IBM's HR Venture Portents Back Office Future | Channelnomics

IBM is now a human resources specialist. Big Blue?s acquisition of HR software leader Kenexa Corp. for $1.3 billion puts it in line for a share of the growing demand for cloud-based back-office applications, and on a collision course with other software vendors including SAP, Oracle Corp., Salesforce.com Inc. and Microsoft Corp.

The bigger story, however, is the significance of this acquisition with regards to how it and other deals like it are reshaping the IT marketplace and the channel. The big software vendors are racing to position themselves for anticipated growth in the next generation of cloud services, namely back-office automation and solutions that drive better business outcomes.

Since December, enterprise software vendors have been snapping up specialty companies to bolster their back-office solutions inventory. In the last year, Oracle bought cloud management software vendor Taleo Corp. for $1.9 billion and infrastructure management provider Right Now Technologies. SAP bought HR specialist SuccessFactors in December 2011 for $3.4 billion. Microsoft is pushing the HR applications of its independent software vendors, which are developing on Dynamics AX. And Salesforce.com is expected this fall to launch Work.com to extend its core cloud-based CRM into HR management.

These acquisitions go well beyond the middleware layer of management and platform development that Oracle (Fusion), IBM (Websphere) and Microsoft (Azure) have engaged in over the last several years. And they?re a layer of abstraction above the cloud management and facilitation applications developed by VMware Inc., CA Technologies, BMC Software Inc, IBM and Hewlett-Packard Co.

The difference: Software, like that developed by Kenexa and SuccessFactors, is about a specific set of workloads rather than the IT fabric itself. It?s about executing on a business process that has a definable outcome with the goal of providing greater business value. They automate processes, take steps out of work flows and expedite outcomes. They are cost-savings and revenue enablers.

IBM, SAP, Oracle and Salesforce.com recognize this, as do other cloud vendors looking to support, integrate or manage back-office applications on behalf of customers. The trend to which all these vendors and providers are reacting is customers? growing appetite for not just IT tools that work, but solutions that do work for them. Just as IT vendors seek more definable return on investments, customers too want more than speeds and feeds from their on-premise and cloud-based tools.

Here?s the challenge for solution providers: keeping up with the complexity of these applications, especially in hosted and cloud-based delivery.

The majority of the channel remains squarely focused on hardware products and cloud-equivalent solutions. If a solution provider isn?t selling an on-premise server, it?s supporting, managing or reselling a cloud-version that it?s hosting or hosted by a third-party. Too many solution providers lack the skills and capacities for advance applications, such as Kenexa. Already solution providers are having a hard time finding talent to fill their current cloud and services-based staffing needs. As the back office trend develops, talent at the solution provider level will become scarce.

Moreover, the delivery of back office applications requires different sales processes, professional services that focus on business structure and operations rather than IT, and technical capacity to integrate and customize implementations. These are difficult qualities for vendors to fulfill, much less the average solution provider. This means more back office deals will go direct, and will drag traditional sales with them and away from the channel.

And this isn?t just about HR applications. Microsoft, Salesforce.com, Oracle and IBM are pushing deeper into what?s being called ?the social enterprise,? which is transforming business communications with the inclusion of social tools. Other vendors are developing automation capabilities for supply chain management, inventory control, capacity planning and facilities management. None of this is to speak of the Big Data trend that?s already unfolding, in which business analytics are integrated into data collection and storage to uncover trends for better planning and strategic decision-making.

IBM is saying the acquisition Kenexa will better position it for growth in the HR software segment and give it an ability to compete with the likes of Oracle and SAP. It and the greater business software acquisition trend is call to arms, as well, for solution providers to start incorporating back office solutions into their future planning. The next generation of channel success may be defined by those who can deliver and support solutions that go well beyond hosted servers and email.

Source: http://channelnomics.com/2012/08/28/ibm-hr-venture-portents-office-future/

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