frustrated with the lack of attention.

Become active and vocal. This is good advice for any member of the buying community, but especially important when the organization you have partnered with has been acquired or gone through recent leadership changes. Get involved in advisory or industry groups, beta testing, and user events. Your voice is always greater when combined with others, and the one thing we’ve heard from all of the solution providers is that they are client driven.

Get to know your solution providers new leadership. Feel comfortable voicing your needs no matter how big or small your organization is in the new company. They want to keep your business and now is the time to get to know their views. If the conversations don’t go well be sure to voice those issues as well, and create a plan for your own next steps.

Current Buyers

Don’t limit the search to those solution providers with the largest marketing budgets. The learning and talent technology space continues to include many viable options in both complete suites as well as niche players. In recent months I’ve seen some impressive briefings from both the major solution providers listed above as well as unique organizations offering solutions that are tailored or niche offerings.
These are industry focused organizations like PeopleMatter a talent management solution focused on the service industry space who recently won a significant deal with Applebee’s Restaurants- capable of effectively meeting the needs of the large and diverse workforces in their niche market, their practical approach with this audience is garnering attention.  Digitalignite,  another example of a solution provider who offers a niche learning platform tailored for professional development and associations. These organizations often have membership models that reach over 100,000 participants or more annually. They have completely focused their research and development efforts on the needs of this audience, creating unique e-commerce, accreditation, and registration capabilities within their platform. Innovation is best driven through good clean competition.

Look for innovation in multiple locations. Before settling in to finalize requirement lists and final vendor lists, spend some time looking at tools and solution providers who are expanding the way we think about learning and talent management. New comers to the market like Zapoint who have a unique approach to filling in career-pathing and career-mapping recommendations based on social data, or Rypple’s open approach to feedback and coaching can help you rethink your own strategy to managing talent.

Know your vendor style. Much like a personality style, a vendor style is an understanding of the type of vendors that your organization works with best. Is your IT staff flexible or rigid? Does your organization generally select vendors where they are a big fish in a small pond, on the cutting edge and willing to take risks, or those that are focused on stability or value? At some point in time, almost everyone in your company will interact with a learning or talent technology if it is enterprise wide, so ensure that it matches the culture and values of your organization.

In the end – this market will continue to change, and we expect to see a sustained interest in this space for capital investment and M&A activity over the next few years.  As the basic functionality across all of these systems converges into industry standards – the real differentiators for buyers will come down to culture, fit, industry focus, and the ability to innovate.

Thanks for the warm welcome from the Brandon Hall members, we will continue to listen and answer your questions as quickly as possible, please feel free to continue to send them my way at [email protected]

Stacey  Harris,
Research Brandon Hall Group

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