U.S. job growth is anemic. But you wouldn’t know it by looking at sales growth from firms that help companies hire, manage and track their workers.
The human capital management field, as it’s known, is expected to grow at an annual rate of 6% a year, hitting $8.1 billion in worldwide revenue by 2015, according to technology tracking firm IDC.
Weston, Fla.-based Ultimate Software Group (ULTI) is growing faster than that, as it wins over converts to its cloud-based human-resources, recruiting and talent-management software services.
“Good people can always find another job. Your top performers are always going to have some level of mobility. So there is this beginning of a recognition that the management of talent is pretty important,” said Lisa Rowan, program director for HR, talent and learning strategies for IDC.
From Product To Service
Ultimate was founded in 1990 by Scott Scherr, a one-time vice president at payroll services firm ADP (ADP). Scherr remains CEO.
The firm began with the traditional model, selling perpetual licenses for its software and packages. But it’s since transitioned to a software-as-a-service model, selling subscriptions to users for remote access to the latest versions of its flagship UltiPro software.
In 2009 it stopped selling new perpetual licenses to all but a few legacy customers.
With that switch, recurring revenue has grown to 81% of its total and will grow by double digits in 2012, the company says.
The firm targets midsize enterprises with 1,000 to 10,000 employees.
In the last quarter, it touted new clients including a health care organization with more than 7,000 employees, a home-improvement and hardware company with 6,000 employees, and a Canadian movie-theater chain with more than 10,000 workers. Most signed on for multiple product offerings, including recruitment, performance management, salary planning and time management.
“Pipelines remain robust, and our market indicators show very healthy demands,” Scherr said after the third quarter.
Ultimate had about 3.5% of the total HCM market in 2010 according to IDC figures, behind only SAP, with 17.6% market share, Oracle (ORCL), with 13.5%, and privately held Kronos at 8.2%.
But Ultimate doesn’t bump up against the likes of Oracle or SAP often, analysts say.
Instead, one of its fiercest competitors is WorkDay, the private company co-founded in 2005 by co-CEOs Dave Duffield and Aneel Bhusri. Both are veterans from PeopleSoft, the HR software firm that Oracle bought in 2005 in a $10.3 billion hostile takeover.
Source:http://news.investors.com/Article/596227/201112291806/Ultimate-software-cloud-human-resources-growth-field.htm
