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Micah Fairchild Deloitte Completes Buy-out of Research Firm Bersin & Associates

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 By Micah Fairchild

HCM Industry Continues M&A Activity With Deloitte’s Purchase of Bersin

As the rest of us were busy sleeping off the effects of our New Year’s festivities, plans were already being laid for 2013 to be just as busy in the M&A department as 2012 was. I’m specifically referring of course to the recent headlines that consulting giant Deloitte made with its buyout and re-branding plan for the research firm Bersin & Associates (to be aptly named Bersin By Deloitte). It would seem that after breaking even around the middle of 2011; fending off would-be investors for a number of years; and finally receiving the industry recognition it so richly deserved, this past year, Bersin courted would-be suitors and settled on Deloitte. While this acquisition isn’t in the same ballpark with what we saw this past year from SAP, Oracle, Microsoft, or even IBM buying Kenexa, the fact of the matter is that this news does have implications for the HR Technology industry that need to be discussed further. To that end, here’s our take on the major questions that we’ve been getting from business leaders about this latest news.

Bersin By Deloitte Question #1: What’s this mean for Deloitte’s business?

Anytime a significant amount of money is exchanged, people are going to start asking questions, and this latest Deloitte acquisition is no different. After all, a company as large as Deloitte has to see an upside to “substantially acquiring all of Bersin’s assets”. The question that remains unanswered for many business leaders though, is what exactly that upside is and how it may impact their services? Well, from what we can uncover the bulk of what Deloitte seems to be gaining is data insight. Not entirely dissimilar from what we saw in 2012 with the Corporate Executive Board’s purchase of SHL, this acquisition by Deloitte is designed to enhance the company’s portfolio of what it can provide to its clients—offerings that can now run the range between selection services, research, data analysis, industry insights, and even implementation consulting. The curious aspect of this deal though (as other analysts within the HCM technology space have alluded to) is that Bersin’s sales model is currently estimated to run off of anywhere from 30-50% of revenues from vendors—an issue that could well mean that, in the near-term at least, revenues will take a hit until Deloitte can fully bring Bersin into the fold.

Bersin By Deloitte Question #2: What’s this mean for Bersin’s business?

As our sister site HCM.tv covered this past year in an interview with Josh Bersin, it’s rather clear that for the past 10 years, Bersin & Associates’ mission has been intimately connected with distilling top-rate research and putting the right information into customers’ hands to help make strategic business decisions. More than anything else then, according to founder Josh Bersin himself, this acquisition “gives [Bersin] growth capital, expanded management depth, and ability to leverage and work with Deloitte”. This means for the time being that Bersin will be expanding their recently-launched research agenda for the new subject areas of: Employee Engagement; Rewards & Recognition; HR & Talent Analytics; HR Tools & Technology; HR Planning & Strategy; Employment Branding; Sourcing & Recruiting; Screening & Interviewing; Career Management; Learning Culture; and Performance Consulting.

However, sources close to the acquisition also suggest that under Deloitte’s watchful eye significant investments in the relatively new BersinInsights platform will be leveraged, as will an untold amount of resources to go towards further developing the company’s Factbooks. In fact, according to Bersin’s own press release on the topic, during 2013, customers will be able to utilize this online benchmarking data service to gain direct access to 250+ data elements for HR, learning/development, recruiting, and talent management. Given Deloitte’s focus on large-scale consulting projects however, it would not be beyond the realm of possibility that any one of these initiatives gets sidelined to focus research energies towards supporting and/or beefing up those consulting services.

Bersin By Deloitte Question #3: What’s this mean for the Bersin customer/vendor cadre?

Among the groups that may stand to lose with this latest deal, perhaps no others are more important than current customers and vendors that the research firm has advised. We say this because it is almost a guarantee (considering Bersin’s to date revenues) that structures will change for these stakeholders. Granted, according to Bersin, regular clients will still receive the same value as before (only broadened and deepened), but pricing changes are almost invariably going to be a part of this new deal. On a more macro level though (as we previously alluded to), one of the unanswerable questions that seems to be floating out in the ether right now is whether customers and vendors will trust Bersin to remain objective. And of the issues that current customers and vendor partners are wrestling with right now, that is certainly the most salient. Unfortunately, there is no way to predict the level of influence that a parent company will have; and so we must wait before any insights into those questions can be thoughtfully addressed.

Bersin By Deloitte Question #4: How does this acquisition effect Bersin’s independence?

To be blunt (and perhaps restate the obvious) Bersin can no longer be seen as a singular, independent, research and advisory firm; and this fact is perhaps what has created the most buzz around the industry. For roughly a decade now, Bersin’s customers have come to expect and value that the firm is independent and free from vendor bias. And while the expected amount of claims from both Deloitte and Bersin have come out to refute any notions that won’t be the case, the fact of the matter is that many in the industry are questioning how service segmentation would even be possible under the Deloitte umbrella. For instance, while not as public as Towers, Deloitte has strategic partnerships with Workday, Oracle, and, SAP. Are we to believe that complete objectivity is going to be retained by Bersin even if it’s not in the best financial interests of Deloitte? The answer is dubious at best, and potentially leaves only a very few truly independent advisor firms left in the market; including Ventana Research, Constellation Research, Brandon Hall Group, and of course us here at Vantive Media.

Deloitte Acquires Bersin – Some Concluding Thoughts

Just as it was the case this past October when the announcement was made that Knowledge Infusion was to be purchased by Appirio, Deloitte’s acquisition of Bersin & Associates has caused some confusion from both vendors and customers alike as to the future of the research that they have come to know and respect. And truth be told, anytime these types of purchases take place that’s only fair; because biases (both personal and professional) have always been at the front of mind when it comes to securing trust from practitioners and HR software vendors. And that trust is the crux of the issue moving forward for Bersin, Deloitte, and the rest of the HCM analyst community. They’re all vying for your attention and dollars, so the question is, who do you place your trust in? End

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Not entirely dissimilar from what we saw with the Corporate Executive Board’s purchase of SHL, this acquisition by Deloitte is designed to enhance the company’s portfolio of what it can provide to its clients—offerings that can now run the range between selection services, research, data analysis, industry insights, and even implementation consulting.

 

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