SilkRoad Technologies Company Viability Dependent on IPO and Global Expansion
Both SilkRoad’s market and fiscal position (albeit smaller than many within the HR and talent management software market) are solid and the company is clearly on a tear right now—effectively riding the wave of the talent management zeitgeist to the tune of roughly 150 new customers every quarter. That said, even though the 400-employee HR technology vendor has over 2000 live customers and counting, SilkRoad has a long way to go in terms of being able to compete with the likes of Oracle/Taleo, SAP/SuccessFactors, and IBM/Kenexa.
In large part the issue most at play here simply has to do with name recognition and is not necessarily an indication of any specific deficiencies with their product offerings. However, when it comes to those larger competitors, one of the more interesting aspects to the company’s strategy moving forward is to expand their international footprint. In fact, according to company representatives, “In the first six months, SilkRoad added more than 50 customers from countries outside of North America; a 163 percent increase over the same time period in the prior year”.
This approach is a solid one, especially considering the rate at which the international market for talent management applications is growing; and SilkRoad has made headway on capitalizing on this growth by most recently securing $35M in venture financing (after raising $54M in 2008 and roughly $33M just after its inception). And while these funds (secured from the likes of Keating Capital, NTT Finance, Intel Capital, Crosslink Capital, Foundation Capital, Azure Capital and Tenaya Capital) have been earmarked for further global expansion and localization efforts, additional development of the company’s HR SaaS capabilities is also on the docket. As Filipowski puts it, “This financing will allow us to enhance our cloud-based social talent management solutions so that companies of all sizes can cultivate their most prized asset — their talent”.
Be that as it may, the secondary (and perhaps even primary) purpose for this latest influx of funding is to fan the flames of an upcoming IPO—a public offering that Filipowski believes is set to take place within the 2013 cycle (though to be fair he said the same thing back in 2008). Following in the footsteps of Workday, Cornerstone OnDemand, and a host of other now public vendors within the broader HCM software space, an IPO could be exactly what the doctor ordered to move SilkRoad from a second-tier vendor to one that can more easily compete against the likes of Oracle, SAP and IBM.
That said, not all aspects of SilkRoad’s strategy are running smoothly. After all, the company’s entrance into the world of the HRMS has proven difficult; and finding customers that are willing and able to decommission their current systems of record has not proven entirely fruitful. For new customers that have yet to purchase any type of HR software, SilkRoad can make a compelling case for why their Life Suite offering should be considered. Unfortunately, unlike many other competitors, SilkRoad does not possess payroll capabilities. They can integrate with existing applications, but not run the actual payroll process. Moving forward, this will be an issue that continues to limit customer acquisition opportunities as well as their aspirations to become a truly viable, end-to-end HCM software solution.
Still, with a solid lock on social capabilities (given the overwhelmingly positive industry recognition for SilkRoad Point), and a user experience (UX) that could possibly dethrone market leaders such as Workday, it’s the company’s expansion efforts that tell the most about their continued success as a vendor. Indeed, as Filipowski recently opined, “We've taken a balanced approach to penetrate both mature and early stage markets...[and] this enables us to realize near-term results to support additional expansion”. And expand they have. Over the past several months, SilkRoad has opened additional offices in Denmark, London, France, Mexico, and Japan—a global effort that piggybacks previous development the company undertook in the Asia Pacific region starting in 2008. Over the past five years, SilkRoad has grown to 20+ international offices—an initiative that company insider’s credit for securing a slew of international sales—which now account for roughly 25% of the company’s total revenues.
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