Another of those big dogs has moved. Yesterday, ADP made its own announcement. The employer services giant intends to acquire Workscape, Inc. Workscape is based in the Boston area and is a global provider of benefit and HR services. Interestingly, they have not only been ADP’s competitor, but also the competitor of Talent Management. Why interesting? Don’t forget in may of 2009, ADP announced a strategic partnership with CornerStone OnDemand so that could round out their product offerings with what was that again? Talent Management.
In its press release, ADP is putting the attention on the Benefits piece saying that the “acquisition will significantly expand ADP’s presence in the benefits marketplace.” Some are already asking if ADP’s acquisition intentions mark the handwriting on the wall for CornerStone already. I don’t think so.
ADP got as big as they are by being smart, being conservative and by buying up the competition. I think this is actually more of a move to solidify themselves on multiple both fronts, Benefit Services, Talent Management and their BPO offering. Back in 2003 when ADP acquired ProBusiness, they did it as they themselves were entering the BPO market.
Pro as you might remember, was one of the first companies to successfully create a BPO offering in the HR/Payroll space. For a number of reasons, Pro made itself a target to be acquired and in late 2001 when their stock price fell through the floor, they started getting ready. 19 months later, it was done and they had been assimilated by ADP. They weren’t after what Pro had done so much as they were interested in the name and their clients.
I worked in the BPO group at Pro before the acquisition and then spent 5 years at ADP in the BPO group after. Most of what we had built at Pro had been thrown out with the exception of the tools used to run the service center (the called it DASH). Acquiring Pro gave ADP a stronger foothold in the marketplace not only because it got the clients and took out one of its key competitors’, but also because of the name and the tenure in the market place that they inherited. Don’t believe me? ADP still has maintained Pro as a separate division and kept the name.
What ADP did do though is to migrate most of the clients off of Pro’s products. GoldenGate is a thing of the past and few remember Whitney as a payroll engine.
I think something similar is going on here. ADP has long been a smart follower and is looking to grow in both the Benefits admin space as well as in the Talent Management space and adding Workscape will help them do that by adding clients, credibility and experience. The fact that Workscape has some nice Self Service tools in the MSS and HR Central products, which I would expect to be integrated as the new front end to Ev6 (yes I said Ev6 and not Ev5) won’t hurt a bit either.
We also have to remember where these products are in the market place. If you look at Gartner’s famous Magic Quadrant report from 2009 for Employee Performance Management systems, you’ll see that CornerStone OnDemand isn’t in the top quadrant, but they are pretty close to the line listed as a visionary, with only 3 others reported as having a more complete vision. They were just south of center on the ‘ability to execute axis’.
Where is Workscape? They are firmly in the lower left corner listed as a niche player. To be fair, the chart for EPM player’s looks like someone’s had a decent grouping in the center during target practice, but Workscape is as further from center than most. Even Taleo isn’t doing a better job of executing, although Gartner does report that they have a more complete vision.
In short, CornerStone OnDemand isn’t going anywhere from the ADP lineup. It will only benefit in the long run from this because potential clients will take ADP all the more seriously in the talent market and they will most likely seek to merge their new clients onto a single platform, which will most likely be CornerStone OnDemand. The merger will add to their vision and certainly their revenue, lack of the latter being the primary impediment to execution.
My prediction, we’ll soon see CornerStone OnDemand as a leader in execution in their space.