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Kronos Expands Offerings Following Unicru Acquisition

August 8, 2006
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Now that HR technology firm Kronos has signaled it will enter the recruiting arena by buying software firm Unicru, how far will it go in talent management?

That’s a key question for the company, argues Jason Averbook, chief executive of HR technology consulting firm Knowledge Infusion. Apart from the recruiting and candidate-assessment capabilities of Unicru, organizations are keen for applications that help them measure and manage employee performance, develop workers and plan succession strategies, Averbook says.

"Is Kronos ready to step up to the plate?" he asks. "In the past, people have seen them as a company that makes time clocks and the software that goes with them."

Stuart Itkin, chief marketing officer for Kronos, which is based in Chelmsford, Massachusetts, says the company has already moved well beyond its roots as a maker of time-and-attendance technology systems and is determined to go further. "The acquisition of Unicru is one step in a journey to broaden our offerings in the domain of talent management and human capital management," he says.

This month, Kronos announced plans to buy Beaverton, Oregon-based Unicru for $150 million in cash. Unicru specializes in software used to assess and hire hourly workers. Its customers tend to be large employers, such as Best Buy, Toys "R" Us and Marriott.

Kronos sells a variety of workforce management applications including scheduling, payroll and human resources management system software. It said the combination of companies will let customers integrate employee selection strategy with actual labor performance and connect labor planning to hiring.

Jim Holincheck, research vice president at market analysis firm Gartner, said the deal should allow Kronos to pitch additional services to its many customers with significant hourly workforces. Unicru, he says, is known for sophisticated analysis of candidate and worker data.

"The scientists that Unicru has on board are very smart," he says. "That’s part of the value for Kronos."

Unicru is slated to operate as Kronos’ talent management division, headquartered in Beaverton. Unicru chief executive Chris Marsh will join Kronos as president of the division. The acquisition is expected to close this year.

"Kronos views this strategic acquisition as fundamentally changing the landscape of workforce management," Kronos CEO Aron Ain said in a statement. "Importantly, this acquisition moves us significantly closer to our goal of becoming the first $1 billion software company focused exclusively on meeting the human capital management needs of both large enterprises and small- and medium-size organizations on a worldwide basis."

Founded in 1977, Kronos posted revenue of $519 million in its last fiscal year. Unicru, which was founded in 1987, is on pace to report revenue of $46 million for 2006, says Brad McMahon, Unicru vice president of corporate development. Unicru’s revenue has been growing at a rate of 25 percent to 35 percent annually in the past several years, McMahon says.

The move is part of a broader consolidation trend in the area of recruiting technology. Holincheck says that given Unicru’s focus on hourly hiring, particularly in industries such as retail, the company was a more desirable acquisition target for Kronos than were other recruiting software firms such as Vurv Technology.

He also says Unicru customers should have little fear that their products will be neglected once the company is gobbled up, which is a common concern when tech firms merge. Holincheck says Kronos is "not going to abandon the retail sector."

Ed Frauenheim

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