Human resources software is shaping up as the next big CRM battleground now that both Salesforce.com and SAP have recently made plays for it.
On Thursday, Salesforce.com said it plans to acquire Rypple, which makes performance management software. The company said it would rename the software Successforce and create a business unit around human capital management. John Wookey, who was hired by Salesforce.com last month and is a veteran of both SAP and Oracle, will head this operation.
Earlier this month, SAP announced a $3.4 billion purchase of SuccessFactors, a cloud-based maker of human resources software.
By tossing its hat into the HR ring, Salesforce.com is gunning for not just for SAP, but rival Oracle, which has long been in the human resources segment and recently made some of its human resources modules for Fusion Applications available.
“As we’ve seen them evolve and we look at whom it deems as its competitor, clearly for the past 12 months, it's had Oracle in its sights,” said Rebecca Wettemann, a vice president and analyst at Nucleus Research in Boston.
The Rypple acquisition is a logical extension of Salesforce.com’s CRM software applications and shows the company’s intent to position itself as an enterprise software company, Wettemann said.
Overall, software companies are zeroing in on the human resources segment because customers are hungry for tools to better manage human capital expenses, the Nucleus Research analyst added.
“It’s the recognition that with all the uncertainty in economy, being able to manage and maximize returns from labor is very important,” Wettemann said. “Companies are recognizing labor is a big cost and they need to maximize white-collar labor investments.”
The Rypple software, which is cloud-based, uses more of a social human resources model, according to Salesforce.com’s announcement, and incorporates functions for goal-setting, feedback and dialogue between employees and managers.
This squares with Salesforce.com’s big push this year for social-enterprise computing and its determination to position Chatter, its Facebook-like collaboration software, as a core piece to the Salesforce.com platform.
Denis Pombriant, president of Beagle Research Group LLC in Stoughton, Mass., said he thinks the acquisition is a good first step into the human resources software market.
“Rypple is to human capital management as a general ledger package is to ERP -- not the whole enchilada by a long shot,” Pombriant added. “It will be very interesting to watch this initiative roll out.”