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2012′s Vendor Consolidation Holds the Potential for the Biggest Impact on Recruiting and HR
Posted By John Zappe On January 1, 2013 @ 3:43 am In News and Features | 3 Comments
My inclination was to ignore it; I’ve got enough to do keeping track of today, let alone trying to figure out what next year will bring. As for 2012, without the perspective of time, it’s hard to tell tell what will turn out to be significant in the long run. A few developments, though, will undoubtedly make the survey.
Social media for recruitment will be there, as will the drive to mobile. My list includes growing buzz over “big data,” even though it’s nowhere near clear how it will eventually make a difference in hiring and workforce management.
Vendor consolidation also makes my list. So too does the changing composition of the traditional workforce composition. By that I mean specifically the use of temps and contractors as a strategic component of the workforce, coupled with the growing cadre of professionals who, having turned to contract work (consulting, to put it politely) out of necessity are finding it suits them and provides a work/life balance companies mostly just talk about.
However, after thinking about my list, I realized that it’s the mergers and acquisitions that will have the biggest impact and will come to be seen as one of the more significant industry developments since the recession forced all of us to completely rethink and restructure what we do.
Much of what went on in 2012 was evolutionary, rather than revolutionary. And this is certainly true of the consolidation of the talent acquisition and HR management system vendors. It has been going on for some time now, though the setting was on simmer. But then SAP’s acquisition of SuccessFactors , technically a late 2011 event, turned up the heat. In short order Kenexa and Taleo got bought up. And later, Bullhorn picked up Sendouts and MaxHire. There were also smaller deals that kept the pot boiling throughout the year.
The significance here isn’t the transactions themselves; it’s what’s behind them and, even more so, what it means for the future.
The implications, as I see them, are that corporate data is aggregating in accumulated and uniform fashion in the data centers of a few major players in the HR tech world. For the first time it will be possible to analyze vast amounts of data, allowing comparisons among companies, divisions, units, pretty much any level, occupation, group, or industry. Applying the standardization rules now being written by the Society of Human Resource Management  (another 2012 trend with legs), software vendors will have the ability to provide real-time business intelligence to HR leaders in a way that allows them to know how they stack up.
I know that some of this has been done for years. But it has not been possible do it in real time, and there has never been the level of accuracy and data legitimacy that cloud-based data storage and SaaS-provisioned systems will allow.
First, a bit of perspective on the deals. As everyone who has read my coverage of the deals or almost anyone else’s knows, SAP paid a premium for SuccessFactors because it wanted its SaaS technology. Until a few years ago, best of breed, on-premises systems that cobbled together an ATS from this company, with onboarding from that one, with a workforce planning module from a third, and so on, were all the rage.
These were such complicated and expensive installs that systems integrators — consultants — sprang up to manage the project and, later, to help run them.
But as employers were forced to downsize over the last several years, and budgets, especially in HR, became tighter than ill-fitting shoes, the SaaS services began to look better and better. Cloud-based services offered lower costs, more frequent updates, and the ability to add-on features like succession planning, learning, onboarding — you name it — as needed and to add them on quickly without them becoming a capital cost.
Avoiding the use of integrators, and especially in-house IT support and its annoying prioritization schedules that never seemed to get to HR projects, was a not insignificant side benefit.
As this move to SaaS and the Internet cloud picked up momentum, vendors scrambled to develop their own SaaS offering. Some were more nimble than others; and these were the vendors first to be acquired and at a premium. The acquirers (not, of course, in every case) were looking to snap up the SaaS expertise that most of the acquired companies had developed. Their mobile capability was another plus, as were the skilled staffs they brought with them.
This alone could make M&A activity the leading development in human resources in 2012. But I think there’s more to the story, and that is the implication of having employers across the country, across all industries, across almost all workforce size concentrating their data into clouds managed by a handful of vendors.
On-premises systems made metrics benchmarking challenging at best and impossible at worst. Now, with the headlong rush to the cloud, and fewer vendors in total, data compilations for business intelligence on an individual basis becomes easier, while industry-wide comparisons are much more easily and reliably done. Eventually, this consolidation will make business intelligence and metrics comparisons possible in real time.
This has the same marketing potential as cell phone giveaways: Vendors might see greater potential in selling data analytics and business intelligence than in a monthly per-seat charge. (They’ll probably do both, though some of today’s freemium services might go that way.)
Besides selling you back your own (processed) data, cloud vendors can apply the kind of BI tools now available only to the biggest, richest companies, making the information available to all their customers at a price even mid-sized and smaller firms can afford. What’s the value to you of knowing how the hires you make from each of your specific sourcing efforts compare to those of other companies just like yours — compare in cost of hire, as well as performance?
That’s a fairly rudimentary and easy-to-do bit of BI. How about knowing that the revenue your hires from source A generates isn’t as high as those the industry sources from elsewhere?
Granted, not everything is going into the cloud, so some particulars may not be available. But as more and more companies use SaaS performance management tools, more and more data will become available.
I don’t pretend for a minute to know just how this will all work out and what all the potential applications will be of having all this data at hand from multiple companies. Bullhorn alone now is pushing 5,000 clients.
Naturally, employers now have concerns about how their data is stored, and who has access to it. Few object to aggregated data analysis. We’ve seen a little of this beginning to creep out. Months ago, SilkRoad released a study of the source of hire of its 700+ customers . Pulled from its ATS cloud, the report, coincidentally, validated the painstaking annual survey done by CareerXroads .
Much data just like this, and much more already resides in the data centers of SaaS tech firms. It’s a treasure trove that the industry consolidation has the potential to unlock. More than that, though, not only unlock, but analyze, and present in usable bits and bytes to HR leaders everywhere.
Of all the developments of the last year, for me, I believe what will have the biggest long-term impact on the industry will be the mergers and acquisitions of the SaaS vendors, coupled with the growing appreciation of the potential of big data.
photo courtesy of Frame Angel/FreeDigitalPhotos.net 
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URLs in this post:
 Image: http://www.ere.net/wp-content/uploads/2012/12/2013-roadsign.jpg
 SAP’s acquisition of SuccessFactors: http://www.ere.net/2011/12/03/sap-acquires-cloud-hr-vendor-successfactors/
 standardization rules now being written by the Society of Human Resource Management: http://www.ere.net/2012/03/13/cost-per-hire-is-now-a-new-hr-standard/
 SilkRoad released a study of the source of hire of its 700+ customers: http://www.ere.net/2012/03/15/new-source-of-hire-study-shows-job-boards-strong-performers/
 CareerXroads: http://www.ere.net/2012/02/20/source-of-hire-survey-big-jump-in-outside-hiring-in-2011/
 FreeDigitalPhotos.net: http://www.freedigitalphotos.net
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