Here Connector Expect IBM to Leverage Its Existing Investments and by Entering Into a Partnership with Saba in Analytics, Social Software and Services, As Software

Workplace Service First Cut Number: 2012- FC15 Aragon August 27, 2012 Topics: Knowledge, Social Software Research Issues: How will enterprises take advantage of new ways to share knowledge and expertise? What are the best practices for leveraging social software to gain a ______Author: Jim Lundy competitive advantage?

IBM Shifts into HCM Software and Buys Kenexa for $1.26 Billion The main application assets of Kenexa that we Summary: On August 27th, IBM announced see are its Recruiting (BrassRing) and its that it was buying HCM provider Kenexa for Learning Suite, which Kenexa recently $1.26 Billion. IBM’s entry into HCM will acquired by buying Outstart (see First Cut). accelerate another round of enterprise We expect IBM to move quickly in both the software consolidation. product enhancement and Services to Socialize HCM by leveraging IBM Connections Event: IBM entered the HCM market with its and its Analytics family, along with its growing announcement of its intent to purchase HCM strength in HCM Outsourcing from IBM Global solutions and services provider Kenexa. Services, which will be enhanced by Kenexa’s RPO service. Analysis: By buying Kenexa, IBM Software Group is shifting into the Human Capital IBM used to compete in Corporate Learning, Management application software market and but it exited that space a few years ago when it is looking to Socialize it and to create a new quietly stopped offering its Lotus Learning category it is calling Smarter Workforce. We product by making it a WebSphere connector expect IBM to leverage its existing investments and by entering into a partnership with Saba in Analytics, Social Software and Services, as Software. Saba migrated a number of Lotus well as the Kenexa portfolio. With this move, Learning customers to its LMS via a special IBM will compete against vendors that offer one-year promotion. Social HCM functionality such as Oracle, Peoplefluent, SAP/ SuccessFactors and Saba. HCM Services IBM Global Services has always partnered to Expertise Location, which leverages social, offer Learning services (mainly via Saba), and search and analytics capabilities, appears to now it has an in-house app that it can leverage be one of the key tenants of IBM's Smarter in its Services led deals. Note that IGS has Workforce initiative, which when fully always been able to act independently of the instantiated, would be attractive to all lines of IBM Software Group. Kenexa Learning business, not just the HR department. If IBM (formerly Outstart) has always been stronger in can deliver on its Smarter Workforce promise, LCMS than they were in LMS; but that is it has the potential to disrupt the HCM Market changing with their soon to be announced and change the way people are utilized in an Social LMS. enterprise.

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Workplace Service First Cut Number: 2012-FC15 August 27, 2012 ______Learning and Learning Services Aragon Advisory IBM can further enhance the Kenexa Learning Enterprises evaluating HCM and Talent Suite’s Social Learning capabilities, one of the Management Suites should now take a step top use cases for Enterprise Social back to evaluate the combined IBM/Kenexa Networking. Additionally, IBM Global Services and their forward looking product and services will be able to leverage the Outstart LCMS in roadmap. its Learning Content Development and Learning Outsourcing Deals. Enterprises should also look at other vendors that have a Social HCM strategy and be wary First of Several Acquisitions of others that do not. The key areas to evaluate IBM will have some work to do to round out its are: HCM Suite and we expect that the Kenexa 1. Social Learning acquisition is just the beginning of its HCM 2. Social Recruiting portfolio. By mid-year 2013, IBM will acquire 3. Social Onboarding an additional HCM technology provider. We 4. Social Performance would put Saba or Cornerstone OnDemand at the top of the list. Bottom Line; The move by IBM into Human Capital Management will change the dynamics Social HCM Emerges of the HCM market and will trigger a new round HCM is all about people and we see the Social of merger and acquisitions. As HCM becomes HCM platform emerging (see the Five Priorities more social, enterprises will need to evaluate of a Social HCM Strategy). While it is just the product roadmaps from HCM providers announcement of the Kenexa acquisition by carefully. IBM, it is clear that there are synergies with the rest of the IBM Software Group product family. Related Research:

Others see the convergence as well. In the last The Five Priorities of a Social HCM Strategy. twelve months we have seen a number of moves: Shifting from a Social to an Enterprise Profile. • Peoplefluent bought Socialtext, • Salesforce bought Rypple, but The Aragon Research Globe for Enterprise developed Salesforce Chatter Social Software organically • SAP bought SuccessFactors and is in the process of combining its Social offerings • Oracle, Saba and Silkroad have built organic Social capabilities.

This does raise questions about the strategy for other HCM providers that have no apparent Social HCM strategy. Enterprises need to take a step back when evaluating their current and their long term needs.