Knowledge Infusion has served as a guide to many mergers and acquisitions throughout 2007. We have also been involved, of course, with many clients that are feeling the impact of M&A activity within the HR technology space. Here is a top 10 list of things to think about as this space continues to consolidate and demands for innovation are higher than ever.
Market consolidation is not a bad thing and when your vendor gets acquired, DO NOT PANIC. One of the biggest mistakes that organizations make is thinking they have to switch vendors.
Understand markets and consolidation is natural. All that this means is that it is important to have open/honest relationships with your vendors and great communication with them so that when market consolidation does occur, you have a pipeline to real-time information.
There is a TON of money coming into this space currently. Some in the form of private equity and this is not necessarily a bad thing. Innovation requires money, but you do want to pay CLOSE attention to the leaders of the private equity organization and the leaders of the specific vendor to learn their roadmap and plans for their organization.
In the world of Software as a Service (SaaS), you are signing contracts with vendors for multiple year contracts. If you have concerns about that vendor and vendor viability, insure you are thinking about that during contract time. Many organizations will look to gobble up vendors with many long-term contracts and then let the product die. Protect yourself against this.
Remember, people read the internet and see vendor activity and PANIC. Have communication plans in place to promise customers (HR groups and the workforce) that you are on top of this situation and will continue to communicate going forward. Many people think that when a vendor gets acquired, they immediately have to take action.
Vendor viability is an area that you must think of today. This includes management team, funding, industry analyst chatter, etc. This is a very important part of your vendor landscape and evaluation today.
Attend conferences - HR Technology Conference and IHRIM to see how vendors are doing. You can look at their client lists, press releases and product roadmaps. These are all good signs of long term viability and health.
Have a plan if a vendor does discontinue innovation. This DOES NOT mean just replace that one vendor with another, but think about if you can continue to optimize your HR technology platform based on current vendor landscape.
Once a year, you should do a vendor landscape healthcheck for each of your vendors. Knowledge Infusion does this for many of our clients to let them know the strength and health of their vendors.
Finally, emerge yourself in vendor user groups, vendor product councils, etc. Don't be an absentee landlord who just uses the application; embrace it. The closer you are to individuals within a vendor, the better you will fare during and M&A activity and you will continue to get the attention you deserve as a client.
Market consolidation has been amazing in the workforce management and business intelligence space in the last 6 months. Look for this to continue into the talent management space into 2008. Stay close to your vendors and be prepared to communicate quickly to your customers (HR) and the workforce when activity occurs in the market.
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