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Oracle buying Taleo for US$1.9 billion in direct hit at SAP

The move follows SAP's recent move to purchase cloud HCM (human capital management) vendor SuccessFactors

By Chris Kanaracus
February 9, 2012 10:33 AM ET

IDG News Service - Oracle is buying cloud-based talent management and employee recruitment software vendor Taleo for roughly US$1.9 billion, the company announced Thursday. The move comes shortly after SAP's move to acquire SuccessFactors, a close competitor of Taleo, for US$3.4 billion in a deal that has yet to close.

"Human capital management has become a strategic initiative for organizations," said Thomas Kurian , executive vice president, Oracle Development, in a statement. "Taleo's industry leading talent management cloud is an important addition to the Oracle Public Cloud."

The Taleo deal is expected to close in the middle of this year and is subject to shareholder approval, Oracle said. Taleo's board has unanimously approved the sale.

Taleo's applications focus on talent management, which includes areas such as recruitment, learning and development, and compensation and succession planning.

It remains to be seen exactly how Taleo's product portfolio will be aligned with Oracle's Fusion HCM (human capital management) software, which is also available as a cloud offering, and has some overlapping functionality.

Together, the companies "expect to create a comprehensive cloud offering for organizations to manage their Human Resource operations and employee careers," Kurian said in a letter to customers. The resulting products will "empower employees and managers to effectively manage careers throughout their entire employment, enable organizations to retain talent and optimize costs, and improve the employee experience through faster on boarding and better collaboration with team members via social media," he added.

Some 5,000 enterprises use Taleo's software, which also handles 15 percent of employee hires in the U.S., according to an Oracle document. About half of the world's top career websites run Taleo as well, Oracle said.

SAP has characterized the pending SuccessFactors purchase as something that will give the company needed "cloud DNA" and expertise in that market.

Oracle's announcement of the Taleo deal included no similar sentiments, but Taleo is its second major acquisition, along with customer-service vendor RightNow, of a cloud application vendor in the past six months.

Since SAP announced the SuccessFactors deal, speculation had run rampant that Oracle would make a move in response, with Taleo bandied about as a possible acquisition target.

Salesforce.com has also begun a push into human-resources software with its recent acquisition of Rypple, which focuses on employee performance management.

Unlike other software categories, the types of products sold by SuccessFactors, Taleo and Rypple have relevance to every employee in a company, allowing for more profitable large-scale SaaS (software as a service) deals.

There will likely be additional acquisitions in the HCM arena soon, said HR software analyst Naomi Bloom, managing partner of the consulting firm Bloom & Wallace. "I think we can expect that the boards of Cornerstone, of Ultimate Software, they are undoubtedly having conversations at least among themselves if not potential acquirers."

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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