Many of the larger enterprise hr technology vendors have had a misguided (arrogant) growth strategy for the last decade – rely heavily on brand awareness from the late 2000’s and don’t worry as much about product quality. In 2016, I wrote about the startup vs enterprise innovation gaps. Sure they drop a few releases here and there, reskin a few dashboards, use AI, ML and “modern” in the product marketing – but at its core, it isn’t improving the technology and UI/UX beyond a demo version enough to make anyones job any easier.
Most HR Tech vendors have not been preparing their technology for the “future of work”.
Or even the “current of work”
Buyers today are being forced to buy start up and point solutions after investing millions not just in product, but millions more in implementation and services of full suite solutions that were unable (unwilling) to have a product that was actually functional on a full suite basis. Modern recruiting has long been the biggest gap for global talent management products – but now that gap has gone beyond recruiting into comp, performance, on-boarding and even learning for these too big to fail legacy vendors. Some have put a heavy financial and company wide focus internally on improving technology and approach over the coming years – others have only done enough to make analyst demos and marketing messaging pretty enough to stay in the quadrants and quiet the demands of the loudest customers. The roadmaps that exist are…bandaids not innovation for many vendors.
Band-aid fixes aren’t product strategies.
Rising sales and stock prices are not true indicator of success for me – I look at NPS, engagement, online sentiment along with numbers that can be manipulated for wall street’s satisfaction. I also watch glassdoor ratings closely. Employees have the best insights well before public or even customers do. And remember, high retention rates are only valid if we are looking at what has happened in the current renewal cycles (last 3 years) not over the lifetime. Just because a product and company was good a decade ago, doesn’t mean it’s still good today. Remember Blockbuster? I have a unique insight into this having working both hr teams frustrated with their technology and seeking better ways to do things as well as working with a number of vendors on growth, product strategy and roadmap prioritization. I see who wants to pretend their gaps don’t exist and who wants to make customers – not shareholders – happy.
The biggest issue many vendors face is failure to remember what happens today in product roadmap and development will really impact you 2-3 years down the road.
Which is where the Saba/Lumesse deal comes into play. Both well known brands that have name recognition and awareness in the market but they have both also not seen the growth I think they they could have over the past few years for a variety of reasons.
Saba started in the LMS (Learning Management) space and acquired Halogen a performance management player just over a year ago. Halogen has become more of an SMB play for them but some of the better tech features have migrated into the enterprise product. Today’s Lumesse acquisition will round out the talent management suite offerings for Saba – while giving them some strong EMEA and global brand recognition from a technology that has been quietly making good improvements, especially around mobile. While we won’t see initial impact shortly – we should be watching where they trend over the coming years as a result of this. It could be they leapfrog over some of the other products that have been playing it safe.
The Saba/Lumesse acquisition should be a reminder to other Talent Management vendors the competition is here to play and not just doing bandaids.
Will this be seemless? No. Will it be fast? No. Will there be hiccups? Absolutely. Anytime you merge multiple technologies and corporate cultures together there are bumps in the road. But what is unique about this acquisition is how well these two fit together on paper – complementing each other’s gaps and weaknesses.
The other winning factor here is the robust API’s offered – something that is surprisingly lacking in some other enterprise learning and talent management vendors. Technically, the API set up should allow some seemless connection between these two technologies for their existing clients in weeks/months – giving a huge benefit over a vendor trying to integrate a new acquisition without existing API’s. That simple api relationship, while not an end goal, will allow them to look at the product, go to market and brand strategy more holistically from the start vs all the energy being “how do we make this look like it works quickly so we can sell it”…band-aid it. Do not underestimate a good API.
Saba was a legacy player and has realized they needed to be better than relying on their brand from the 2000’s. The strategic buy with Halogen and now with Lumesse shows this group is serious about becoming the global talent management suite leader.
Where this (and all acquisitions) could fail.
Time. The biggest challenge for enterprise vendors today is time. They don’t have as much as they think they do. Startups are more nimble and often outpace enterprise bureaucracy in product development and product marketing. They are able to not only build solutions but get the story out there in a way that wasn’t necessary 5 years ago. This market is moving quick and M&A activity is moving quicker – the Halogen acquisition is already old news and there is a limited time frame for doing this well and right. Two well known brands are in this – it isn’t a big name and a start-up. The expectation will be to see movement quickly.
Product Strategy. To create a truly holistic talent management product this can’t be a Saba and Lumesse product. It needs to be SabaLumesse or whatever the new name will be unified roadmap and product strategy for moving forward. Short term for product unification and long term for total strategy. This may be one of, if not THE, most important part of this acquisition play as doing it wrong could cost you customers on both sides.
Communication. People need to feel safe, secure, confident and excited. The communication that will be hitting Lumesse prospects in particular is that they should sign with Competitor X because “who knows what will happen.” I’ve seen it happen over and over. Its kinda slimy, but it happens more than we’d like to admit in HR software sales. Sales and Services teams need to feel comfortable they know what the bigger plan is. They need to have the confidence in sales meetings and client reviews to speak to the changes. This is often the most overlooked aspect of acquisitions. I remember a while back being at a dinner with a group of sales reps who got an email half way through the night that told them they had been acquired, they needed report to the booth 30 minutes early in the morning and they will find out by who.
Awareness. Even the best products fail when people don’t realize the value. Companies like Saba struggle to a degree because people know them as who they were and often miss who they are. The powerful brand reputation they built has overshadowed the product and company maturity – especially moving into a crowded full suite talent management space. Lumesse to a degree faces this same struggle. Specifically for this pairing, awareness and brand identity with technology/product/solution and not just brand name will be vital for customer acquisition and growth.
As with all M&A activity in this space we will have to take a wait and see approach as to how these two vendors come together and who’s agenda wins. For the sake of the industry, I hope it is the talent management buyer that comes out as the main priority here.