Oracle Buying Taleo: Is It a Good Deal?

As Howie Mandel always says to his guests after they’ve pressed the button and say “Deal!” on the TV show Deal or No Deal—”but was it a good deal?” Time will of course tell, but I do believe Oracle has made a very good deal. As the acquisition was announced just last February 9, I’ll briefly recap what had happened.

Oracle announced an agreement to buy Taleo for $46 per share, an 18% premium over Taleo’s stock price the day before the announcement, equating to $1.9 billion. As Taleo’s board has approved the acquisition, it is now subject to normal regulatory approval and is expected to close by summer. This follows SAP’s announcement on December 3, 2011 to acquire SuccessFactors for $3.4 billion. I had blogged about my take on the acquisition last December 13, 2011, stating that SuccessFactors is a provider of talent management software, but software alone does not get at the core of what makes for effective talent management. First, let me state that I also feel that SAP buying SuccessFactors was a good deal, albeit a steep price, as cloud-based software, including talent management is clearly on the rise and expected to continue to grow. NelsonHall has seen a large increase in the number of cloud SaaS HR services contracts and nearly 15% of HRO contracts in 2011 also included talent management software, often performance management, mostly in the mid-market.

Getting back to Oracle, Taleo provides cloud-based talent management software as well, so this is also a good deal, but how does that make this different? Because Taleo adds recruitment capability that Oracle did not have before. And although SuccessFactors provides recruitment software as does Taleo, Taleo also has an applicant tracking system that according to NelsonHall’s 2011 RPO report is the most widely used recruitment technology and applicant tracking system, utilized by approximately 80% of all RPO vendors for their clients, Oracle’s PeopleSoft had been in sixth place. The RPO report also noted that approximately 45% of all recruitment technology was platform-based. Taleo also has a business edition, popular in the mid-market for clients seeking a more standardized solution, used by vendors including Alexander Mann Solutions and Pinstripe. According to NelsonHall’s HRO forecast, RPO will have the highest growth of all HR services through the forecast period of 2015.

In summary, I think both acquisitions by SAP and Oracle are good; especially as clients continue to focus on talent management and recognize the need to have integrated technology and processes, most importantly supported by leadership that understand this. I’m in the final stages of my learning BPO research interviews and I‘m seeing a clear trend that learning vendors are now also providing talent management software and associated consulting services to their clients along with their learning services. I look forward to aggregating this data that I’ll present at the HRO Today Forum in Washington, DC on May 1st, titled State of the Learning BPO Marketplace, including the Emergence of Social Learning.

Gary Bragar, HRO Research Director, NelsonHall

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Explore posts in the same categories: Acquisitions, Business Process Outsourcing, Cloud, hr outsourcing, hr outsourcing research, hro, hro research, performance management, recruitment process outsourcing, RPO providers, SaaS, Talent Management

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2 Comments on “Oracle Buying Taleo: Is It a Good Deal?”

  1. Kevin McDonald Says:

    In the case of both Oracle/Taleo and SAP/SFSF, in your opinion, are these deals also “good” for current customers or Taleo and SFSF? I understand the rationale for Oracle and SAP and the deals were probably good for them (and certainly good for the management teams of Taleo and SFSF); however, would you feel good as a client of either?

    • gbragar Says:

      Thanks Kevin. I think current customers will feel fine about the acquisition as they should receive the same level of service they do today. These are valuable clients that SAP and Oracle will be very careful in making sure they are satisfied. Another positive from a customer point of view is this increases the financial security/backing of their vendor. Due to space limitation here I can’t explain further, but in sum, I would feel good as a customer.


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