Yesterday’s announcement that Appirio is partnering with Cornerstone OnDemand as its preferred solution for talent management should not come as a surprise, following Appirio’s recent acquisition of Knowledge Infusion, a specialist HCM consultancy.
On a pre-briefing call, Jason Corsello, VP corporate development and strategy at Cornerstone said: ”In the past, we have done most of the hands on deployments ourselves. We can’t scale at the rate we need to so this partnership comes at the right time. Knowledge Infusion are the biggest and best HR cloud services providers. We have 30 percent of the business in international plus we are expanding into the Asia-Pacific region where Appirio is already strong.”
What may not be well known is that in a past life, Corsello was a senior executive with Knowledge Infusion so it doesn’t take too much imagination to understand how the logic of this deal comes together. How it works out going forward is another matter. My concerns are two fold
First, while there may be a large addressable market for talent management – something around $4-5 billion, it is the kind of application that only gets limited use. Corsello believes that is changing. “Performance reviews are not going away, but we’re seeing social performance and feedback coming along. It is quickly becoming much more relevant to how people work.” To flesh this out, Mike Brennan VP deployment services at Appirio said: “In professional services for instance, the ability for someone coming off a project where they are doing a debrief via a Salesforce form can be leveraged to trigger a 360 that shares what went well and what didn’t, provide new learning opportunities for budgeting, new presentations etc..” From where I am sitting that sounds like the ol’ integration story but with added benefits for customers.
Second, I wonder how this partnership will work out in the long term. If you check out the image above, it is clear that Appirio is aligning itself with partners that share common legacy applications enemies in the shape of SAP and Oracle. However, in the past Cornerstone OnDemand was more likely to be plugging its solution into an incumbent on-premise landscape. That now changes if the Appirio partnership is to bear fruit. However, neither Appirio nor Cornerstone can expect that the enhanced offering will lead to massive displacement given that both SAP and Oracle are leveraging their own customer bases to ensure that their offerings remain preferred. That may change as Workday grows, pushing aside its more expensive rivals.
Recommendation to buyers
- This expanded offering makes a switch to the cloud for core ERP, CRM and talent management a much more viable alternative to mixed or hybrid landscapes. Cost savings in the 30-50 percent range alone will be enough to get attention, even though integration is required.
- Custom development that leverages more than just HR/talent management but includes CRM and finance data becomes tempting. The ability to quickly assemble new user experiences, add to and share the pool of knowledge in service industries will mean that transformative value is now on the table. That should be an instant hit with upside for everyone.
- Pressured CIOs, looking to be a central part of the innovation team should find they have the opportunity to become heroes, provided they are comfortable with public cloud offerings.
- Anyone expecting SAP and Oracle to hang around will be disappointed. At the last SAP earnings call, Lars Dalgaard, CEO SuccessFactors was effusive about the impact access to SAP’s customer base has had on its growth. More quietly, Oracle is enjoying success with its Fusion HR offerings, benefitting from a well defined hybrid deployment ‘choice’ play. Expect SAP and Oracle sales people to come knocking – if it hasn’t already happened – but be prepared to think whether alternatives provide a bigger bang for the buck.
One more thing
Now for some speculation. Cornerstone uses NetSuite as its core ERP. How long before Appirio becomes a NetSuite partner? If/when that happens the door opens for a 2-Tier ERP discussion, something that has worked very well for NetSuite the last year or so. In turn, that introduces the possibility for businesses to consider a switch to the cloud with a large enterprise suite of offerings while surrounding that core with a mid-market cloud offering. The potential aggregate cost savings in this scenario plus the possibility of acquiring (relatively) modern technology that delivers a flexible solution set will be attractive. Wild idea? Perhaps but still something that piques my interest
Disclosure: some of the vendors mentioned in this article either have been or are current clients.