Thought Leaders in Cloud Computing: Adam Miller, CEO of Cornerstone OnDemand (Part 2)

SM: OK. What was the evolution of those situations?

AM: Typically in these private equity rollups of software companies, they’re not all that effective. The top talent will leave right away. Those two companies still exist [but] neither is competitive in the marketplace today.

SM: OK. All right. Those are on the private equity side, and then you’ve got the two big acquisitions by Oracle and SAP, and then you have the independent companies. What do you think is happening in this space now?

AM: The thing that’s happened over the last year is Success Factors and Taleo made a series of acquistions, and then over the last few months, they both got acquired. So, you’ve had two of the leading companies in the space become acquisitive prior to being acquired, which means there’s a lot of integration work to be done both from those companies down, relative to the companies they acquired, and up, relative to Oracle and SAP, which just acquired them.

You have a big shift in the marketplace now where, from our perspective, we’re the last man standing in integrated talent management. Our competitors now are the ERP players, so we compete.

SM: That’s not entirely true, though. Where would you put Workday?

AM: Workday is a partner of ours. We have some overlap around performance management. But we also complement each other in other areas.

SM: What does the small company landscape look like to you? We still see a lot of activity in various social, recruitment, there are all sorts of broad talent management players in the entrepreneurship world. What is on your radar that’s interesting?

AM: There were two companies that were more interesting than others on the small business side of things:  Rypple and Sonar 6. Salesforce.com bought Rypple as an extension to Chatter. And we bought Sonar 6 as the base of our small-business operations. There’s a lot of other companies out there, but I would describe them as very feature-specific. They tend to do one specific feature or one piece of the puzzle as [opposed] to a full suite that deals with talent management or even with regard to what we would define as a cloud. We have a recruiting cloud, a performance cloud, an extended enterprise cloud. There are many companies out there today sub $5 million in revenue that are focused on one feature within one of those clouds. We don’t view those as competitors.

SM: No, of course not. Those feature acquisitions could be interesting to plug the gaps in your own feature set, right?

AM: Our product has been built entirely organically. Sonar 6 is kept separate as its own product for the small-business market.

SM: Your main product is an enterprise product, right? So, you brought in Sonar 6 as a different product to service a different market altogether?

AM: That’s right. Our product is organically built, so we strongly favor building rather than buying as it comes to features and incremental functionality. We have a significant advantage today in that we are the only organically built end-to-end talent management solution out there, which provides significant benefit to our end users and clients. It has given us a real advantage in the market. We don’t want to change or weaken that advantage, so we aggressively have invested in development internally and are continuing to innovate and develop our suite.

SM: What is the primary positioning pitch that you have against large competitors like Success Factors and Taleo?

AM: Our view today is that the client has a choice between an ERP suite or best-of-breed solution. It’s worth mentioning that prior to this, it was a three-horse race between us, Taleo and Success Factors. All three public SaaS companies; all three significantly larger than any of the other companies in the space. I’m not counting Workday as an integrated talent company. They do have performance management.

SM: Workday, size wise, is also much larger than Cornerstone, right?

AM: From a bookings perspective, yes. We are continuing to grow faster than any of the other talent management companies. We were smaller than Success Factors and Taleo but growing much faster … prior to their getting acquired. It was really a three-horse race. Since the acquisitions, it’s become two distinct two-horse races. If a company is a global enterprise, it’s an SAP shop. So, they use SAP for all of their back office software. They’re highly unlikely to bring Oracle to the deal. Conversely, if it’s an Oracle shop, they’re highly unlikely to bring SAP into the deal. In most cases today, instead of being three competitors, there are only two competitors at the end of the sales cycle, and that would be us as the best-of-breed solution and one of the ERP guys as the other option.

This segment is part 2 in the series : Thought Leaders in Cloud Computing: Adam Miller, CEO of Cornerstone OnDemand
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