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Mid-Market (April 20, 2004) - There's enough pressure for growth to drive a huge array of bad decisions. In Taleo's S-1 filing, a clever deconstruction would notice that they have only managed to grow in the low single digits and that even some of that growth is suspect. Make no mistake, the IPO will fund an acquisition strategy and a virtual exit from the core business. It's a prudent move with a successful track record in other industries. Taleo is hardly the only player with flat growth. The situation is so desperate that a number of key players have taken to seeding the market with rumors about the ill health of their competitors. Virtually everyone (except Recruitmax and iCIMS) had flat growth for the last year or two. The two exceptions offered a lower price point and the jury remains out on delivery against the price. Why is the market so slow? There are several possible reasons:
Whatever the underlying reason(s), the top tier firms are all under relative pressure to produce evidence of continued traction (growth). The perennial down-market move is a predictable consequence for Deploy, BrassRing, Taleo and other fledgling enterprise players. After a couple of years of sustained flat growth, investors will lose their interest. With the exceptions of Deploy, Webhire and Resumix, most of the current crop of enterprise players began their lives in small to medium sized companies. It is no surprise that when times get tough, their strategy shifts towards earlier, better days. Unfortunately, the middle market is being well served by vendors who have scaled their operations and sales approaches to the realities of smaller customers. Most "mid-market" firms prefer to do business with companies who understand the needs and constraints of their market. It's no accident that IBM has spent years investing in advertising and restructuring to serve to smaller markets. Smaller companies are rightly nervous about Enterprise companies. The overheads and tactics required to be effective in the world of huge companies are inappropriate in the mid-market. We may be about to witness an interesting transformation. We're certain that a significant number of the industry's players will be forced to hunt for deals in companies smaller than their normal targets. We're equally certain that the mid market is very well served. By taking their eyes off the prize, the bigger players could well be ceding their core markets to the incumbent Enterprise houses. It would be bad for the industry and worse for the customers. Home | ERN | Bugler | The Blogs | Blogroll | Advertise | Archives | Careers Copyright © 2013 interbiznet. All rights reserved.
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