DH Kass, Senior Contributing Blogger

August 28, 2012

2 Min Read
IBM Nabs Cloud Recruitment Software Maker Kenexa

Add IBM (NYSE: IBM) to the growing list of major IT players snapping up cloud-based software developers sporting a social media twist. IBM said it will plunk down $1.3 billion, or 46 cents a share, for Kenexa (NYSE: KNXA), a 25-year old, publicly held maker of online recruitment and talent management solutions.

What does IBM want with Kenexa, whose cloud-based technology and consulting services target the recruitment and management of talent using social networking tools, and whose motto is, “To us, business is personal?”

Early reports suggested that IBM’s interest in Kenexa stemmed from its intention to gain a stronger foothold in social business, following a string of similar deals, including Microsoft’s $1.2 billion purchase of Yammer, SAP’s $3.4 billion buyout of SuccessFactors and Salesforce.com’s $698 million nabbing of Buddy Media.

While there’s truth to that observation, the Kenexa purchase likely is more tightly tied to IBM’s overriding investments in analytics, with this move extending Big Data analysis and social business into the human resources department, and, by association, expanding the vendor’s Smarter Planet initiative, half of which, by the way, includes channel engagements.

“IBM is uniquely positioned to help clients generate real returns from their social business investments, while helping them gain intelligence into the data being generated in these networks to be more competitive in their markets,” said Alistair Rennie, IBM general manager, Social Business.

Is there a play here for channel partners? IBM didn’t say what it plans to do with Kenexa’s network of resellers and distributors that sell the vendor’s shrink-wrapped, low-touch products (assessments, survey, compensation and leadership solutions) or its roster of application and software partners. One safe bet, though, is that Kenexa’s channel partners will be briefed on, and integrated into, the Smarter Planet blueprint. As for IBM’s social business channel partners, the Kenexa move is certain to gain them access to the same products the recruitment solutions vendor offers its own channel.

IBM of late has taken to pointing to its internal market research to explain some of its motivation for acquisitions, strategic moves and the like. For example, with Kenexa, IBM referenced its recent CEO study in which more than half of the participants identified social business as a top priority, about three-fourths are investing in analytics, and 70 percent cite talented employees as the single most important factor in sustaining economic value. Put that all together and you have IBM’s reasoning for buying Kenexa neatly explained.

IBM said that after the acquisition closes (sometime next quarter) it will support Kenexa’s customers and invest in the company’s technology. Kenexa has about 2,800 employees and services some 8,900 clients in financial services, pharmaceuticals, retail and consumer, including more than half of the Fortune 500.

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About the Author(s)

DH Kass

Senior Contributing Blogger, The VAR Guy

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