The marketplace for Human Capital Management (HCM) solutions has seen an extraordinary amount of acquisition and consolidation activity in the past six months. The activity related to cloudbased HCM solutions for Consumer Products companies is far outpacing any other application of cloud-based technologies. Earlier this year SAP spent $3.4 billion to purchase SuccessFactors. Not to be left behind, Oracle jumped into the fray two weeks later by spending $1.9 billion to acquire HCM solution provider Taleo. Some say that Salesforce. com started the frenzy with its purchase in December of 2011 of cloud-based HCM performance management solution Rypple.
As a backdrop to this activity, there is an impressive march forward by cloud-based HCM provider Workday. In a recent Towers-Watson survey, 444 organizations responded to detailed questions about their HCM solutions. Of those organizations planning to implement a new HCM solution, 22 percent are planning to implement an SAP HCM solution. However, a stunning 18 percent are planning to implement a Workday solution.
With the highly dynamic solution landscape for HCM, questions abound:
- Should Consumer Products companies implement an on-premise SAP HCM solution?
- Should we continue to invest in on-premise SAP HCM solutions?
- Should we investigate cloud-based solutions like Workday?
- What can we expect from SAP’s purchase of SuccessFactors?
- How do I maximize my company’s success while minimizing the risk we face during these volatile times?
To help lay out a roadmap for success, we sat down with David Watts, one of Clarkston Consulting’s SAP HCM specialists.
What’s Driving All of This Acquisition Activity with Cloud-Based HCM Solutions?
Well, it’s really the result of two unyielding forces. On one hand we have the continued maturity of web-based solutions. We shop on the web, and we bank on the web. We even use the web to reserve a table at our favorite restaurant. That trend line is unstoppable. Combine with it the ongoing drive in business to provide better solutions to business challenges with less investment.
Where these two trends are intersecting, we’ve seen the rapid development of powerful cloud-based HCM solutions. And since these solutions have proven themselves to be viable in the marketplace, the traditional on-premise solution providers like Oracle and SAP have taken notice. As you look at the success of Workday, it is clear that their rapid adoption rate by companies is a threat to Oracle and SAP. That’s why the big guys have been on a buying spree.
For more, please download our report.