Salesforce.com Buys Into HR Software Market

posted on 12/16/2011 12:15:41 PM

With its acquisition of social human resources software provider Rypple, Salesforce.com hopes to gain new ground against rivals SAP and Oracle.

Depending on how you look at it, companies selecting human resources software now have fewer or more options to fulfill their corporate needs.

On Thursday, Salesforce.com, a company known as a pioneer in cloud-based CRM systems, made its first foray into human resources software, announcing its intention to buy Rypple, a cloud-based software company that leverages social techniques to drive employee performance and HR management. Using Rypple’s software, companies can set performance goals, coach employees, and enable real-time feedback and recognition, all while incorporating an employee’s peers into the process.

Salesforce.com said in a statement that it plans to create a new human capital business management division under the purview of John Wookey. Through his career, Wookey has spent time among the behemoths of enterprise software. Over a dozen years at Oracle, he helped guide the database and ERP vendor’s applications road map, eventually leading the much-anticipated and oft-delayed Fusion Applications program. Then, in 2008 Wookey joined Oracle rival SAP, where he headed up the company’s cloud applications division, also no stranger to delays.

Now Wookey finds himself in charge of a new HR division at a company that considers itself a rival to both of his former employees. Indeed, Salesforce.com’s move into human resources software via the Rypple acquisition pits the company more squarely against the ERP giants, which consider human resources software a pillar of their offerings.

In what appears to be an unabashed reference to that competition, Salesforce.com said it will rename the Rypple application Successforce. Earlier this month, SAP announced a $3.4 billion takeover of cloud HR provider SuccessFactors.

The trick for Salesforce.com CEO Marc Benioff may be to fashion the HR software for a wider audience. Salesforce.com’s core CRM system is essentially an industry-agnostic platform aimed at facilitating any organization’s sales activities. Rypple’ HR software, by contrast, has been targeted heavily at young technology companies, online retail upstarts, and other socially savvy service businesses.

Daniel Debow, co-CEO of Rypple, gave a nod in that direction in his statement. "As the leading social enterprise company with more than 100,000 customers worldwide,” he said, “Salesforce.com will allow us to not only strengthen our offering for the hundreds of high-performing organizations that use Rypple today, but also scale it to reach many more."

Salesforce.com revealed that it would embed pieces of Rypple’s functionality in its Chatter applications, including the ability to thank colleagues, earn badges, and offer recognition of co-workers.

Salesforce did not reveal the acquisition cost. It said it expects the takeover to be complete in its first quarter, which ends in April 2012.