Where Does Kronos Go From Here?
Where does Kronos go from here? That is the question I have been getting in the past few days regarding the announcement the company will be taken private by private equity firm, Hellman & Friedman.
While I was somewhat shocked by the announcement, it is speculated that a handful of other software companies where interested in the deal, presumably ADP and Oracle (from my understanding, price is what ultimately won the deal).
So where do they go from here? There are two potential paths…
- The PE firm, rapes the company of cash (in the form of management fees, of course), loads up on debt, and returns the company back to the public markets
- The company maintains its “first billion dollar HCM company” strategy and continues to focus on growth via acquisition and greenfield opportunities
While PE’s more recently have had a track record for option #1, I am still unclear on what to expect. The tell-tell sign of future strategy will be if we see a mass exodus of sales and executive ranks. Although I don’t expect a massive overhaul of the management team you can almost never predict what will happen.
March 28th, 2007
8 Comments Add your own
1. Phil Fersht | March 28th, 2007 at 8:55 pm
Kronos has proved a very robust firm over the last couple of decades and its competitors have struggled to uproot them from accounts (especially with some HRO deals where their main rival pushed its lighter, 3-tier web-app version. I can recount some famous stories where they got ripped out and then had to be brought back in within months). Their “sticky” client base makes them an attractive proposition for one of the big guys to acquire, but they need quite a significant overhaul of their product and financial structure to maximise their potential. They have a great story when it comes to dynamic scheduling and real-time workforce management…let’s hope for their sake their new owner will invest in building a true web-app product. They have nice people and a good culture…good luck to them!
2. Ron Hanscome | March 29th, 2007 at 6:45 am
This deal brings to light an interesting trend over the past few years around vendor viability…size of the vendor used to be a great indicator of stability — the smaller niche players could be quickly snapped up, while you could count on the bigger players to stay around and execute their strategy. Certainly the biggest blow to this theory was Oracle’s purchase of PeopleSoft in late 2004, which sent the signal that (almost) no software company (and their customer base) is immune from major disruption, regardless of size. While only time will tell the extent of change to the Kronos customer base, it’s clear to me that the rules of the HCM software game continue to morph. Stay tuned for an interesting decade!
3. Alex | March 30th, 2007 at 8:54 am
Working for a competitor of Kronos, I find that this new situation positive. http://www.timecentre.com [TimeCentre] has always done well competiting against Kronos in the area of functionality and flexibility. As Ron mentioned, it used to be the larger the company, the more stability. However, with a larger company there are more mouths to feed. This means higher prices and slow implementation times. Bringing Kronos back to the private sector again probably won’t change much from the customer standpoint, but internally there will be cultural and process changes.
4. jcorsello | March 30th, 2007 at 9:02 am
Ron - Great point. Vendor viability is increasingly important especially in the last 2 vendor selections I have been apart of. Viability is not just about the fear of your preferred vendor being acquired. What Kronos, Peoplesoft and other have proven, almost no vendor is immune to being a takeover candidate. What companies need to look at though is the current state of the vendor in terms of financial, resource, and management health and determine if they think the vendor is capable of surviving as a standalone vendor or part of a larger vendor.
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