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IBM Buys Social HCM Specialist Kenexa for $1.3B

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Posted August 27, 2012 By Pedro Hernandez     Feedback

IBM bolsters its social enterprise services slate by acquiring human capital management (HCM) software maker Kenexa.

Big Blue today announced it is acquiring Kenexa, a social-enabled, cloud-based human capital management (HCM) specialist, for approximately $1.3 billion or $46 per share. The deal is expected to close in the fourth quarter, pending regulatory and shareholder approvals.

The goal, according to IBM, is to help businesses derive value from the social interactions of their workforces.

"Every company, across every business operation, is looking to tap into the power of social networking to transform the way they work, collaborate and out-innovate their competitors," said Alistair Rennie, general manager of IBM's social business division, in a company statement. ""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."

Social Enterprise Meets HR

Kenexa is a provider of recruitment and talent management services, including career sites, compensation software and social recruiting tools. It operates in 21 countries and has 2,800 employees. The company has 8,900 customers, a client base that includes more than half of the Fortune 500.

The deal strengthens IBM's position in the booming social enterprise and human capital management (HCM) markets.

The company cites a recent Forrester Research forecast that paints a rosy picture for social enterprise apps in the coming years. The research firm expects the social enterprise apps market to experience a growth rate of 61 percent through 2016.

According to IBM's own data, social business solutions emerged as a top priority for 57 percent of CEOs polled for the company's survey. Seventy percent singled out human capital as "the single biggest contributor to sustained economic value," says IBM.

When it comes to the social enterprise, IBM already has a head start. Over 60 percent of Fortune 100 companies are IBM social business licensees, according to the enterprise computing giant.

But IBM isn't the only game in town, nor is it the only IT giant willing to spend big on HCM.

Big Deals Rock HCM Market

Late last year, SAP snapped up SuccessFactors for $3.4 billion. At the time, the cloud-based HCM firm had 15 million subscription seats and 3,500 customers in 168 countries.

With today's deal, IBM echoes SAP co-CEO Bill McDermott. In explaining his company's motivation behind the blockbuster deal, McDermott said, "The acquisition will help us address the top priority for CEOs globally—managing people and talent."

In February, another big technology company joined the race. Oracle bought HCM cloud services provider Taleo for $1.9 billion. The deal, also valued at $46 a share, gave the Oracle Public Cloud some much-needed ammunition against rival platforms from and SAP.

Pedro Hernandez is a contributing editor at, the news service of the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @ecoINSITE.

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