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HRlab HR Blog Salesforce.com Acquires Rypple

Micah Fairchild Cloud HCM Vendor Consolidation Accelerates

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Salesforce.com's Rypple Acquisition: More Questions Than Answers

As the dust continues to settle on Salesforce.com's (SFDC) latest acquisition of the Social Performance Platform Rypple, opinions abound as to just what exactly this means for the HCM software space. While trying to wrestle that answer out of vendors, analysts, and customers alike; in the meantime I have my own set of burning questions for this latest M&A activity that I intend to get to the bottom of. Namely, is this a move by SFDC to set the stage for more related acquisitions in 2012? Will Rypple actually work for a broader audience? And finally, is SuccessForce really the best name they could come up with?

Does the Rypple purchase signal 2012 Salesforce.com aspirations?
Up until now Salesforce.com has focused on Customer Relationship Management (CRM) and the development of Force.com, the company's Platform-as-a-Service (PaaS) offering. With Mark Benioff at the helm, the trifecta strategy of CRM + Cloud + Social has clearly worked, as has the development of the Force.com ecosystem for the company's Sales and Service Clouds. This latest acquisition though has undertones that we haven't seen from SFDC as of yet—the development of non-CRM applications outside of Force.com. A fact highlighted by a recent Gartner report that cites, "Salesforce.com does not plan to redevelop Rypple on Force.com".

In some ways, this new Rypple-Salesforce.com relationship is a given considering Rypple's plugs for the often-cited holes with Salesforce.com Chatter, but it has also left many wondering if this latest move is a "build disguised as a buy". Indeed, the Rypple acquisition seems to be a signal that SFDC is attempting the short-term fix of beefing up Chatter for gamification and employee engagement—thereby extending the use and market for the Chatter application. While further Rypple integrations aren't yet known, as strong man John Wookey himself has attested, the future directions SFDC is interested in are Recruiting, Onboarding, and Learning, with possible Compensation Management aspirations down the line. Given these facts, and though I hate to side with a particular vendor on this, Taleo's response (albeit self-serving) to this latest news seems to hit the nail on the head. Specifically, as that company's David Wilkins puts it, "Rypple is really just another piece of [SFDC's] social analytics strategy". Indeed, on its own, the Rypple acquisition doesn't mean all that much for the HCM software space, but if partnered with a comprehensive talent management strategy (that it appears that company is pursuing) SFDC could wind up with a solution that appeals to a large population of HR software buyers. It's a big bet (and a big "if"), but if SFDC follow-through can match up with the market's current momentum towards "social", it could pay off.

Will Rypple work for a broader audience?
Perhaps the biggest point I would make (from someone who has seen their fair share of implementation issues from a performance management software solution) is that for many large companies—especially those that fall into the verticals of government, hospitality, manufacturing, healthcare, and retail—performance management is not an oft-visited process. More likely in fact is that managers and employees will gather up some documents and meet once (or twice) a year, pin down an arbitrary rating, and then assign a standard cost-of-living increase that fails to make any sort of impact on motivation or retention. I'm not trying to be overly negative here, but the fact is that this culture is so entrenched that the likelihood of drastically altering it has precious little chance of working with simply the implementation of a new software offering. Aside from Rypple's offering up of a snazzy User Interface (UI), software also needs to actually be used on a regular basis in order for the learning curve to even out (and adoption to fully take hold)—a truth that Rypple and now SFDC must admit is not entirely likely just yet.

Unfortunately, the bulk of comments that you come across in blogs and analyst reports revolve around the idea that Rypple's approach is going to up-end the performance management establishment and finally bring about the utopian system that employees and executives have been clamoring for (okay, maybe not—but close). The fundamental flaw in this evaluation however is that Rypple has been primarily leveraged for salespeople (hence the great partnership with SFDC)—a group that is unique in almost every substantive aspect of their employment relationship. For example, compensation for countless salespeople is driven off a base+ model, a clear sign that in order to make a decent wage, a salesperson has to perform. Likewise, working hours for many salespeople can go well past 60+ per week, an indication that salespeople are paid for results and not hours worked. It might be nice to imagine a world where all employees are handled this way, but try handling your administrative assistants or IT staff this way and chances are that an "Occupy Workplace" movement is about to start in your office lobby.

The point I'm trying to make here is that Rypple works for salespeople because of who they are and the nature of their work. The metrics for performance are right out in front of them every day and as such, a social performance tool complements that work style. The tool's wider application beyond sales (and customer service truthfully) requires a different culture—a culture that is not easy to build and even harder to convert to. That's not to say it can't be done (or shouldn't be done for that matter), but a healthy dose of reality is still needed to see the uphill battle that this type of application faces.

Concluding Thoughts
While I'm sure that many more questions will surface over the coming months in regard to this acquisition, I can say one thing for sure—this is not a tide-turning move by SFDC to enter into the HCM software space. Rypple may well work for specific sub-sets of an organization's employee population, but a great deal of effort will be needed to translate that over to company-wide success. That being said, SFDC is one of the great unknown commodities in regards to how much of a market impact the company could make in the coming year. With another round of strategically-positioned activity, the company could well create a one-stop shop for those small to mid-market organizations seeking customized HCM functionality in the same way that SFDC served the CRM market. It's too soon to know exactly how all that will pan out, but needless to say we'll be keeping our eye out.

Oh, and to the last question on my list from above…SuccessForce is the name they've gone with; a name that even though I might consider a bit cringe-worthy, at least it's not Abracadabra (SageAbra's prior moniker). End

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"The Rypple acquisition seems to be a signal that Salesforce.com is attempting the short-term fix of beefing up Chatter for gamification and employee engagement —thereby extending the use and market for the Chatter application.

 

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