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The acquisition frenzy in the enterprise software market continues. The announced acquisition of Taleo by Oracle will remove the independence of another successful cloud-based software company. Publicly traded Taleo (NASDAQ: TLEO) provides talent management applications on a rental cloud computing basis. Acquiring Taleo, which by all accounts has done a good job of growing the recruiting and applicant sourcing software business in a scalable cloud environment, was too good for Oracle to pass up. SAP’s much costlier acquisition of SuccessFactors, which I assessed clearly placed more pressure on Oracle to do something rather than nothing.

On the downside, Taleo had been growing overall but had been struggling to gain significant adoption of its portfolio in areas like analytics, compensation, performance and succession. Taleo recently expanded its portfolio by acquiring learning management system provider Learn.com, midmarket recruiting-focused Cytiva, and European provider Jobpartners to further its reach and portfolio. Taleo had introduced some innovations in social media and mobile computing, which I assessed after its Taleo World 2011 conference.

Oracle has been working to build human and talent management capabilities but has struggled to get companies to adopt Oracle Fusion for HCM (see “Cloudy Forecast for Oracle Fusion for CRM and HCM). Oracle has not effectively marketed and sold that to HR and business leaders and has been outpaced by applications such as those from Taleo and others including ADP, Cornerstone OnDemand, Peoplefluent, Saba, SuccessFactors, SumTotal Systems, Ultimate Software and Workday. I’ve already discussed the rise of Workday in relation to Oracle and the challenges Oracle has had in keeping its legacy PeopleSoft customers, many of whom did not migrate to Oracle Fusion HCM but switched to Workday. We have also seen customers of PeopleSoft Financials embracing Workday, as my colleague Robert Kugel pointed out.

Customers, employees and shareholders of Taleo must wonder whether Oracle will follow the same pattern as in other acquisitions but as an industry analyst in enterprise software tracking Oracle for a good amount of time and been part of one of their acquisitions in the 1990’s, it is pretty predictable. In most cases Oracle will lay off as many employees of the acquired company immediately and then more within a year. In this case Oracle might keep more than usual around due to the lack of success so far in growing its cloud computing application business. Taleo is headquartered in Dublin, Calif., close to the Oracle facilities in Pleasanton that once belonged to PeopleSoft, so it can easily house the employees it keeps.

Until now Oracle did not have a significant product in recruiting and lacked depth in learning. From Taleo it will gain important software assets to place in its Oracle Fusion for HCM cloud and even in its on-premises offering. But Taleo’s applications in compensation, performance, succession and analytics overlap with Oracle’s and did not have significant adoption, and likely will be placed into maintenance to extract what revenue can be attained. Organizations that currently use Taleo software should immediately reassess their portfolio and cease any further deployment of applications whose future is in question.

If your organization has committed to Taleo’s integrated suite for talent management applications, this pending acquisition will hinder your efforts and you should pause immediately and assess any further action or adoption. If you are using Taleo for recruiting and learning, be aware that Oracle has announced it will move these and the other applications to its public cloud environment, which will delay upgrades in the software and impact future roadmap commitments. The advances that Taleo was making in mobile and social computing, such as Taleo Radar, also are likely to be dropped, since Oracle has its own approach for these areas, which is used across Oracle Fusion Applications and Middleware.

Oracle’s announced intention to move the Taleo applications to the Oracle Public Cloud is to be expected, though Taleo had a considerable presence measured by the volume of customers and transactions operating in its cloud environment. In fact, with this announcement, Taleo has provided statistics showing that 15 percent of all new hires flow through Taleo applications. The company says Taleo accounts for 74 million transactions per day and has 240 million candidates in the Taleo Talent Exchange. I doubt that Oracle has anywhere near this level of volume and experience in its Public Cloud. It will be interesting to see how moving the Taleo applications will impact customers’ performance and scalability.

I have seen some pretty bland analyses of this announcement that fail to consider Oracle’s track record with acquisitions and their impact on customers, software and people. Customers and potential buyers of Taleo should be skeptical of any announcements from here on. Oracle and Taleo did not even bother to have a call on the announcement and just published a presentation, frequently asked questions and a limited and immaterial letter from an Oracle executive of which all are pretty useless to base any real decision. That reinforces my analysis that this will be an acquisition that Oracle picks through quickly in regard to software and Taleo employees and keep as many of the customers as possible.

Taleo’s competitors now have an opportunity to expand their businesses during the expected turmoil of Taleo’s transition into Oracle. Taleo had not addressed some of the key application issues that I have researched extensively and commented on, such as digital interviewing with HireVue, sourcing across all applicant channels, including social media, with Talent Technology and sophisticated workforce analytics like that of eThority and Visier. Factors like those should now be a larger concern for businesses that are considering the Oracle and Taleo combination, since they are critical gaps in the current Oracle and Taleo application portfolios. This acquisition does not help validate Oracle Fusion HCM which still is not very widely adopted and is early in its evolution of sophistication and Taleo customer should expect to hear shortly how important it will be to review it as part of Oracle eventual cross-selling activities.

Anyone using Taleo should take immediate action to assess and review the implications of this announcement to their talent management strategy and processes. The progress of this merger also will be something to watch very closely.

Regards,

Mark Smith – CEO & Chief Research Officer

Business analytics and big data are common topics of conversation in the business and information technology markets, but these technologies are only building blocks to help businesses manage performance. Entering the conversation is Actuate, which for years has had a performance management division that provides software for managing progress toward objectives through a variety of analytic and action-focused techniques. The company has announced release of a promising new generation of its enterprise software, Actuate BIRT Performance Analytics.

Using its longstanding business intelligence (BI) technology based on the open source BIRT, Actuate packaged an offering called ActuateOne that I assessed over a year ago. ActuateOne helped the company retrofit the core of its software for performance management by embedding and building on top of the underlying analytics and BI functionality. This is a good step forward, as our business analytics benchmark research found that only 15 percent of organizations are innovative in using business analytics. Such companies can access, collect and review performance based on analytics and metrics faster, better and more cost-effectively than others.

Now Actuate has shifted its attention from performance management to performance analytics, which helps broaden the relevance of its offering. The software goes well beyond traditional dashboards to provide the ability to assess gaps toward goals and direct action. Actuate has not gotten enough credit for depth in the analytics and discovery elements of its software for optimizing and managing performance. In this release it is clearer how it can cover the basics and get organizations to focus on supporting actions that require commentary and review cycles. Actuate has improved the ability to make observations and notation directly on the analytic information from within the software, eliminating the need to attach comments from a Word document or electronic mail. 

One of the key capabilities Actuate shares with other vendors of software designed for managing performance through analytics is to easily collect the data necessary for integrating with the performance indicators. For example, to examine key customer indicators on satisfaction, you might have a summary number of customer complaints by region and month to be used in a calculation. These types of data points can come from customer feedback management (CFM) software and reports, but the process of integrating them with your analytics data model can be cumbersome, and it might not even be necessary to assess the impact of complaints on customer satisfaction. Our benchmark research in business analytics found that collecting data is hard for 51 percent of organizations and inhibits them in getting full value from analytics. Actuate has been expanding its software portfolio to support more customer-related information, which my colleague Richard Snow has assessed. It can now demonstrate how it helps organizations focus on their customers, which many desperately need to do.

Of course speed is critical for businesses in building key indicators from measures and metrics. Results must be recalculated as the underlying data and measures change daily or weekly. By using Actuate BIRT, organizations can use 64-bit in-memory processing for query, reporting, analysis and publishing of their performance analytics. This also helps organizations do what-if scenario planning, and they can access the metrics and analytics using Microsoft Excel as a front end to their application-specific information.

ActuateOne can help organizations focus more on the application level and less on the underlying analytics and BI infrastructure. Indeed, our business analytics research found that organizations dealing with analytics spend 69 percent of their time on data-related activities compared to analytic ones, partly because their analytic and BI technology  has trouble directly accessing and integrating data.

Actuate makes its offering available via the cloud computing model. You can sign up and rent the software, then configure and load data, eliminating the need for IT cycles to tailor the in-house hardware and computing environment for the software. The trend toward using cloud computing to rent and access software continues to grow; our business analytics research found that 27 percent of organizations now prefer this approach.

Actuate BIRT Performance Analytics provides a foundation to choose and integrate pre-existing key indicators. It has more than 12,000 measures to select from including business and financial, operational and customer-centric ones. If you are trying to manage goals, objectives, activities, initiatives and business processes, the Actuate approach gives you a method for reaching the outcome you desire. 

Actuate’s visual capabilities make it easy for managers to review performance-related analytics,  including briefing books that organize collections of reviews not just in pages but also subpages. This approach eliminates the laborious process of creating presentation decks and sending them around for review. Such presentations are static and inevitably out of date by the time the real decisions must be made. Actuate’s key indicator visualizations, which come from its roots in delivering balanced scorecards, are some of the best to engage business people’s attention and complement the traditional pie and bar charts to represent the relevant impact of its performance. And the product still has strategy maps and methodical scorecards.

Actuate has an opportunity to spread performance management to a much broader audience. The new software may help customers see the limitations of analytics that allow you to understand but not optimize and align performance. Actuate’s approach to the full management cycle is an example of what my colleague Robert Kugel calls action-oriented information technology systems. It can help mitigate risk in business through risk analytics. Beyond risk, to get full value from Actuate BIRT Performance Analytics, organizations should not just focus on key performance indicators but also track people, process, customer and other types of analytic-generated metrics and indicators that focus on causes and conditions rather than just outcomes.

If Actuate wants to take its technology to the next level and get more management interest, it should make its Performance Analytics accessible on tablets like Apple iPad, as that is the perfect platform to allow management to check on business and operational performance anywhere at any time. While Actuate has mobile capabilities today, running natively on smartphones and tablets and allowing users to review most of the analytics, the unique visualization style of Performance Analytics has not been engineered to work on Apple’s proprietary technology framework. 

With the new release of BIRT Performance Analytics, Actuate makes performance management simpler to get up and running and to use. Its refreshed marketing to address its product’s capabilities was needed. Actuate now can educate businesses about why taking action on analytics can make a difference in business.

Ventana Research has spent a decade insisting that performance management be treated as a key business process with unique needs and significant benefits to organizations. Assessing and adopting dedicated applications designed for a particular business process helps reduce costs, time and risk and gain the outcomes sought. In the context of our analytics research finding that only 41 percent of organizations are satisfied with and one-third are looking to make changes in their approach in 2012, Actuate has an opportunity to advance its market position.

Regards,

Mark Smith – CEO & Chief Research Officer

Mark Smith – Twitter

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