A Talent Management Vendor’s Obituary

Now, 12 years after the industry started, we are staring at two monumental developments which have the capability to reshape the market yet again.  First is the formal delivery of Oracle’s Fusion HCM suite.  With this much anticipated product the team at Oracle have taken the time to provide a substantial upgrade ground-up rebuild of the HCM product line.  The result is a highly competitive offering which should cause many Oracle customers to give it a good look when their SaaS Talent Management contracts are up for renewal.   With strong functionality, mixed-deployment options, and what I anticipate will be more flexible contract terms than on-premise software much of what caused the birth and growth of the dozens of vendors in the talent management space will have vanished.

At the same time, Workday has been aggressively developing their talent management capabilities while rounding out their product offering in the HCM space.  Workday’s VP of HCM Product Strategy Leighanne Levensaler brings a wealth of talent management domain expertise from her days as an industry analyst at Bersin & Associates. Additionally, Ultimate Software, SuccessFactors and a number of other vendors have also been busy evolving their product line to bridge the gap between the strategic functions which HR desires and the administrative functions which HR cannot live without.  Needless to say there is a substantial sea change underway in the HCM technology market right now.

Twelve years ago the talent management technology market was in its infancy.  In order to grow, develop, and mature the market it needed to exist as a separate set of capabilities.  We’ve reached a point in the maturity of the HCM technology market where the emphasis is not on new bells and whistles (although there are plenty), but rather how HR can and should absorb all of these capabilities.  The questions being asked aren’t as much about can a product function in a certain way, but rather do we need specific features at all?  And if so, why?

Just as the talent management technology space was born out of a need to separate from Core HR, the same challenges are likely to drive the reunion of these two in the not too distant future.  For those talent management vendors who choose to head down the Core HR path, the road is paved with high levels of competition from the vendors who have been there all along.  Those who choose to avoid that route may find themselves with a somewhat darker future.

2010 was the year of the acquisition in the HCM technology space.  The coming year or two might see a few more big ones fall but for very different reasons.  While I can’t predict which vendors will thrive, survive, or fall, many paths seem to lead to the same end-point.

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