Employees are the lifeblood of a customer-obsessed enterprise. No matter how advanced a company's technology, how big its data, or how trendy it’s marketing, businesses today simply cannot succeed without employees who devote themselves to customers. However, many companies struggle to build a customer-obsessed workforce because they:
Hire for skills and experience. Siloed hiring managers focus primarily on job candidates' technical skills and experience and seek little input from applicants' potential colleagues. Knowing how well candidates can code, lift boxes, or write marketing copy is important. However, skillset alone doesn't tell employers if applicants are willing and able to use their skills and cooperate with their coworkers in customer-obsessed ways.
Have weak training programs. Most training programs consist of long and dry classroom, online, and coaching sessions rather than short and engaging sound bites that employees can access when they need to. Even worse, training focuses solely on employees' job responsibilities, businesses processes, and operation of technical systems — topics that rarely help employees become more customer-obsessed.
Fail to recognize and reward customer obsession. Our data shows that although 42% of companies claim that excellent customer treatment is one of their core values, only one-third of companies actually hold employees accountable and tie employees' incentives to customer experience (CX) metrics.
I’m thrilled to see “people” talked about as a major focus of business. Company executives recognize that people are critical to sustainable organizational growth. Talent is now a C-level priority. People development is a responsibility of all managers and leaders, not just the HR department. Great to hear! Vendors see talent management as a hot space and are strategically lining up to meet business needs — enter IBM!
The rumor circulating for the past few weeks has now been confirmed: Oracle is buying Taleo, a global talent management vendor, for $1.9 billion. This is just another — albeit important — acquisition in the strategic talent management space. All companies must have core HR systems in place, but now it’s equally important to look at the strategic part of HR: the performance, succession, career development, and learning components as a layer resting on top of the core. Companies want to retain, develop, and reward their employees and need these applications in place for efficiency and effectiveness.
With this acquisition, Oracle gets a vendor with these talent management components in a pure SaaS deployment model, which provides ultimate flexibility. However, the offerings in the suite are not equally robust. Taleo is known for its recruiting app; to become a suite vendor, it added performance, which has gotten mixed reviews, and learning, which is not best in its class. Learn.com, the vendor Taleo acquired for learning, works OK for the midmarket, but its functionality does not hold up well for large global and enterprise customers.
Oracle can’t buck the SaaS tide any more. SaaS is the preferred deployment model for talent management, and the large ERP vendors like SAP (finalizing its acquisition of SuccessFactors) and Oracle are now joining the movement. Oracle offers Fusion, but a lot of work still needs to be done to develop this into a full SaaS talent suite. Once this deal closes, watch and see how Oracle positions the Taleo offerings with Fusion Talent Management.
Oracle Corporation announced its purchase of Taleo for $1.9 billion on Feb. 9, 2012, signaling a major shift in its stance on software-as-a-service (SaaS) and talent management applications. The transaction is expected to close midyear 2012, subject to regulatory and stockholder approvals.
Oracle has long held a “we can build it better” position on talent management, learning, and recruitment applications but struggled to compete with best-of-breed talent management vendors like SuccessFactors (recently acquired by rival SAP), Taleo, Kenexa, Cornerstone, and SumTotal Systems. Oracle has been reticent to offer these (or any other) applications via SaaS, preferring a licensed/on-premises business model that provides early revenue recognition versus the deferred revenue model of SaaS.
In fact, Oracle CEO Larry Ellison has been outspoken in his anti-SaaS stance in recent years, changing his posture somewhat with the Oracle Public Cloud announcement at last October’s Oracle OpenWorld conference. Meanwhile, the HR apps market shifted overwhelmingly to the SaaS (subscription-based) deployment model, which has become virtually ubiquitous in recruitment, learning, and talent management and is also growing in core HRMS via ADP, Ultimate Software, and Workday.
By acquiring Taleo, Oracle puts itself back in the game for SaaS recruiting and talent management. Taleo is a market leader in recruitment automation and has a competitive portfolio of products across performance, compensation, and learning management. The $1.9 billion deal price is more than six times Taleo’s 2011 annual revenues of $309 million, a high premium but substantially less than the $3.4 billion and 11-times revenues that SAP recently paid for SuccessFactors.
SAP is a paying a substantial premium to acquire SuccessFactors, a leading SaaS performance and talent management vendor. The press release of December 3, 2011 states that the deal price of $40 per share is a 52% premium over the Dec. 2 closing stock price. Even more startling is that SuccessFactors has a revenue run rate of roughly $300 to $330 million for 2011, and the acquisition price of $3.4 billion is more than 10 times revenue! Why then did SAP make this move?
SAP’s cloud strategy has been struggling with time-to-market issues, and its core on-premises HR management software has been at a competitive disadvantage with best-of-breed solutions in areas such as employee performance, succession planning, and learning management. By acquiring SuccessFactors, SAP puts itself into a much stronger competitive position in human resources applications and reaffirms its commitment to software-as-a-service as a key business model.
In my recent research for a soon-to-be-published Forrester Wave™ on human resource management systems (HRMS), I noted that SAP has more than 13,000 customers using its HCM suite. Yet the adoption of SAP’s learning and talent management products is much less (a few thousand, perhaps), which is noted in my colleague Claire Schooley’s “The Forrester Wave™: Talent Management, Q2 2011.” The talent management Forrester Wave also clearly shows that SAP’s embedded talent management offerings lag well behind the best-of-breed specialists in learning and performance management. The bottom line here is that SAP HCM customers predominantly run best-of-breed talent management solutions alongside their SAP core HRMS (i.e., the transactional employee system of record).
Today Taleo announced the acquisition of privately-held, Europe-based Jobpartners for $38 million (€25 million) in cash. With this acquisition, Taleo strengthens its European presence in talent management, as Jobpartners has a presence in 50 countries and 28 languages and is also a talent management vendor. The deal is expected to close in early Q3. Jobpartners has only 68 customers, but these customers include Deutsche Post DHL, Nike EMEA, Rabobank, and 16 Global 500 companies. Jobpartners also has a R&D facility in Krakow, Poland and a support center in Scotland that no doubt figured prominently in Taleo’s acquisition decision. In terms of technology, the fit is a good one, because Jobpartners is SaaS-only. Taleo said that it is in the process of evaluating Jobpartners’ technology, but this acquisition is not about acquiring new technology — it’s about doubling Taleo’s customer base in Europe and becoming a known European player in the talent management field. Customer success teams made up of Taleo and Jobpartners staff are in place to meet with Jobparters customers to help them get familiar with Taleo. Taleo will continue to support the existing Jobpartners platform for a while as plans are put in place for the transition.