Sunday, August 08, 2010
Every talent management solution provider today is striving toward one goal…expanding their global footprint. They are opening offices overseas, enhancing multilingual capabilities establishing critical partnerships, and trying to localize their sales and support. Yet despite these efforts, few US-based providers really succeed. What are the secrets to success? Just ask Stepstone Solutions.
This week, Stepstone Solutions announced the acquisition of MrTed, a leading talent acquisition system provider. Stepstone now has the largest market share of European customers in both the mid-market and enterprise market segments. We estimate the company now has greater than 55% market share based on our upcoming talent acquisition systems research. Talk about differentiation. As talent management leaders Taleo and SuccessFactors continue to make headway in the global market, Stepstone Solutions’ acquisition of MrTed reconfirms its position as the leading European provider.
What does this acquisition mean for the future of Stepstone?
• Brand and Market Awareness: The Stepstone Solutions name is becoming known as a leading talent management provider in the North American market yet is very well known as a leading talent acquisition provider in Europe. But despite the company’s very successful talent management software, the StepStone name has historically been far better known for its legacy job board business. As a result, Stepstone is often left off of many major RFP’s for talent acquisition software in North America. The management buy out led by Matthew Parker of StepStone Solutions from it’s parents StepStone ASA and Axel Springer combined with the acquisition of Mr Ted has now changed the game. With StepStone Solutions being the dominant StepStone brand. MrTed, on the other hand, has become a well-known talent acquisition software player in the Central European and North American markets with its Enterprise solution TalentLink as well as the launch of SmartRecruiters (a free talent acquisition system for the SMB market). In fact, the company grew at over 20% even during last year’s recession. So together, Stepstone Solutions is now a well known player in the talent management software space. Stepstone will not be moving any of MrTed’s TalentLink customers over to their own products. The strengthened branding will help position Stepstone as a leading talent acquisition provider around the globe.
• Global Customer Base and Market Share Leadership: After this acquisition, Stepstone has more than 1700 customers located in over 20 countries around the world (including Poland). With nearly $100M in revenues, the company is now among the top 10 providers in the market.
• A Growth Platform for Future Acquisitions: In May of 2010, Stepstone Solutions was acquired by the management with support from one of Europe’s leading private equity firms HG Capital for EUR110 million. With HG Capital’s support, Stepstone can now increase its spend. We can expect increased marketing, PR, and possible acquisitions in all areas of talent management.
• A True SaaS Product Architecture: MrTed is a true SaaS provider with a single code base, no customizations, and a multi-tenant architecture. MrTed’s latest release fully embraces cloud computing technology and will enable the company to rapidly enhance its partnerships via its open integration capabilities. HG Capital has made it very clear that they are 100% committed to investments in SaaS providers and MrTed fits this requirement.
• Strong Customer Partnerships: Today, more than ever, it is important for customers to establish a true partnership with their software providers (“business partnership” is one of the lowest rated satisfaction areas in our talent management customer satisfaction research. MrTed brings Stepstone a strong commitment to customer relationships and a deep understanding of their customers business needs. Jerome Ternynck, MrTed’s CEO, one of the most visible and engaging figures in the talent acquisition space, is being retained as an advisor by StepStone Solutions.
What does this acquisition mean for the rest of the market?
• First and foremost, talent acquisition matters. The new breed of sourcing and assessment solutions make it absolutely necessary for large organizations to have a scalable talent acquisition platform. We estimate that this market will continue to grow at a rate of 10% and the acquisition of two major players (Peopleclick and MrTed) in this space is a testament to the value of talent acquisition.
• The talent management market continues to consolidate and will continue to consolidate, and this acquisition accelerates the pace. Fewer and fewer solution providers with a heritage in talent acquisition focus solely on this area. These providers are becoming part of the broader picture of talent management- Peopleclick with Authoria and MrTed with Stepstone. Talent management providers without talent acquisition systems (Saba, Cornerstone, SumTotal, Halogen) are quickly running out of options.
• Taleo and SuccessFactors have been actively expanding globally and will now face stronger competition from Stepstone in Europe. The European marketplace as a whole will eventually be as big or bigger than the US, but is 2-3 years behind in penetration. Taleo now has dozens of full-time staff in Europe and SuccessFactors has offices in five major European cities. There are other acquisition candidates in Europe (e.g. Cezanne) and this move will heat up the drive to grow in Europe.
• One thing to consider for any organization looking at this market is the amount a provider invests in research and product development. When a company that invests heavily in their product and pushes innovation at a rapid pace, it might be a sign that they are ripe for acquisition. Nearly 50% of MrTed’s employees are focused on R&D.
One question that organizations ask during consolidation is…does this acquisition make sense? In the case of Stepstone and MrTed – the answer is yes. The three biggest trends in talent management software today are innovation, globalization, and consolidation. This acquisition fits all three: Stepstone expands its European and US footprint; the company has acquired a very innovative player; and they have now reached near the $100M revenue point.
Stay tuned for our upcoming research on talent management systems customer satisfaction – with market share, trends, and our big industry studies coming out this Fall.