Bill Kutik had a great article in HR Executive magazine about ongoing innovation in the E-Recruitment software market. I agree with him. We discussed a lot of the areas of innovation around the edges in recruiting in the Magic Quadrant for E-Recruitment Software (Gartner subscription required). As Bill points out, there are new vendors popping up all of the time (even since we published our research). There is always innovation occurring around the edges of established application areas. E-Recruitment (formerly Applicant Tracking) solutions have been around for around 20 years. It is clearly a well-established area.
Yet, we have had profound changes driven by technology (the movement from applicant tracking to e-recruitment solutions driven by the internet and web-based solutions). In addition, we have seen innovation because these solutions still have not solved all of the business challenges in the domain. This is a common pattern that we see in many different business software application markets.
There are two implications from this. First, there are a lot of new vendors that will pop up trying variations of the themes with a variety of different business models. Most of these will not be successful (or will have limited success). Few will change the world. That is not necessarily bad, but it is important to make sure that you do not put all of your eggs in one basket (and make sure that you are easily able to end your relationships) as you try some of this innovation to solve your business challenges. Second, once innovation starts to become accepted wisdom, it starts to get absorbed into the established solutions (either directly or through preferred partnerships with the "winning" vendors). This cycle of assimilation occurs all of the time. So, it becomes important to understand how your core/strategic vendors are moving related to innovations you find useful.
Remember your HCM application portfolio requires active management. Technology will not solve all of your challenges today, but it is constantly evolving and you need to continually look at your priorities and what is possible to make sure you get the most from your investments, especially in these challenging economic times.
On the Gartner Blogging Network, we have not added the ability (yet) for bloggers to add their own pages. I have updated the page I maintain over at BlogERP (I cross-post to both blogs presently). So, if you are interested in the latest research I have published on HCM, please feel to take a look.
I would be remiss if I did not give a plug for the Gartner webinar (subscription required) I am doing today at 11:00 AM EDT. The presentation will focus on five market discontinuities that will impact sourcing of ERP, CRM, and SCM applications. Here is the link for more details. Please join me.
I will be appearing on the Bill Kutik Radio show at Noon EST on Wednesday, November 12. Please check out this link for details. For those who are unfamiliar with this, HR Executive Magazine technology columnist Bill Kutik, in conjunction with Knowledge Infusion, has produced a series of podcasts (this will be #17) where Bill interviews a wide variety of individuals including software executives, consultants, customers, and industry analysts. Following the podcast premier, I will be online from 12:20 PM to 12:50 PM EST on Wednesday taking your questions (registration at the Knowledge Infusion Center of Excellence required) on HCM technology. Please join me there.
Dennis Howlett gives a nice summary of SuccessFactors' Q308 results. SuccessFactors revenue grew 77% Y/Y and it raised its guidance for Q4 and 2008. On the surface, this would seem to support that HCM and Talent Management software, in particular, are weathering the current economic crisis well. Taleo also reported earnings yesterday and its total revenue grew 39% Y/Y. Taleo did report a loss due to restructuring charges and amortization expense related to the Vurv acquisition. Kenexa also posted its Q3 results. Revenues grew modestly compared to SuccessFactors and Taleo (15% Y/Y). In addition, it cited the current economic climate as a reason to reduce its headcount by 11-12%. Kenexa's stock price has taken a big hit (down more than 25% today).
These are definitely mixed results. In a tough economic climate, the strong tend to get stronger (in terms of market position) as the weak struggle to hang on. Vendors that have little cash (and/or even worse are burning through cash in a way that gives them a "short runway") have little margin for error. Some of these vendors will be purchased at discount prices. Others may fail altogether. All of this plays well to the stronger vendors in the market that have the capital and resources not only to weather the storm, but also to continue to expand their business and grow market share. However, as Kenexa's results show, the current economic conditions can impact even a relatively strong vendor.
How do you interpret these results? Will talent management software vendors be negatively impacted by the current economic crisis? Who do you think will be the winners and losers?