Peopleclick Authoria – A New Talent Management Leader?

Last week Bedford Funding announced its acquisition of Peopleclick and the immediate combination of Peopleclick with existing portfolio company Authoria, creating a combined talent management systems company with more than 2,000 customers and $100 Million in revenue.  The combined company (now named Peopleclick Authoria)  is now a significant player in the talent management systems market.

History and Analysis of this Merger.

Authoria is one of the pioneers in the talent management market, with a strong solution for integrated benefits communication, performance and succession management, compensation, and talent acquisition.   Founded in 1997 with a focus on building a platform for integrated benefits communication (helping employees view all their benefits and retirement information), the company learned how to build compelling HR portals and integrate data from many back-end applications.

In 2004  Authoria acquired AIM, a small provider of performance and compensation management software, and then re-engineered the product to launch a to compelling suite.  In 2005 Authoria won the HR Technology Conference Shootout for performance and compensation.

In mid-2005 the company acquired Hire.com, bringing a set of technology and services to integrated recruiting into its talent management suite.  Hire.com was one of the first systems to introduce candidate relationship management, a key feature in Peopleclick.  In 2006 and 2007 the company focused on marketing its integrated suite and further integrating these platforms into a next-generation, integrated user experience.  The resulting product suite was so successful that Authoria once again won the HR Technology Conference Shootout in 2008.

As a pioneer in integrated talent management, Authoria’s product has been ahead of its peers in many ways.  But by 2008 the market had grown to over $1.5 Billion and aggressive entrants like SuccessFactors, Taleo, Oracle, SAP, Plateau, Saba, and Softscape were now significant players.  (The original investors and management team were not growing the company at competitive rates, so in September of 2008 Authoria was acquired by Bedford Funding, a savvy private equity firm which has extensive experience in enterprise software.  Excited by the company’s position and the fast-growing market, Bedford put significant money, management and executive focus into the company and started to redefine Authoria’s go to market strategy.

One of the things Authoria’s leadership found was that the talent management software market has reached a stage of “early majority” adoption.  That is, today there are many excellent offerings on the market so the keys to success are no longer only product innovation and evangelism, but scale, industry depth, and end-to-end solutions.  With the two gorillas in the market (SuccessFactors and Taleo) now well over $200 Million in size, Authoria’s leadership realized they needed a way to “get big fast.”

At the same time this was occurring, Peopleclick, a provider of talent acquisition solutions, was continuing to grow – with a strong focus on high volume recruiting, candidate management, diversity, and other talent acquisition services.  The talent acquisition market, while now considered part of talent management, is actually a slightly different space.  Talent acquisition buyers have very pragmatic, somewhat tactical needs – they must rapidly source, select, hire, and onboard people.  Their needs dovetail with the rest of talent management, but their actual problems are different.  They want to reduce cost to hire, improve quality of hire, work seamlessly with internal and external recruiters, manage costs carefully, and take advantage of the new world of social-network based recruiting solutions.  Small to mid-sized companies needs are fairly common and can be addressed by most applicant tracking systems;  larger corporations need high-volume, very easy to use systems which must have many external interfaces and tools.

Peopleclick, which focuses on the mid to larger enterprises, became an excellent, highly focused, innovative company in this space.  But as I described above, with Taleo and SuccessFactors now heavily focused on integrated recruiting and talent management, it was becoming clear to PeopleClick that some type of merger made sense.  (Most of the talent management companies were talking with Peopleclick).  Bedford Funding, the owners of Authoria, have now made this happen.

The combined company now has many strengths:  a global reach with more than 500 employees and revenues around $100 Million, best-of-breed products in all segments of talent management, and a deep level of expertise in almost every area of talent management.  And of course this merger gives Peopleclick Authoria the opportunity to cross-sell products and further develop integration between the Peopleclick and Authoria product families.

What this Tells us About the Market.

The market for talent management software is growing up (I’d say it’s in its late teens – filled with potential but not fully mature).  As this happens the market itself expands, because more and more companies now realize that they should consider implementing a talent management solution.  But at the same time, the market now has many major players (read more in our Talent Management Systems 2010 research) so an aggressive company must have enough money and people to survive the next phase of growth.

Innovation is still a critical key to success.  While some of the talent management modules have become common (e.g. performance reviews, goal setting, goal alignment), many areas of talent management are still very new and unexplored (critical role identification, succession pooling, readiness pools, workforce planning, scenario modeling, and the whole area of talent analytics and measurement).  Companies like Salary.com, Silkroad, Softscape, and Workday are focusing heavily on building out the core HRMS, which is another rapidly growing adjacent set of customer needs.  I believe that Peopleclick Authoria now has the scale to continue to innovate, an important strategy in this evolving market.

Finally, this merger once again illustrates how the financial community has become very important.  For the last two years many venture and private equity companies have become very involved.  (SumTotal’s acquisition by Vista Equity Partners, for example.)  This is a very positive sign – it means that this market has become a healthy place to invest and innovate, driving companies to become bigger and better solution providers.

Will Peopleclick Authoria Become a Market Leader?

As in all mergers, it all comes down to execution.  The new combined company has a tremendous set of assets to draw upon.  Now they must integrate sales, marketing, product, and support strategies to create a 1+1=3 solution.  With strong leadership from Bedford I believe Peopleclick Authoria has the potential to become an even larger player in this exciting market.

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