Oracle Expands In HR Technology Buying Taleo

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By ROBERT SCALLY–

Larry Ellison

Larry Ellison

Computer software giant Oracle is purchasing HR technology firm Taleo Corp., in a deal valued at about $1.9 billion.

Taleo shareholders will receive $46 a share, Redwood City, California-based Oracle, the second-largest software company, announced in a statement on 9 February 2012. The Taleo acquisition is expected to close mid-2012, according to Oracle.

Buying Taleo gives Oracle software tools that help companies manage human resources, recruit employees and determine pay. The acquisition is seen as a response to the planned acquisition of talent management software company SuccessFactors Inc. by privately held software maker SAP’s. That deal is valued at $3.4 billion.

The Taleo deal may also help keep Oracle competitive with the closely held HR software firm Workday Inc., which is planning an initial public offering for later this year.

Job seekers may often encounter Taleo’s software, although they may not realize it. More than 5,000 organizations use Taleo’s workforce management software technology.

This is the second HR technology acquisition announced this week. Ceridian Corp., a major provider of workforce management software, announced 7 February 2012, that will it acquire human capital management software maker Dayforce Corp. of Toronto.

Sanford C. Bernstein & Co. analyst Mark Moerdler, told Bloomberg News that Taleo fits in with Oracle’s aggressive recent moves into the fast-growing cloud-computing market.

In October, Oracle agreed to buy RightNow Technologies Inc. for $1.5 billion, a deal that closed 25 January 2012. Oracle has purchased more than 70 firms during a $40 billion acquisition binge, adding software technologies that help large businesses manage human resources and other related functions, according to Bloomberg.

The is part of an on-going consolidation trend in the human resources management and could computing software markets.

Taleo itself has purchased nine firm since 2003, including two in 2011 and two 2010.

The consolidation is taking place as companies assemble the prices of what will become the future of employee management technology, best expemlified by cloud computing.

Cloud computing is a term for computer software and services that are accessed strictly via Internet rather than through software programs installed on hard drives of individual computers or computer servers.

Moving software services onto the Internet allows the software maker to have greater control over the software and to make continual improvements.

In general, cloud-computing software offers firms more services and more computing power, at prices that can be lower than that of software that is installed on a company’s computer system.

Cloud computing is also transforming the software business from being product-based to service-based. This new approach to software is also is known as software-as-a-service, abbreviated as SAAS.

Among others, Oracle is also competing in the software-as-a-service market with Salesforce.com Inc., Peter Goldmacher, analyst with Cowen & Co, said in a research note published 9 February 2012.

The continued consolidation within the HR technology business has far-reaching implications, both for large and small companies as well as for workers and managers.

Large companies will be faced with few choices from larger vendors for their human resources management software. Job seekers will likely encounter more sophisticated screening software as they look for employment. Managers will likely see familiar HR software systems either radically transformed into a Web-based environment.

One sign of the likely transformation ahead scan be seen in this statement Taleo issued to it customers on it’s website:

“Oracle is currently reviewing the existing Taleo product roadmap and will be providing guidance to customers in accordance with Oracle’s standard product communication policies. Any resulting features and timing of release of such features as determined by Oracle’s review of Taleo’s product roadmap are at the sole discretion of Oracle. All product roadmap information, whether communicated by Taleo or by Oracle, does not represent a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. It is intended for information purposes only, and may not be incorporated into any contract.”

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