1Mby1M Deal Radar 2010: iCIMS

iCIMS is a Web-based talent management platform that is designed to handle the entire talent life cycle. Colin Day founded iCIMS.com in 1999 and is the company’s president and CEO. Prior to founding iCIMS, Day worked at Comrise Technology in sales and new business development, where he was responsible for opening and growing branch offices. iCIMS was founded as an offshoot of Comrise Technology. At the time, Comrise had built an internal platform to manage all recruiting/HR in their organization, but it had no intention to sell it as a stand-alone product. In 1999, iCIMS bought the rights to their platform and spun off as a separate company to focus exclusively on designing and hosting talent management platforms for other companies.

iCIMS has platform, package, and solution rates that scale based upon the number of employees within a client’s organization. Clients can implement iCIMS’s entire Talent Platform (one end-to-end system) or subsets of the platform based on their needs. This may include packages for candidate or employee management, or more specific solutions geared specifically for applicant tracking, performance management and others. Some of the features of the platform are databases for candidates and employees, forms libraries, job posting portables, websites for internal and external recruitment, onboarding, and employee self-service. Depending on what a customer chooses to implement, pricing varies, but it typically includes a one-time implementation fee and a monthly hosting fee.

The global talent management market is estimated at $7.7 billion, growing to $12.1 billion by 2015 (~8% growth). The market comprises HR management systems, workforce management systems, learning management systems, recruitment systems, and performance & compensation systems. The U.S. talent management market is estimated to be approximately half of the global market, of which applicant tracking systems (ATS) are approximately $324 million. Of the U.S. ATS market, iCIMS estimates that the SMB portion is approximately $210 million.

iCIMS’s roots are in the mid-market industry, where it has become a dominant player. Small Business is also a focus, and the company is eveloping campaigns to hone in on that audience. Vertically, iCIMS is targeting the retail and healthcare industries. Brands like New Balance, J. Crew, and most recently WebMD (a company I cover extensively) have all signed as iCIMS customers. Into 2015, iCIMS will continue to focus on signing small and mid-sized organizations in healthcare and retail industries, with an added focus on the legal and professional services verticals in the following years.

There is no shortage of players – iCIMS counts over 100 talent management vendors – and the company is competing against well-known names such as Taleo, Kenexa, SuccessFactors, and SilkRoad. iCIMS aims to stand out by focusing not so much on the number of features but on the ease of use of its software, the speed and availability of the software, and the quality of its customer service. Further, iCIMS maintains a business model that supports approximately 90% renewable revenue, whereas many competitors rely on the 30-30-30 rule: These vendors generate 30% of their revenue from start-up fees, 30% from extra services/additional products, and only 30% from renewable revenue.

The company was internally funded and is fully profitable with no venture debt. The majority of iCIMS’s profits are used to further develop the talent platform. Revenues range from $20 million-$30 million. iCIMS says that the internal funding model has allowed it to make decisions that it feel are ultimately right for customers, employees, and the overall organization vs. making decisions based off of pressure from VCs or other backers. It sees itself as the underdog in many ways; even today, 10 years after inception, it feels there is a David & Goliath story out there. While competitors had a lot of money to pour into marketing, for example, iCIMS decided to go after business in a grassroots way and kept sales and marketing functions as lean as possible. The company was often challenged by a lack of brand awareness, as iCIMS didn’t have the financial resources to pour into analyst relations, print ads, and other branding exercises.

But now, iCIMS has more than 850 customers that fall within the small business, mid-market, and enterprise categories. Some notable clients include Hershey’s, Whole Foods (enterprise), Sony Music, Crunch (mid-market), SolarWorld and eHarmony (small). There are over 1 million users across the globe and more than 5 million candidate hits each day, and the average customer has 2,500 employees. iCIMS’s largest client to date is FedEx with over 100,000 employees among FedEx Corporate, FedEx Ground, FedEx Freight, and FedEx Kinkos. FedEx has 200 recruiter users, and over 5,000 hiring manager users, and it maintains hundreds of open jobs on a monthly basis.

iCIMS has developed a plan to be IPO ready within five years. In order to make that a realistic decision when the time is right, the company has taken actions to be prepared, such as having audited financials for more than three years, sitting on a healthy amount of cash while maintaining enviable profit margins, evaluating strategic acquisitions, and having revenue targets of more than $80 million by 2015. Of course, if the right offer came around the company would consider it, but the mission right now is to continue building the talent platform over the next five years and then launch its next business platform.

Recommended Readings
Building an Ambitious SaaS Company: Taleo CEO Michael Gregoire
The 1M/1M Incubation Radar: SurgeForth
Deal Radar 2010: NowHIRE
Lars Dalgaard and His Success Factors

This segment is a part in the series : 1Mby1M Deal Radar 2010