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HR Software Feels a Shift Following SuccessFactors, Lawson Deals

April 27, 2011
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Related Topics: Human Resources Management Systems (HRMS/HRIS), Mergers and Acquisitions, Latest News
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A pair of pending acquisitions are reshaping the HR software landscape and rekindling debate regarding the future of applications for managing people.

On April 26, SuccessFactors Inc. said it would acquire Plateau Systems for $290 million in cash and stock, while in a separate deal Lawson Software Inc. announced it had agreed to be bought for $2 billion. Lawson will be combined with business software provider Infor.

The moves signal the rise of publicly traded SuccessFactors as a comprehensive talent management technology provider while also ending Lawson’s run as an independent vendor of human resources and other business software.

Jason Averbook, CEO of consulting firm Knowledge Infusion, sees the developments as a watershed moment for human resources software.

On the one hand, he says, the news indicates the decline of enterprise resource management software, which refers to business management applications that typically include a core HR system for tracking employee data and often are installed on customer computers. On the other, he says, the acquisitions highlight the emergence of a new era in human capital management software in which core HR systems are tied to talent management tools and delivered via the Internet.

“Generations have changed in front of our eyes,” Averbook says. “Customers need to rethink and replan where they are going.”

The pending acquisitions are the latest in a flurry of merger activity in HR software. The field also has been wrestling with the best approach for delivering people management software tools. SuccessFactors is a vocal advocate of software as a service, or SaaS, over the Internet while Lawson has provided its applications as a service and on customer computers.

Plateau Systems is one of the leading vendors of learning management systems, which track employee training. Learning is considered one of the pillars of talent management along with employee performance management, compensation management and recruiting. SuccessFactors has lagged in the learning arena, though it recently bought Jambok Inc., which makes software for creating learning content.

With the Plateau deal, which according to a company statement should be final this summer, SuccessFactors will strengthen its hand against remaining talent management rivals including SilkRoad Technology Inc., SumTotal Systems Inc., Taleo Corp., and. SuccessFactors is among the talent management firms pitching an alternative core HR system.

Lawson is being acquired by GGC Software Holdings Inc., which is an affiliate of Golden Gate Capital and Infor. Golden Gate Capital is a private equity firm, and Infor is one of its portfolio companies. The deal is expected to close in the third quarter, according to a company statement.

Lawson has long been a major player in the HR software arena. In the past few years, it has pushed to increase its visibility and competitiveness against the biggest players in the field, Oracle and SAP, in part through a new set of HR applications.

Infor, which has acquired a number of companies in recent years, has had a reputation for not investing in products. Averbook predicts the Lawson products are headed toward a decline.

“Any time an organization like Lawson gets merged into a conglomerate such as Infor, innovation and focus gets spread too thin,” he says.

Infor, though has fought its caretaker reputation. Earlier this year, the 8,000-employee company said it would hire roughly 400 additional software developers.

“Infor and Lawson will create a rich, integrated enterprise application suite,” Charles Phillips, CEO of Infor, said in an April 26 written statement. “We have a long list of ideas to improve the customer experience and deliver value through a singular focus on enterprise applications, accelerated investment and a strong incentive to challenge convention.”

—Ed Frauenheim

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