More on Kenexa Learning Management Announced Yesterday

Yesterday, Kenexa announced the available of Kenexa Learning Management (KLM).  After reading the press release, I thought it would be fair to clarify some of the points in the release.  Notably…

1. Kenexa purchased the source code from a “global vendor” that is now branded, Kenexa Learning Management (KLM).  What this means is that Kenexa actually owns the “as is” product today, but no future versions of the product from the vendor.  Therefore, Kenexa will be responsible for all future updates to the product.

2. Contrary to the quote in the release, the product is not “integrated”.  It would be impossible for the product to be integrated already.

3. I wouldn’t consider Kenexa to have an “integrated talent management suite” yet.  They have components of the suite including Kenexa Recruiter (talent acquisition), Kenexa Recruiter BrassRing (talent acquisition), and Kenexa CareerTracker (performance/succession/compensation), but it would be a long shot today to call it “integrated”.

I consider the “purchase source code” strategy very risky.  For starters, they do not have a personal attachment to the product nor do they know the history of the product (bugs/fixes/etc) beyond what is available in published release notes).  A few companies (ADP and Kronos come to mind) have attempted this strategy in the past with lackluster long-term success.  What typically happens over time is that the product get neglected and does not get the necessary resources needs to drive the product forward nor the commitment from the vendor because it is often not tied to “the core”. 

Needless to say, Kenexa has some work to do.  As one of my financial analyst friends described, “…(it’s) another platform distraction”, referring to the aggressive plans they already have building their forthcoming 2x platform.

Lastly, as Jim Holincheck has noted, Kenexa’s stock took a huge hit (-27%)today as they guided down.  In their analyst day yesterday, company executives suggested weakness in the global market.  Most analysts I know would say over the past 2 years, Kenexa has lacked a product strategy which has put them in the position they face today.   What is interesting is that other publicly-traded talent management vendors are experiencing quite the opposite effect growing anywhere from 30-70%. 

The good news is that Kenexa has begun to put a solid team in place to drive the product, sales and thought leadership forward.  The only question…is it too late?

September 11th, 2008