By acquiring MindSolve, SumTotal Systems gains a strong talent management offering, including e-learning, employee performance management, succession management and compensation management applications.
On 14 November 2006, SumTotal Systems, a provider of talent and learning solutions, announced that it had acquired the privately held MindSolve Technologies, which focuses on performance management software, in a cash and stock deal for approximately $12 million.
MindSolve's capabilities offer a good fit for SumTotal. MindSolve offers a very strong employee performance management solution, along with succession management and compensation management offerings. However, most of MindSolve's customers use only its employee performance management solution. This is not a significant issue because most of SumTotal's e-learning customers will probably look at employee performance management as a first step into a broader suite. MindSolve represents a good technology fit for SumTotal, because both vendors leverage the Microsoft .NET architecture.
SumTotal is a leading vendor in the e-learning market. Its strategy for assembling a broader set of talent management applications had included a partnership with SuccessFactors, which provides performance management applications. Together, SumTotal and SuccessFactors have had some success selling an integrated e-learning and employee performance management solution. SumTotal will continue to work with SuccessFactors and other providers to integrate their solutions with SumTotal's e-learning solution. In addition, SumTotal will continue to support customers who bought the integrated SuccessFactors solution. However, SumTotal acquired MindSolve because there was still a large opportunity available for an integrated talent management application suite.
SumTotal's acquisition of MindSolve is further evidence of vendors trying to gain a leadership position in the emerging talent management application suite market. Employee performance management is the linchpin of the suite. However, less than 10% of potential customers have purchased employee performance management solutions. SumTotal realized that it could not truly be a contender in the broader suite market without having its own solution. Authoria, Halogen, Softscape and SuccessFactors have established strong initial positions. But e-learning vendors such as Cornerstone OnDemand, Plateau, Saba and now SumTotal will present a strong challenge, as will Kenexa, Vurv and ultimately Taleo from the e-recruitment market.
MindSolve customers: Continue investments and consider SumTotal for your e-learning needs. Expect some isolated issues during transition with sales and customer support. Any interruption in short-term product strategy is unlikely, but push SumTotal to provide a detailed road map for longer-term product plans.
SumTotal customers and prospects: Consider MindSolve if your organization requires a broader, integrated talent management application suite.
"Magic Quadrant for E-Learning Suites, 2006” — Market and product consolidation is expected to continue through 2008, although there are no products in the market that “do it all.” By Waldir Arevolo and Lou Latham
"MarketScope for Employee Performance Management Software, 2005” — Employee performance management and its integration with other talent management applications are key to gaining business value. By James Holincheck
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