Softscape Plans Expansion Amid Growing Sales

By Ed Frauenheim

Jun. 30, 2006

HR tech vendor Softscape is betting big on its recent growth and the momentum behind increasingly popular talent management applications.

    The Wayland, Massachusetts-based firm announced recently that it plans to add 100 employees to its base of about 200 during the coming year. Softscape, which offers applications ranging from basic human resources information management to workforce planning and recruiting, also said it has hired five HR technology veterans to bolster its services division.

    The swelling ranks come in the wake of a 22 percent rise in annual revenue last year, says Christopher Faust, Softscape’s executive vice president of global strategy. And Faust says the company is looking forward to another year of significant growth in 2006.

    Softscape’s pace has fallen from 2004, when its annual revenue jumped by about 40 percent. But that’s partly a result of having a larger base of business against which to measure progress. The 10-year-old company is starting to rake in serious annual sales. “We’ll probably break $40 million this year,” Faust says.

    Along with vendors such as Taleo, Kenexa, Oracle and SAP, Softscape competes in the field of performance and talent management software. That’s the hottest part of the human capital management market, and it should grow 20 percent annually through 2009, says Forrester Research analyst Paul Hamerman. Softscape’s expansion goals reflect both the company’s own success and the vigor of the performance and talent management arena, Hamerman says.

    “It seems to be a strong player in the strategic segment of the market,” he says.

    That assessment echoes a report last year by research firm Gartner. In a study of 26 employee performance management software systems, Gartner analyst Jim Holincheck rated Softscape, SuccessFactors and Halogen Software as the only vendors meriting a “strong positive” rating, the highest classification.

    In the past several years, there have been several mergers and acquisitions among smaller vendors of talent management software. For potential customers, that raises questions about whether anyone will be around in the future to support and maintain software they adopt.

    Softscape has fielded some acquisition inquiries, according to Faust. But he says the firm is not shopping itself around. That’s in part because the company, unlike some of its competitors, was not financed by venture capital, Faust says. Companies that are backed by venture capital often must satisfy investors who are antsy for a flipped company and a quick return.

    “We’re here for the long term,” Faust says. “We don’t have investors that are looking for an exit strategy in the next 18 to 24 months.”

    Softscape serves both large organizations and midsize firms. It offers software in a number of ways, including as a service rented over the Internet. That approach, known as software as a service, is becoming more popular, thanks in part to lower upfront costs and faster upgrades.

    One of Softscape’s priorities is to expand its consulting operations. Faust says adopting new HR systems is almost invariably challenging, despite vendor claims to the contrary.

    “It’s not easy,” he says. “That’s why we have a services organization.”

    Despite its growth, Softscape may find it hard to get its voice heard, given all the vendors clamoring for business. “The space is getting pretty crowded,” Hamerman says.

Workforce Management, June 26, 2006, p. 18Subscribe Now!

Ed Frauenheim is a former Associate Editorial Director at Human Capital Media and currently works as Senior Director of Content at Great Place to Work. He is a co-author of A Great Place to Work For All.

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