Well, last week´s survey created quite a stir in the industry.  Of the 105 vendors in the talent acquisition space, many called and asked why they were not included. What I needed to preface the research with was a more detailed list of criteria I used in selecting these vendors.

To make the list firms need to:

1)      Have a stable revenue associated to just the Talent Acquisition Space. Many of the ERP/HRIS players, or vendors that are striving to build out a fully integrated suite, were disqualified because their talent acquisition portion of their software may be a free add on, or part of a suite (either not sold as a separate line item or thrown in as the entire suite) or the revenue from this line item alone was small. Some of the players eliminated here were Pilat, HRSmart, Softscape, Oracle, and SAP.

2)      Be able to address the entire Talent Acquisition Space, not just focused on one vertical or one category of workers. This eliminated Unicru (which was subsequently bought by Kronos and is the dominate player in the hourly workforce), as well as JobFlash (hourly), HRLogix (Gaming Industry), EEmpact (Staffing Firms), and experience.com (Campus recruitment).

3)      Have enough referencable clients and an established history of growth in this vertical. This eliminated some of the newer funded players like Trovix or some of the older players who are not experiencing the same industry growth.

So if you are looking for a very specific solution in a niche area or looking at the entire talent management space, you are best to pick up the phone and call us before you venture down the vendor route.

Kronos continues to dominate.

It seems to be a race as to who can build out the integrated talent management space first. Kenexa is winning if you look at the market cap as well as their product line and client base, but the heat just turned up last week with the Kronos acquisition of Unicru, the leading provider of talent acquisition systems for hourly workers. Unicru had been shopping the company for a while and had many potential suitors but this is by far the best alternative for them. While the competition for the hourly recruitment technology was once "owned" by Unicru, a number of the BOB (Best of Breed) solution providers have integrated hourly solutions into their platform. This has caused the average deal size of Unicru to shrink and revenues, although still growing, have not been growing at the same extent as some of the other players in the space. What makes the Kronos acquisition so significant are the following facts:

1)      Kronos is the 800 pound gorilla in the time and attendance space. With the largest dedicated sales force to the human capital space, they have significant traction with over $500 million in revenue. They are the only software vendor in the HR space that has this revenue size. They will become the first billion dollar HR software firm within the next five years.

2)       They continue to invest in core products with additional acquisitions like SmartTime and Ad OPT Technologies.

3)      Their HRIS/Payroll product is getting significant traction in the market. Adding best of breed products like Unicru and Clarity Matters will add significant value to their clients. They were the first vendor to add in-depth metrics to their platform. This is a major differentiation and once this product line is fully integrated across their HRMS/ Payroll and Unicru offering it will be even more impressive.

4)           They are dedicated to the HR space, unlike Oracle and SAP who have alternative product lines (CRM, Finance, Mfg) to focus on.

The HRO world seems to be in a bit of turmoil. The reality is clients are just not that happy with their HRO providers. Much of this has to do with setting proper expectations and realistic goals. What is apparent is that the industry is still investing heavily in trying to get this right and entering this space is not for those without deep pockets. Here are some of the major issues facing the HRO players:

1)       Incomplete product offering: Although no one HRP player has the " nirvana" platform that can support multiple clients on one architecture, many are willing to provide customized solutions or assume their client´s current infrastructure which is not necessarily scalable or feasible in a shared services environment.

2)        HRO providers are all losing money on client deals. The reason is many fold (too high of a cost on client acquisitions, what the client is willing to pay for, bad contracts, churn on staff and IP, etc.)

3)       Lack of real vision and leadership. Even the industry leader Hewitt is experiencing significant management changes. What happened to James Madden and Kevin Campbell of Exult? They had a very clear direction and focus on the HRO space. Leaders in the market they defined, we do not see any one firm or individual stepping up to the plate to fill these shoes.

4)       Complexity of the deals .... They are not getting any simpler - that´s for sure.

5)       Lack of Project, Relationship and Scope Management. Companies are still vying for deals that are bad for them and not so concerned about making the existing deals work.

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Debbie