How does M&A in HR tech space add value?
A great year for M&A in the HR Tech space but what is the value to the customer?
Tech giants are clearly willing to pay hefty premiums to expand their geographical & social portfolio. The M&A activity in the HR tech space has been greater than $9 billion in disclosed transaction value in the last 12 months. SAP’s acquisition of SuccessFactors, Oracle’s acquisition of Taleo, Salesforce.com’s acquisition of Rypple, the social performance management provider, Microsoft’s buy-out of Yammer, the “Facebook for business”, and IBM’s acquisition of Kenexa, the HR software giant, have taken the HR space to headlines across the world. The capital markets activity has also been extremely dynamic in the last couple of years, LinkedIn and Cornerstone OnDemand completed successful IPOs in 2011 and they have continued to grow in revenues and customer acquisition. These deals represent a logical height of a trend that has been going on for the past five or so years.
Customer expectations have transformed the role of technology in HR from simple automation of human resource business processes to becoming the habitat that employees work in. This changing customer expectation is the driver for innovation in the HR tech space.
The benefits of these mergers are that they bring new solutions and applications to enterprise software and systems creating an opportunity to connect all layers and functions in the organization. For example, a SuccessFactors or Ripple can now provide cloud and mobile solutions that have an underlying social component and are designed for the young generation and link the usage of these tools to SAP or Salesforce.com architectures that provide analytics and intelligence. The benefits, of these tools coming together to offer an integrated solution for the end users, are tremendous and can be seen across the organizations and across levels.
From the HR perspective these offerings brings the real value of HR systems, that is not just to provide data, but rather providing an integrated view of the organization as a living organism.
In India, the HR technology landscape is still very fragmented and consolidation has not started on a large scale. For Indian consumers, whether they are looking at global technology players or domestic ones, the benefits of this evolution are likely to take few more years until it transforms the way people relate to work and vice versa.