Human capital management software provider SuccessFactors Inc. yesterday said it plans to acquire workforce planning vendor Inform Business Impact for $40.5 million in cash and stock.
The deal, which is expected to close in the third quarter, moves SuccessFactors more directly into competition with other providers of workforce planning and scheduling software, such as Kronos Inc. and Oracle Corp.
The acquisition announcement came on the same day that SuccessFactors revealed its fourth-quarter financial results, disappointing financial analysts by predicting that, for the full year 2010, it expects break-even earnings. Analysts had been expecting earnings of 11 cents per share, according to Thomson Reuters.
SuccessFactors’ shares fell 8% in after-hours trading Thursday, but more than made up for it today, rising 12% to stand at $16.16 per share at press time.
Brisbane, Australia-based Inform offers workforce planning and analytics software as an online service. Besides workforce planning, reporting, and analytics, Inform offers peer benchmarking content and services for 20 industries, including manufacturing.
The 28-year-old, privately owned company claims 130 enterprise customers, including General Dynamics, Bausch & Lomb, and Textron. SuccessFactors has more than 1,000 customers. The companies have 15 customers in common, including manufacturers General Dynamics and Nokia.
The acquisition will accelerate the business execution software strategy that SuccessFactors rolled out last year, said Dominic Paschel, the company’s director of public and investor relations in an interview with Managing Automation. In particular, he said, Inform’s workforce management analytics tools will give enterprises better insights into ways to align and manage their workforces to attain specific business results.
Analysts today agreed that the deal fits SuccessFactors’ long-term strategy.
“It makes a lot of sense for them,” said Jeff Freyermuth, a research analyst at Gartner, in an interview with Managing Automation. “They had $300 million or so in the bank and have been looking for a good acquisition candidate for a while. It was smart to start with a smaller deal, and this is a good fit.”
In the near term, Freyermuth said, SuccessFactors will have opportunities to cross-sell Inform products to its 1,000 customers. Adoption of Inform’s workforce management analytics tools has been slow, in part because many enterprises, though experienced at applying advanced analytics to finance and operational domains, haven’t historically applied them to workforce management. SuccessFactors’ large sales force may be able to change that, Freyermuth said.