Wow! Some big announcements in the HCM space last week with two significant mergers and acquisitions. Let’s start with Kenexa’s (KNXA) announcement that they intend to buy Salary.com for 80M. First of all, Rudy Karsan, CEO of Kenexa, is one lean operator; as one of the only publicly traded software vendors in the HCM space that is consistently profitable Kenexa has always been dedicated to building out a fully integrated talent management suite.

The largest hole in their product line has always been compensation. With the integration of Salary.com they now have the ability to offer best-of-breed solutions in both compensation and performance management. At 80 million, this is a steal of a deal compared to some of the others. Focusing strictly on compensation, Salary.com, will be able to quickly deliver a healthy profit and the additional focus from Kenexa’s sales team could mean a quick uptake on cross selling to impact revenue. Kenexa can also learn a lot of from Salary.com in terms of quick development, industry expertise, and productization of product lines. Unfortunately many of the Brassring people who left after its’ acquisition of Kenexa may find themselves on the street once again.

Boston, one hub of HCM vendors, is slowing losing its’ name as an innovator of HCM solutions and people.
Brassring / Webhire now Kenexa
Deploy now Kronos
Workscape / ADP
Nuvosoft / Plateau
and Authoria now PeopleclickAuthoria
Only industry giants remain with Monster and Kronos as well as a few smaller players like myperfectgig and Highroads.

The second major announcement was of course Taleo’s acquisition of Learn.com for 120 million in cash. With approximately 25 to 30M in sales Learn.com was still not profitable and has struggled to find its’ way in a fragmented LMS vertical. Personally I thought the acquisition of something like Saba with 110 million in sales, moderately profitable, and an industry giant based in California would have been a better acquisition! Of the 100 plus vendors in the LMS space, the majority of which are very unprofitable, this multiple seems very high. In Taleo’s defense, they have one of the strongest sales and marketing teams as well as development teams and if anyone can make this work it would be them.

So who is next … Cornerstone to ADP? They already have a partnership in place and are experiencing significant traction with this relationship.
Or perhaps Kenexa or Taleo to Oracle?