IBM is acquiring Kenexa, a publicly-held recruiting/talent management solution provider, in an effort to bolster its social and HR business initiatives. Kenexa offers cloud-based front office applications and consulting services.

Making Recruitment Social

In its announcement of the acquisition, IBM says Kenexa, “complements IBM's strategy of bringing relevant data and expertise into the hands of business leaders.” More specifically, IBM intends to integrate Kenexa recruitment and talent management functionality into its existing and well-developed social business technology offering.

Although IBM has not released any significant detail about exactly how Kenexa’s technology will fit into the larger social business strategy, presumably IBM will leverage its capabilities to enable clients to perform tasks such as evaluating, recruiting and training employees via social networks. IBM did state that “As a result of this synergy, clients will be able to attract and develop the right skills to build the right teams, for the right projects, the first time.”

IBM Attempts to Build on Social Biz Lead

By acquiring Kenexa, IBM is demonstrating that it is not content to simply sit back and rest on its laurels as the de facto leader in the still evolving social business market. In June 2012, IDC named IBM the worldwide marketshare leader in enterprise social software for the third year in a row. IBM achieved this ranking on the basis of 2011 revenue. According to an IDC study, IBM’s social enterprise software revenue grew faster than any competitor, and nearly twice as fast as the market overall.

This is a considerable feat, given that the market for business social software grew almost 40 percent between 2010 and 2011. IDC said that the market is expected to continue at this level of growth for each of the next four years, reaching US$ 4.5 billion by 2016. IBM Connections is the company’s social networking platform, available in either cloud-based or on-premises versions, and it allows one-click collaboration and the functionality to create social communities both inside and outside a company.

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IBM customers for Connections include Lowe’s Home Improvement, TD Bank, Electrolux, Bayer Material Science, The Ottawa Hospital and Earthwatch. One-third of Fortune 100 companies use IBM’s social software, as do 80 percent of the top 10 retailers and banks.

Expanding Social Footprints The Fast Way

According to commentary in the Dealbook section of the New York Times, IBM buying Kenexa is part of a larger trend of “tech giants” snapping up smaller enterprise social networking companies to quickly expand their social footprints. The article cites recent high-profile acquisitions such as Microsoft’s purchase of Yammer and Salesforce.com’s purchase of Buddy Media. Stating “the flurry of acquisitions underscores the increasing importance of social media in the workplace,” the New York Times concludes IBM has made a good decision with this purchase.

IBM expects the $1.26 billion cash transaction to close in Q4 2012, subject to Kenexa shareholder and regulatory approvals and the satisfaction of other customary closing conditions. With operations in 21 countries, Kenexa has approximately 2,800 employees and supports 8,900 customers across a wide range of verticals.