HR Tech as a niche actually started out as an additional function for ERP systems and developed into a multibillion-dollar market over the past 15 years. The friction between market leaders and their challengers led to a dynamic wave of innovation once the development of software "in the cloud" became mainstream back in 2010. Today, 10 years later, the Benelux market is flooded with digital solutions that help organizations to focus on their people. Investor confidence is growing, which only confirms the innovative trends and opportunities for growth. Market leaders and larger HR Tech companies also respond by purchasing smaller companies and their innovation, customers, or opportunities.
Historic Talent Management Billions
The first spark to unchain an entire HR Tech Market took place in December 2004, when ERP system ORACLE finally took over cloud-based Talent platform Peoplesoft for $10.3 billion, after years of trying. When competitor SAP acquired HCM System SuccessFactors for $3.4 billion in March 2011, Oracle strengthened its offering with the acquisition of Talent Management Software Taleo for $1.9 billion in February 2012. To complete the list of top competitors, IBM also entered the HR Tech Market in December 2012 by taking over cloud-based talent management system Kenexa for $1.3 billion.
The challenger at the time, which launched an IPO in October 2012, valued the company at $9.5 billion, was Workday. Workday was founded in March 2005 by the former founder and CEO of PeopleSoft, along with his chief strategist, following Oracle's hostile takeover of Peoplesoft in 2005. As if that detail was not spicy enough, the duo attracted Jeff Bezos (Amazon) as one of the first investors.
Also, after an initial strengthening in 2014 (Expense Management System Concur Technologies - $8.3 billion), SAP surprised the world by taking over survey platform Qualtrics in 2018 at a cost of $8 billion. The goal was clear: faster measuring, managing, and acting on the experience of employees. However, in 2020, SAP has decided to re-market Qualtrics as a separate company or solution "because the potential goes beyond SAP".
Talent Acquisition Software Milestones
In the early 2000’s there already were many classic job boards and besides the local newspaper some of them turned out to be pretty successful. In 2012, Recruit Holdings bought job platform Indeed for $1 billion, shaking up the Talent Acquisition Market.
When recruitment software Bullhorn launched with the acquisition of MaxHire Solutions & SendOut, TheCodeWorks & Easy Software Solutions in 2012, it was clear that digital solutions for the recruitment process were a stayer. Bullhorn even added Connexys & PeopleNet in 2017 and took over Jobscience & TalentRover in 2018. No amount was ever disclosed.
Job boards proved to be a popular investment. HR Service Company Randstad also acquired job board Monster in 2016 for $469 million. In that same year, Microsoft made a remarkable acquisition by buying recruitment platform LinkedIn for $26.2 billion.
Also, in 2018, Recruit Holdings acquired the disruptive Employer Review Site Glassdoor for $1.2 billion and once again surprised the world with the prospect of creating a transparent workplace.
As mentioned, Amazon is already involved in the HR Tech Market through Jeff Bezos' personal investment in Workday and Microsoft with the LinkedIn acquisition in 2016, followed by the launch of LinkedIn Recruiter in 2018 (in a partnership with Cornerstone on Demand). However, Microsoft has been active in HR Tech for some time since the acquisition of Enterprise Social Network Yammer in 2013. When Microsoft Dynamics 365 was launched in 2017, Yammer was immediately included in the package.
Facebook could not stay behind either. Facebook Workplace launched at the end of 2016 with the ambition to become the better version of Microsoft's Yammer in the niche of Internal Communication, Social Networking, and digital collaboration within the company.
Today, Microsoft's journey is proving to be the most successful with applications like Microsoft Teams, among others. The latter has not made it easy for competitor and outsider Slack - which may well have been a factor in SalesForce's recent acquisition of Slack (for a sloppy $27.7 billion). There is even more, with Talent365 - an AI driven Talent Marketplace solution - Microsoft shows that it takes HR Tech seriously.
What about Google? Well, Google was always around but never directly involved in HR Tech. Gsuite and the marketplace with a few digital HR solutions had potential but so far had little success in HR circles. Until recruitment marketing became a hype and Google for Jobs was launched. Also, the new solutions that Google is working on will have to be monitored, the step towards matching profiles is not far away (Google Cloud already offers this if you search for it). Together with the rebranding of Gsuite to Google Workspace and the associated marketplace – on which HR Tech can also be found– this may increase the popularity of Google at the expense of some other (larger) competitors.
Apple, on the other hand, seems to have little ambition to make a move on the HR Tech market on the short term – but it should not be surprising if they decided to do so in the future.
A lot is about to happen in the coming years. Now that Big Tech has been taught that HR Tech is big business, they all want a piece of the proverbial pie. The battle between Microsoft and Google in terms of Business and Recruitment Solutions could erupt in 2021. Also, the development and acquisitions on the HR Tech market - with some very strong challengers who made their entry (or are planning on making one) - are already things to look forward to.
Evolution Benelux HR Tech
Driven by SaaS development and the need to approach HR more from a Marketing perspective, the HR Tech Market grew exponentially since 2015. More and more applications that improve the efficiency and/or (digital) experience of the employee have entered the market. In 2017, HR Tech Guru Josh Bersin (Bersin Academy) estimated the total value of the global HR Tech Marketplace at over $400 billion. That has certainly not diminished over the years, quite the contrary.
For the Benelux alone, HR Tech Valley has registered no less than 555 different HR Tech suppliers in 2020. From recruitment platforms to predictive HR analytics software and artificial intelligence for HR purposes. The Netherlands is the leader with more than 315 digital solutions for companies and staff who have their headquarters there. In Belgium there are 235 at the end of 2020, where just 220 were counted at the end of 2019. Not bad, knowing that a dozen companies have ceased to exist in the meantime that means there is enough innovation, courage, and funding out there to start a new business in times of uncertainty.
Today, the huge range of HR technology is even in the spotlight. Thanks to - or despite - Covid19, HR Tech often offered a way out and thus became completely "mainstream" in 2020. New digital solutions are needed for both new and old challenges, forcing organizations to evaluate the current situation. Something that will happen more often in the future. Today, for example, it is no longer just about "Total Talent Management", but also about "designing" and managing the employee experience and workflow, analyzing data, and automating underlying processes.
However, too often compatibility issues must be resolved by the organizations themselves to achieve the desired result. This will influence the evolution of the HR Tech Market towards several “Total Talent Marketplaces”. Larger HR Technology companies will increase partnerships with new "feature technologies” – or purchase them – to differentiate themselves in the market.
Benelux 2020 recap
Looking back on the most important investments this year in Benelux HR Tech, covid19 may have played a role in accelerating certain financing and or acquisitions.
The capital round of 90 million euros by ERP provider Odoo (BE) in December 2019, seemed to be the starting point for a dynamic 2020 in terms of investments and acquisitions in the HR Tech Market.
With over 10 known financing rounds totaling 52.2 million euros, spread across Belgium and the Netherlands, investors have shown their interest and are confident investing in Benelux HR Technology. There also were 13 known acquisitions, of which the amount was almost never disclosed, but what with the information that is known about the acquisition of Luxembourg-based SkillSoft by Churchill Capital Corp II (USA), the total amount exceeds EUR 1 billion.
Involved in acquisitions: SDWorx, Pointlogic HR, geneHRations, Progreso, Adessa, Visma, NMBRS, Stepstone, Cammio, Globepayroll, Exact, Unit4, Intuo, Officient, MainCapital, Textkernel, Churchill Capital II, Skillsoft, Mysolution, Otys, Vonq, IGB, 8Vance, GiniRecruit, PIXID, Connexting-Expertise.
Covid19 has delayed many deals, yet it did not stop HR Technology investors from investing, and it did not stop major HR Tech suppliers from expanding their functionalities, customer base or both. HR's future strategy will therefore be a data-driven Total Talent Management Strategy, which is flexible in all circumstances and can cope with change processes.
Now, the pieces of the puzzle still seem to be scattered all over the market, often as point solutions or semi-complete systems. Soon, all this will be connected or integrated in one way or another, as more acquisitions and synergies are expected, which in turn will lead to more innovation. Many HR Tech suppliers will therefore become hyper compatible with other systems, innovative startups will find funds to develop into a scalable product and new concepts will receive sufficient attention from investors.
Because large companies are currently solving compatibility problems themselves to achieve the desired result and HRTech is a means that enables organizations to focus more on their people, these organizations also want to retain more and more control and accumulated knowledge through, among other things, the control and accumulated knowledge. to re-fill existing roles. HR Business Partners will also have to reinvent themselves for the future, especially now that this evolution has been strengthened by Covid19.
"We should always remember 2020 as the year in which the status quo ended."
Written by Hans Mangelschots - Business Manager and HR Tech Market Analyst at HR Tech Valley