The Parable of IBM and Kenexa: Part I

Linda Merritt, HRO Research Analyst, NelsonHall

I have not seen such a range of varied opinions from members of the HRO and HR tech communities as those about IBM’s acquisition of Kenexa. The commentary showed that many were taken a bit by surprise and weren’t sure how to analyze the news that IBM was acquiring Kenexa for $1.3bn.

IBM Bought Kenexa?

The surprise was not the purchase of Kenexa, which was foreshadowed by the acquisition of Taleo by Oracle and SuccessFactors by SAP. It was more about the fact that IBM was doing the purchasing.

A few  thought that ADP might make such an acquisition since it had already expanded its benefits capabilities with Workscape and SHPS and its RPO capabilities with The RightThing, so wouldn’t talent management make sense? Speculation continued, perhaps Mercer, Ceridian, or even ADP would be the target of an acquisition or merger.

IBM itself was considered likely to continue its acquisitive ways with something more in the talent management / HCM space. Likely targets mentioned included Cornerstone OnDemand, SilkRoad, SumTotal, Saba, with a few suggesting Halogen, Peoplefluent, and others. In short, someone is going to buy something else.

The Meaning of the Deal?

What does this mean we all asked, much like the tale of the Blind Men and the Elephant as was suggested by the leading light Naomi Bloom. Early viewpoints on the acquisition included:

  • Continuing IBM’s move into social media and analytics
  • Continuing IBM’s move into professional services including strengthening RPO
  • Disrupting the HCM market and becoming a talent management player
  • Delivering value to the HR executive
  • Delivering value to the C-suite and bypassing HR
  • Primarily being a HRO deal with some software attached
  • Primarily being a software deal with some HRO attached
  • Upping competition with SAP, Oracle, Salesforce.com, and even Workday
  • Selling into Kenexa’s IBM-like customer base of Fortune 500 clients.

IBM’s news crossed many markets including HRO, HCM, HR tech (software, platform, cloud, etc.), BPO, social media, talent management, and financial and market analysts. Each commenter viewed the same information through the lens of their personal perspective and professional interest, much like the blind men touching different parts of the elephant.

With so many options before it, including IBM’s own announced intentions for the addition of Kenexa, the opportunities are new and exciting. Given the inherent complexities, IBM will face many risks as well. Look for more on The Parable of IBM and Kenexa coming in Part II.

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