Linda Merritt, HRO Research Analyst, NelsonHall
It’s common for major HRO announcements to be followed by a conference call, and sometimes one-on-one briefings are also offered for analysts as in the case of the IBM and Kenexa deal. Naturally, the NelsonHall HRO team including myself, Gary Bragar, and Amy Gurchensky took advantage of both opportunities.
IBM’s Own View
The initial announcement was largely from the perspective of the IBM Social Business group that will add Kenexa’s HCM capabilities to its combination of social media, content management, and analytics. IBM believes that this creates value through the application of social technology to front office processes and generates ROI by creating social networks of expertise that leverage analytic insights to improve business processes. In sum, a “Smarter Workforce.”
It is the Whole Elephant…
In Part I, I compared the various views of the IBM and Kenexa news to the analogy of the blind men and the elephant. The answer is that all of the following interpretations are rationales of the deal:
- Builds upon IBM’s social media, analytics, and professional services including BPO
- Brings valuable software, HRO expertise, as well as talent management capabilities
- Increases competition and cross-selling to both IBM’s and Kenexa’s base of Fortune 500 customers
- Delivers value to C-suite executives, HR executives, and the whole value chain of management and employees.
…and Much More
The IBM Global Process Service’s HRO team was involved from the start and will be deeply involved throughout the integration process. RPO services will be combined creating an even bigger global footprint with new service centers including three in the U.S. Kenexa’s learning platform will be reverse engineered to support IBM’s learning services. There are also other parts of Kenexa that can be kept or spun off such as compensation services, behavioral sciences surveys and assessments, and middle market customers.
Kenexa will be a wholly-owned subsidiary for the first year to allow time to determine the best options for unleashing the full value of the deal. Kenexa brings innovative and collaborative intellectual capabilities and a portion of the value is greater than the “stuff” that can be divided up. Even with Kenexa’s leadership intact, the decisions will be many, with lots of players due to the matrix nature of the services and opportunities adding to the normal M&A complexities.
IBM’s Smart Workforce incorporates the concept of the boundary-less enterprise that works across the “whitespace” between processes and organizational silos. IBM wants to make human capital management an integral part of business operations by enabling people to unleash their talent when, where, and how it is most needed to create measureable value.
We each see the world through our own lens of experience and expectations, and sometimes the truly new and innovative “elephant” is harder to see. IBM and Kenexa can create the truly new and we should all hope they do. HCM, HR, HRO, HR tech, IT, social media, and more will have to raise their game to benefit from the new technology, services, and consulting opportunities. And that is a good thing!
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