Oracle Acquires Taleo: The ISG Point of View

The shift toward delivery of human resources (HR) applications via Software as a Service (SaaS) in the cloud continues with Oracle announcing its planned $1.9 billion acquisition of Taleo, a leading SaaS talent management and applicant tracking software provider. The  Oracle acquisition comes just two months after SAP announced its acquisition of SuccessFactors and is another example of the leading on-premise human resource management system (HRMS) providers responding to the increased competition from Workday.

Our Point of View

Oracle’s acquisition of Taleo will deliver a number of benefits. The acquisition will fill functional gaps in the Oracle Fusion HCM solution, round out the product’s talent management suite and accelerate Fusion’s ability to serve as a potential migration path for customers seeking a SaaS HCM platform. Taleo provides Oracle additional cloud technical expertise and infrastructure, a stronger foothold in the growing market for cloud services and is consistent with Oracle’s strategy of providing their customers with choice. Both companies should benefit from access to an expanded customer base.

For HRO providers using Taleo in combination with an Oracle HRMS solution, we do not expect any immediate impact from this acquisition. We expect the same to hold true for outsourced customers leveraging a non-Oracle HRMS solution such as SAP in combination with Taleo. We anticipate that Oracle will continue to support existing Taleo customers, regardless of their outsourced service delivery model platform.

The demands on HR technology are changing rapidly with a particular push for mobile access, social collaboration, business-driven analytics and deployment viathe cloud. Once they sort out their future technology path, Oracle and Taleo together should have the products and the experience to deliver on these demands. Whether they can do this quickly enough to compete effectively with Workday remains to be seen.

We expect to see the pace of HR point solution acquisitions to continue to accelerate as the large enterprise software vendors play catch-up with native cloud platforms. These acquisitions should compel organizations to reassess their human resource technology roadmaps.

About the author

Stanton helps enterprise IT and sourcing leaders rationalize and capitalize on emerging technology opportunities in the context of the global sourcing industry. He brings extensive knowledge of today’s cloud and automation ecosystems, as well as other disruptive trends that are helping to shape and disrupt the business computing landscape. Stanton has been with ISG for more over a decade. During his tenure he has helped clients develop, negotiate and implement cloud infrastructure sourcing strategies, evaluate and select software-as-a-service platforms, identify and implement best-in-class service brokerage models, and assess how the emerging cloud master architecture can be leveraged for competitive advantage. Stanton has also guided a number of leading service providers in the development of next-generation cloud strategies. Stanton is a recognized industry expert, and has been quoted in CIOForbes and The Times of London. You can follow Stanton on Twitter: @stantonmjones.