Salesforce.com announced Thursday it will acquire Toronto-based cloud-based performance management vendor Rypple Inc. in a bid to enter the human resources software market.

The deal is expected to close before April 30 of next year. Financial terms were not disclosed.

The move comes shortly after SAP made a major market splash by announcing its intentions to buy cloud HR software vendor SuccessFactors, the second-largest pure SaaS (software as a service) company after Salesforce.com.

Exhibiting no small amount of chutzpah, Salesforce.com said it will relaunch Rypple’s application as Successforce, a new business unit led by John Wookey, who recently left SAP after serving as a top executive in its SaaS strategy. Salesforce.com had been quiet about Wookey’s planned role until now.

“Salesforce.com and Rypple share a vision for extending the social enterprise to transform the way we work,” Salesforce.com CEO Marc Benioff said in a statement. “The next generation of HCM is not just about a cloud delivery model, it’s about a fundamentally better way to recruit, manage and empower employees in a social world.”

Rypple will provide the basis for Salesforce.com to “revolutionize” the HCM market, Wookey said in another statement.

David Stein, Rypple’s co-CEO and co-founder, told Computer World Canada that the deal makes a lot of sense because 80 per cent of Rypple customers also use Salesforce.com and are looking for ways to integrate the two applications. In fact, Salesforce.com had been looking to use Rypple for its staff, he said. Talks on partnering soon lead to acquisition talks.
 
“Now we get access to this huge channel — Salesforce has 100,000 customers — so the ability to take what we’ve developed and plug it into this big organization over time is going to be a huge win for our team and product,” Stein said.
 
Stein and co-CEO Daniel Debow will stay with Rypple, as will most of the company’s staff of 45, to help build the application and look for adjacent areas to grow. 
 
Stein and Debow were also behind WorkBrain Corp., which was bought by Infor in 2007 for $227 million. 

Salesforce.com’s announcement talked up the social networking pedigree of Rypple’s software, which is used by the most famous social network of all, Facebook, as an employee performance management system.

Rypple’s approach eschews the practice of static, periodic performance reviews, and instead allows managers as well as employees to give ongoing feedback and public recognition to individual workers and teams, according to descriptions on its website.

“What Rypple has done is three things: They are the convergence between performance management, gamification and social [software],” said analyst Ray Wang, CEO of Constellation Research. “The thing they’ve done is make performance management kind of fun.”

Performance management is also the type of “edge application” that has the potential to reach every user in a company, thereby giving Salesforce.com an opportunity to scale up its business significantly, Wang added. Expense reporting software would be another example of this sort of application, he added.

Meanwhile, Rypple’s technology also garnered praise from HR software analyst Naomi Bloom, managing partner of the consulting firm Bloom & Wallace.

“Everyone hates performance reviews. If we could make it more Facebook-like, more consumery, that would be a good thing,” she said. “They’ve done a very good job of embedding that thinking into the product.”

From a strategic standpoint, performance management is “a nice place to start” for HCM software vendors, Bloom added. “It’s not regulated, so you’re not buried in compliance issues. It has much more to do with a corporate culture.”

Salesforce.com’s long-term intentions for its HCM strategy could raise questions about its highly public partnership with Workday, Bloom said. Workday has landed a series of large-scale implementations for its cloud HCM software, including a 57,000-seat deal with Kimberly-Clark, which was announced Thursday.

“I think it would be not unreasonable at all for Salesforce.com to build something substantial in HCM,” she said. “I don’t think Wookey would be there if they were only going to flesh out some performance management.”

Salesforce.com’s Force.com platform may not have all the necessary capabilities to pull that off, but “Wookey will at least know what needs to happen,” she added.

 
(With files by Howard Solomon, ComputerWorld Canada)


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