You’ll remember that SAP paid $3.4 billion to acquire SuccessFactors in late 2011 (a deal that brought tears to the eyes of certain writers).

That kicked off a spate of HR-focused cloud acquisitions. Within two months, Oracle had paid $1.9 billion for Taleo, and Salesforce.com acquired Rypple and turned it into Work.com. This string of deals was taking place against the backdrop of Workday raising a lot of money from investors, on its way to going public in one of the more successful IPOs of 2012.

Since SuccessFactors was a cloud-born company and SAP is, let’s face it, an old-school on-premise software company working hard to transition to a more cloud-friendly way of doing things with its HANA line, it’s not hard to imagine some cultural friction.

That’s what analyst Karl Keirstead of BMO Capital Markets attributed Dalgaard’s departure to in a note to clients following the announcement. “We believe that there were some conflicts between the cloud development efforts under Dalgaard and the HANA and on-premises development team under CTO Vishal Sikka. We’re not altogether surprised by the changes given the challenge of integrating fast-growing SuccessFactors with a more methodical SAP culture, but despite this, SAP has made solid progress in closing its cloud gaps over the past 12 months,” Keirstead wrote.

In a company statement and on Twitter, Dalgaard said he’s going to become an investor. One other factor that is likely playing into his decision to leave SAP is the fact that he has a 3-year-old son who is battling leukemia.

Dalgaard just tweeted this about an hour ago:

Look forward to becoming worlds best professional investor – and continue to help SAP as formal advisor – will try to honor all I learned

about 1 hour ago via Twitter for iPhoneReplyRetweetFavorite

@LarsLuv

Lars Dalgaard

SAP cloud efforts will now be headed up by Bob Calderoni, the CEO of Ariba, another cloud company that SAP acquired last year for $4.3 billion, and Rob Enslin, an SAP veteran.

Keirstead worries that the pair may not bring enough HR-specific expertise to the business. Ariba runs a cloud-based network focused on business-to-business commerce — human capital management in the cloud is still a pretty hot business. Earlier this week, Workday reported a smaller-than-expected loss and raised its revenue outlook for the year.

As Keirstead at BMO put it: “Our key concern is that SAP’s on-premises business is most vulnerable on the HCM [human capital management] side, where Workday is increasingly competitive and where Dalgaard brought strong domain expertise. SAP’s new cloud business head [Calderoni] has no such expertise in the HCM arena and in our judgment will need to bolster SAP’s presence with some key HCM hires.”

For what it’s worth, SAP shares are down by more than 3 percent this morning to $75.85.

At a human resources conference yesterday, Yahoo CEO Marissa Mayer finally commented on the massive controversy generated after the Silicon Valley Internet company decided to end its work-from-home offering to its employees.

News of the change came in February after AllThingsD published a hopelessly awkward memo on the new dictate that resulted in a firestorm of debate.

That was no surprise, since the missive was confusingly penned by HR head Jackie Reses, who noted, in part: “Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.” Along with an incomprehensible aside about the “cable guy,” there were few details.

And because Yahoo PR’s goal is to not comment, except when pushing shiny new products, it was disinclined to say anything at all once the memo was public. ATD reported initially it was a couple hundred employees, but the memo made it unclear who would be impacted and how. Yahoo later made an unusually bloodless statement that work from home was not what was right for the company at that time, given its need to turn itself around.

Mayer underscored that point in her keynote speech, with Fortune reporting that she put up an image of a purple elephant with WFH letters on its side and said, “I need to talk about the elephant in the room.”

She also tried to push blame onto, well, I am not sure whom, noting, “It was wrongly perceived as an industry narrative.” This mistakes-were-made tactic was clever, but the situation spun out of control simply due to the fact that Mayer was tin-eared on a hot-button issue and was poorly advised not to give a quick and cogent explanation of it at the time, causing a lot of unnecessary external and internal confusion and worry.

What was too bad was Mayer had a valid enough point — even if it was very harsh medicine to end the popular policy — that Yahoo probably needs all hands on deck right now to return to innovative relevance. She also said in her speech that while “people are more productive when they’re alone … they’re more collaborative and innovative when they’re together. Some of the best ideas come from pulling two different ideas together.”

As I said, it’s an excellent point, even if how Mayer delivered her message turned out to be a lesson as a new CEO in how it’s not what you say, but how you say it. And, of course, when.

Aneel Bhusri

Few people in Silicon Valley wear as many hats as Aneel Bhusri. Currently known primarily for his role as co-CEO of Workday, the cloud-based human resources software company that floated in an IPO last year, he also maintains an active role as a partner at venture capital firm Greylock Partners. He also finds time to sit on the boards of many interesting startups, including Sumo Logic.

Workday is the company that caused a lot of consternation at the large enterprise software firms. As it raised money and marched toward its IPO, SAP acquired Workday rival SuccessFactors in late 2011, forcing Oracle to make a similar move to acquire Taleo.

AllThingsD caught up with Bhusri at a San Francisco restaurant recently to learn of the latest doings at Workday, and to chat about his view of the fundamental shifts that are rocking the enterprise from so many directions and creating opportunity in the process.

AllThingsD: Aneel, you sit in a position with sort of a unique point of view, being both a CEO of a cloud software company that’s by definition riding one of the fundamental shifts in the enterprise, and also you’re a partner at Greylock, with a history of leading investments in enterprise-focused companies. So, from a high level, how do see the changes happening in the enterprise landscape right now?

Bhusri: When you think about what’s happening in the enterprise, it’s the most disruptive time in 25 years. Apps are moving to the cloud. Arguably, the relational database is going to look like a mainframe in 10 years, as transactions move into in-memory databases and Hadoop and other noSQL databases for Analytics. Storage is going from disk to flash. The legacy enterprise companies aren’t innovating, but they have cash and they have distribution, so they can buy their way into this new generation of innovation. To me, the one big question is whether or not this generation of entrepreneurs sells out to the big guys, or do they go it alone? This is going to be a conundrum for this wave of entrepreneurs. The large companies will put such large valuations in front of you that it’s hard not to sell out. Some will go it alone, and some won’t.

Do the new companies stand a chance? I mean, you’re talking about some pretty formidable companies being attacked.

One big change that has occurred over the last few years, that if you look back to the period from 2000 to 2006, with the exception of Salesforce.com, everyone was trying to compete at the edges with the big guys. No one wanted to take them head-on. No one wanted to take on Oracle or SAP or EMC or any of these guys, because they knew they would lose. Then, with the explosion of new technologies like the cloud, like Hadoop, like flash memory, you’re seeing a new set of companies that are not trying to compete at the edges, but are going right for the jugular. We haven’t seen these in 15 years or so, when new companies are trying to disrupt the established players rather than just coexist. So the big companies have not been threatened for a long time. Salesforce is going right after Siebel, a.k.a. Oracle. Palo Alto Networks is going right after Checkpoint Systems and Cisco. Pure Storage is going right after EMC and Hewlett-Packard. This is why the enterprise space is doing well: Because the companies that are becoming public are going after big markets.

To follow your example, then, is Workday going for the jugular versus SAP and Oracle?

We have the advantage in product, and they have the advantage of distribution. And that race is going on in every key segment: Distribution channels versus innovation. Oracle and SAP have the advantage of distribution. It’s not about money. We have a lot of money in the bank. It’s more about investing it smartly and building out the distribution to bring out our market-leading product faster than they can build a market-leading product using their distribution.

So how is business at Workday generally? You recently landed HP as your biggest customer. Have you landed anyone else like that?

There’s nothing slowing down about the shift to the cloud. I don’t see anything on the horizon that is changing that. But, yes, we’ve landed a big customer and, no, I’m not allowed to talk about it yet.

Did having HP name you as a vendor help bring in more business?

Anytime you land a big company like that, it gives people more comfort that the cloud is real. It’s hard to measure. But it helps other large companies to see that another one of their peers is shifting an application to the cloud.

So, what are your priorities at Workday this year?

I would consider this to be a really key transitional year for Workday. If we’re really successful, three or four years down the road we’ll look and see this was the year where we put the foundation in place. If you look back historically, we were a one-product company and in only one geography, and that was the human resources product in the U.S. In the next 18 months, we’re going multi-product and multi-geography. We’re expanding into Europe, and the financial products are doing really well. We will continue work on the financial product, but this is the beauty of the cloud: With every update, we add more functionality, and we land more customers. And in 18 months, we become a company that is both global and has multiple products, then I think we’ll have Oracle and SAP back on their heels for the next five to seven years. As for HR in the U.S., the other guys have a really long way to go to catch up to us. We have to build out a global distribution channel over the next 24 months. And as we build that channel, we’ll also be building financials, which is a market that’s two to three times the size of the HR market. What comes out the other end is the next large enterprise ERP company.

Is there a third leg to the stool after financials?

Analytics. We announced a big data product, and it doesn’t go into general availability until the second half of the year. What I did not realize as much as I do now is that there are companies that have a variety of different data that they want to co-mingle from a lot of different sources. Also, they’re looking for a home for third-party data. Most production systems don’t want you to bring third-party data into them. They want a way to import all of the third-party data they had from either HR or financial. And our big-data product is a way to help them do that, and I expect a pretty strong attach rate with that. So I think that is the third leg, right there. Take those together, and you’re looking at a pretty big market.

Courtesy of a plethora of very irked Yahoo employees, here is the internal memo sent to the company about a new rule rolled out today by CEO Marissa Mayer, which requires that Yahoo employees who work remotely relocate to company facilities.

“Speed and quality are often sacrificed when we work from home,” reads the memo to employees from HR head Jackie Reses. “We need to be one Yahoo!, and that starts with physically being together.”

Painfully awkward as this is phrased, it means every Yahoo get to your desks stat!

I reported earlier today that the move will apparently impact only several hundred employees, such as customer service reps, who work from home full time. But numerous sources told me that the decree extends to any staffers who might have arrangements to work from home just one or two days a week, too.

The changes begin in June, according to the Yahoo memo.

After that, employees who work from home must comply without exception or quit. One top manager was told that there would be little flexibility on the issue.

The anger from impacted employees was strong today, because many felt they were initially hired with the assumption that they could work more flexibly.

In fact, even waiting for the cable guy is questionable. “And, for the rest of us who occasionally have to stay home for the cable guy, please use your best judgment in the spirit of collaboration,” wrote Reses.

The tone and tactics have infuriated some at the company. Wrote one impacted Yahoo employee to me: “Even if that was what was previously agreed to with managers and HR, or was a part of the package to take a position, tough … It’s outrageous and a morale killer.”

Most tech companies encourage workers to stay on their campuses, offering free food and other perks. But none enforce such rules beyond staff needed to operate an office.

“Our engineers would not put up with that,” said one tech exec. “So, we’d never focus on it.”

In the comments section of my first story on the HR change at Yahoo, WordPress founder Matt Mullenweg wrote:

“For anyone who enjoys working from wherever they like in the world, and is interested in WordPress, Automattic is 100% committed to being distributed. 130 of our 150 people are outside of San Francisco.”

The issue is an interesting and controversial one, with some certain that working at home is the wave of the future, while others considering it hurtful to productivity.

Well, we’ll presumably see which this way goes in time.

Earlier, when asked about the change, a Yahoo spokesperson said the company does not comment on internal matters. The memo was released after my story on the change was published this morning.

But, you don’t need any comment when you can read for yourself the new working order at the Silicon Valley Internet giant:

YAHOO! PROPRIETARY AND CONFIDENTIAL INFORMATION — DO NOT FORWARD

Yahoos,

Over the past few months, we have introduced a number of great benefits and tools to make us more productive, efficient and fun. With the introduction of initiatives like FYI, Goals and PB&J, we want everyone to participate in our culture and contribute to the positive momentum. From Sunnyvale to Santa Monica, Bangalore to Beijing — I think we can all feel the energy and buzz in our offices.

To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.

Beginning in June, we’re asking all employees with work-from-home arrangements to work in Yahoo! offices. If this impacts you, your management has already been in touch with next steps. And, for the rest of us who occasionally have to stay home for the cable guy, please use your best judgment in the spirit of collaboration. Being a Yahoo isn’t just about your day-to-day job, it is about the interactions and experiences that are only possible in our offices.

Thanks to all of you, we’ve already made remarkable progress as a company — and the best is yet to come.

Jackie

The culture-celebrating hijinks continue at Yahoo, it seems.

After free food and smartphones and even dressing up as a Yahoo purple banger, CEO Marissa Mayer now has a high-ranking exec dancing for employee enjoyment.

As part of an effort to improve participation in the annual Yahoo Employee Satisfaction Survey (YESS), Mayer instituted a punishment for the lowest participation rate of any division on her executive staff.

The culprit turned out to be Jackie Reses, EVP of people and development for Yahoo, which includes the unlikely combo of human resources and business development.

Thus, Reses apparently had to dance to the hit K-pop song “Gangnam Style” with her staff at the weekly FYI employee meeting at Yahoo’s Sunnyvale, Calif., HQ on Friday.

Despite having a rep as an intense New Yorker, said one employee, Reses has some “decent moves.” Others agreed.

Also decent was one of the top results of YESS, which showed that employee belief in the future vision of the company was up 32 points year over year.

That’s not a big surprise, given the upward trajectory of Yahoo’s shares of late. But, more to the point, it has a weak comparable in last year’s survey, which painted a picture of a deeply demoralized workplace. That’s because the 2011 YESS questions went out to employees the week that the company fired CEO Carol Bartz, with most of the responses gathered in the ensuing weeks.

Despite the improvement, this year’s YESS also still showed a lot of worry about whether Yahoo leadership can execute, and whether the company can achieve strong results over the long term.

[UPDATE: One reader said the Yahoo survey is now called YEES, the Yahoo Employee Engagement Survey. I could not determine if that name change had been made.]

That’s the question that at least one Wall Street firm was asking, in a downgrade of Yahoo stock today. In dropping Yahoo’s rank to “market-perform,” Sanford C. Bernstein analysts noted worries about its turnaround efficacy, a possibly jarring reorg of its advertising unit, and also whether the future sale of its assets in China’s Alibaba Group can save the day again, as it did for last quarter’s results.

“We think there may be upside from an eventual Alibaba IPO at a valuation much higher than $50B or a Yahoo! core turn-around, but it is hard to have high conviction in either given the facts we currently have,” said the report, in part. “In addition, there is manageable but real downside risk: reorganization (e.g., of the sales force) could be negative for revenues, management could decide to invest in growth now and cut excess later, and MSFT RPS guarantee could expire without a renewal.”

Those are all good questions for investors to ask, of course, although more have been caught up in the hype/hope ahead of actual performance gains.

Still, it’s no sweat to get caught up in digital execs being made to trip the light fantastic for their weak results. So, since I was not there to enjoy Reses’ performance, click here for an also fun-tastic JibJab Gangnam video I made of her.

Sales at $72.6 million grew 99 percent year on year, and while the net loss grew to $41.3 million versus $19.7 million a year ago, it was, at 39 cents per share, a lot better than the 67 cent loss that analysts had expected.

The company said that, during the quarter, it signed deals with chemical giant DuPont as well as industrial technology concern Johnson Controls.

Looking ahead, CEO Aneel Bhusri said in a statement that Workday expects sales in the current quarter to come in between $75 million and $79 million, amounting to growth of between 74 percent and 83 percent.

Workday shares finished the regular trading session up $1.34, or more than 2 percent, to close at $53.19. Once the results were reported, they rose again after hours by another 2 percent, to $54.40.

The company now says it will offer 22,750,000 Class A shares at a price of between $21 and $24 a share. At the midpoint of that range, it should raise about $512 million, at a valuation of about $3.6 billion. It also said it will trade on the New York Stock Exchange under the ticker symbol WDAY.

The company is often described as “PeopleSoft in the cloud” mainly because its two and co-CEOs Aneel Bhusri and Dave Duffield both ran PeopleSoft during the period that software giant Oracle completed its hostile takeover of that company in 2005.

Bhusri and Duffield will collectively control about 67 percent of the shares, which should be worth about $2.4 billion. Greylock Partners, the venture capital fund where Bhusri is a partner, has a stake amounting to about 11 percent of equity. New Enterprise Associates has about 10 percent. COO Michael Stankey has a stake amounting to 2.5 percent.

And while it has reported about $120 million in revenue for the first six months of 2012 as of July 31, the real number to be watching — it is a cloud company, after all — is the deferred revenue number, an indicator of uptake in subscriptions to its service. As of July 31 it was $247 million.

The company’s valuation has nearly doubled in the last year since its $85 million institutional investment round, when it was valued at $2 billion.

The competitive landscape for Workday is also heating up. Oracle CEO Larry Ellison announced last night that all of its applications — including PeopleSoft — will now run on a software-as-a-service basis. Previously, it had been a traditional on-premise software product. Ellison likes to publicly beat up on Workday from time to time, which is widely considered to be more of a good thing for Workday than a bad thing. In an onstage interview at D:All Things Digital in June, Ellison said that Oracle “beats Workday all the time.” Ellison also said, “It’s going to be very interesting to monitor Workday.” And so it will.

Kenexa’s shares jumped 41% to $45.70 in recent premarket trading, just below IBM’s per-share offer price of $46, which represents a 42% premium over Friday’s closing price.

Read the rest of this post on the original site »

David Windley

As I reported earlier today, new Yahoo CEO Marissa Mayer is shaking up the human resources unit at the company.

Consider it shook and definitely not stirred: Leaving the company, by mutual agreement, is its longtime head David Windley, several sources said.

Also out is his No. 2 exec, several sources said, talent acquisition head Grant Bassett. Both have been replaced by another Yahoo HR exec Kristen Robinson on interim basis. (In another big HR departure, international head Marc Ketzel just left for a top HR job at Samsung.)

Windley’s tenure has included a huge brain drain at the Silicon Valley Internet giant and a series of layoffs at Yahoo, as well as an ongoing musical-chair series of top leaders.

Yahoo, keeping with a spanking new policy of non-communication, has not returned an email seeking comment.

Windley’s leaving comes as exactly no surprise, since Mayer has arrived and taken control of its culture and recruiting, which have basically boiled down to making a Yahoo version of the search giant. Before taking the top job at Yahoo, Mayer worked at Google for her entire career.

As I wrote earlier: “While free food and better swag have attracted attention, Mayer has also plunged into the recruiting arena aggressively. She is now reviewing all new hires personally — another steal, um, borrow, from Google — and has also begun to require a much more stringent set of standards.

That has included the requirement of the addition of solid college grade-point averages and a preference for higher-level educational institutions for incoming resumes.”

Windley follows former interim CEO Ross Levinsohn out the door as Mayer begins her house-cleaning of the current crop of exec at Yahoo, while searching her her own team.

Mayer is reaching out to a number of execs outside the company, including Twitter exec Katie Stanton, as well as perusing at a series of start-ups to bring new people into the company.

She has made two hires of mid-level execs from Google — both of whom have been described to me as longtime Mayer loyalists. But she has still to pull in a big name or deeply experienced exec to her team.

We’ll be watching for that, of course, as well as who’s next to go in this game of “10 Little Yahoos.” Several sources at the company said that they expect Mayer to replace almost the entire current executive team, from its CFO Tim Morse on down.

David Windley

According to sources close to the situation, active new CEO Marissa Mayer has turned her focus on the troubled Silicon Valley Internet giant’s human resources unit.

It is now headed by David Windley, whose tenure has included a huge brain drain and a series of layoffs at Yahoo, as well as an ongoing series of top leaders.

Yahoo, as has become its new practice, has not returned an email seeking comment.

Some in the company think a big shakeup is coming, which could include Windley’s departure.

He could stay too, but it is clear his new boss will be in his business much more than previous CEOs.

That is probably no surprise in the wake of the hiring of Mayer. The former Google exec has instituted a series of quickfire changes across the company related to its culture and recruiting, which have basically boiled down to making a Yahoo version of the search giant.

While free food and better swag have attracted attention, Mayer has also plunged into the recruiting arena aggressively. She is now reviewing all new hires personally — another steal, um, borrow, from Google — and has also begun to require a much more stringent set of standards.

That has included the requirement of the addition of solid college grade-point averages and a preference for higher-level educational institutions for incoming resumes.

Windley has been at Yahoo through a long series of CEO musical chairs and has been criticized internally for the talent loss and also its series of layoffs at Yahoo.

While none of this is his fault specificially, Windley is the person, according to its Web site, in charge of “driving Yahoo!’s worldwide strategies around talent, culture and organization effectiveness.”

Which has not been very effective — thus, the Mayer scrutiny.

If he left, Windley would follow former interim CEO Ross Levinsohn out the door as Mayer begins her house-cleaning of the company and looks to put her own team in place.

Mayer is reaching out to a number of execs outside the company, including Twitter exec Katie Stanton, as well as perusing at a series of start-ups to bring new people into the company.

Aneel Bhusri

The latest hints on timing come in the form of an extensive interview in Bloomberg Businessweek (the magazine I used to work for) with co-CEOs Aneel Bhusri (pictured) and Dave Duffield. Both are veterans of PeopleSoft, the HR software company that Oracle acquired in a $10.3 billion hostile takeover in 2004. The magazine says that Workday could file its S-1 with the U.S. Securities and Exchange Commission as soon as this month.

That jibes more or less with what AllThingsD reported last month when Workday selected the bankers that will shepherd it through the IPO process: Morgan Stanley, Goldman Sachs, Allen & Company and J.P. Morgan Chase. The process began in earnest after Workday hired away former VMware CFO Mark Peek.

Workdays plans still call for a fall road show, and then for the shares to debut in October or December, depending on market conditions.

The interview is rather interesting. When Fortune Magazine profiled the Workday founders in March, it portrayed the company as a means for Duffield and Bhusri to exact some revenge on Oracle CEO Larry Ellison. In Bloomberg Businessweek, Duffield all but thanks Ellison for the takeover drama:

“You have to bless Larry’s heart for giving us this opportunity. I would never have been part of this Workday thing without Larry.”

Ellison sure didn’t mince words when the subject turned to Workday during his appearance at D: All Things Digital on May 30. Asked during the Q&A session about Workday, Ellison sought to take Workday to the woodshed:

“It’s going to be very interesting to monitor Workday. We monitor Workday, and we beat Workday all the time.”

He then went on to accuse Workday of not using a database and using a Flash interface, making it useless on an iPhone or iPad. That prompted Bhusri to respond via Twitter:

Larry is super entertaining. But, we run on #iPads, support HTML5 and use MySQL as a database:-). @Workday #atd10

May 30, 2012 5:13 pm via Twitter for iPhoneReplyRetweetFavorite

@aneelb

aneel bhusri

What else do we learn about Workday? It’s apparently on track to break $500 million in bookings — essentially the combined value of multiyear contracts — this year. That’s in line with the $320 million in 2011 bookings Bhusri told me he expected in October of that year.

No wonder that Workday has raised a combined $250 million in capital since Duffield and Bhusri started it up in 2005. The last was an $85 million institutional round that valued Workday at $2 billion.

That round included T. Rowe Price, Morgan Stanley Investment Management, Janus, and Bezos Expeditions, the personal investment entity of Amazon CEO and founder Jeff Bezos. William Danoff, the manager of Fidelity’s $80 billion Contrafund, the mutual fund giant’s largest stock-based fund, also participated in that round. Other investors include Greylock Partners, where Bhusri is still a partner, and New Enterprise Associates.

Varicent makes software that’s intended to automatically collect and analyze sales data not only from a company’s finance and sales operations, but also from its human resources and IT departments. The point — and if this doesn’t describe an IBM-like view of the world I don’t know what does — is to gain efficiencies, discover unknown trends and, as always, boost sales.

In more practical terms, it means, according to a note from Brian Marshall at ISI out this morning, that Varicent’s software makes it easier for companies to “optimize compensation, streamline territory assignments, manage quotas, analyze sales activities and prepare for audits.”

Founded in 2003, it had raised $35 million in venture capital from FTV Capital, RBC Venture Partners and Edgestone Capital. It has 180 customers including Hertz, Manpower, Office Depot and Starwood.

Marshall goes on to argue that IBM is the company best positioned to capitalize on the expected $10 billion business in analytics. Varicent would be its sixth recent deal in the space: Others include Algorithmics, Clarity Systems, OpenPages, Cognos and SPSS.

And while terms haven’t been disclosed, IBM, Marshall says, has indicated that the return on its software acquisitions has been better than it has been in several years. It also looks like Big Blue’s dealmaking it on a serious upswing: After spending about $6 billion on acquisitions in 2010 it cut back to only $2 billion in 2011. Marshall argues that IBM is going to be busy buying companies: “We expect continued activity this year and see IBM as among the best in large-cap technology at building high-value capabilities through acquisition.”

IBM shares fell by $1.09, or about a half percentage point, to $204.23 by 10 am ET. The shares are up almost 12 percent this year, and earlier this month hit a lifetime high of $210.69.

The deal can’t help but be seen as a response to SAP’s acquisition last year of SuccessFactors, a Taleo rival. Indeed, Taleo’s shares have appreciated significantly in recent months — from $29 to $42 a share over the course of two weeks in December — on speculation that it would be the next cloud company to fall to the recent burst of acquisitions in the cloud software space. And so it has.

If Taleo is a new name to you, perhaps you should go back and read this interview I did with its CEO Mike Gregoire (pictured), about a week after the SuccessFactors deal. The company had been on track to do $325 million in revenue, and has been growing at a 20 percent annual clip.

What’s strange is that Gregoire seemed uninterested in being acquired by Oracle at the time, mainly because he had lived through Oracle’s hostile takeover of PeopleSoft, and had been with that company “until the bitter end.” Apparently, Gregoire and his board have seen past any reticence about Oracle this time around.

The press release is below:

Oracle Buys Taleo

Adds Leading Talent Management Cloud Offering to the Oracle Public Cloud

DUBLIN, CA–(Marketwire -02/09/12)- Oracle today announced that it has entered into an agreement to acquire Taleo Corporation (NASDAQ: TLEO – News), a leading provider of cloud-based talent management for $46.00 per share or approximately $1.9 billion, net of Taleo’s cash and debt. Taleo’s Talent Management Cloud helps organizations attract, develop, motivate and retain human capital to improve performance and drive growth.

Together, Oracle and Taleo expect to create a comprehensive cloud offering for organizations to manage their Human Resource operations and employee careers. The combination is expected to empower employees and managers to effectively manage careers throughout their entire employment, enable organizations to retain talent and optimize costs, and improve the employee experience through faster on boarding and better collaboration with team members via social media.

The Board of Directors of Taleo has unanimously approved the transaction. The transaction is expected to close mid-year 2012, subject to Taleo stockholder approval, certain regulatory approvals and other customary closing conditions.

“Human capital management has become a strategic initiative for organizations,” said Thomas Kurian, Executive Vice President, Oracle Development. “Taleo’s industry leading talent management cloud is an important addition to the Oracle Public Cloud.”

“Taleo’s integrated cloud-based talent management solutions optimize how organizations hire, manage, develop and reward their employees and gives companies the intelligence needed to capitalize on their most critical asset — their people,” said Michael Gregoire, Chairman and CEO, Taleo. “Joining forces with Oracle gives us the opportunity to better serve our customers.”

Salesforce just announced that it is buying Rypple, an oddly-named outfit that specializes in performance management and goal-setting. It’s a cloud-based platform for giving employees feedback on how well they do their jobs, and which attempts to make the annual performance-review process — dreaded by so many employees and managers — less, well, dreadful.

Salesforce says in its press release that it plans to relaunch Rypple under the name Successforce, which to me sure sounds a lot like SuccessFactors, the cloud-based HR software outfit that software giant SAP acquired earlier this month for $3.4 billion. That makes the third acquisition of a cloud-based software firm in recent months. Oracle, you’ll remember, acquired RightNow for $1.2 billion in October. Expect a new round of speculation around other companies in the space, chief among them Taleo, whose stock has picked up considerably since the SuccessFactors deal, but which was down today.

Rypple’s customers run the gamut: Facebook is mentioned as one of them in the press release; Spotify was named as another in a Wall Street Journal blog post earlier this week. Jive Software, a social enterprise software outfit that IPOed this week, is another.

Financial terms haven’t been disclosed, but Rypple’s investors include Bridgescale Partners and EdgeStone Capital Partners, as well as several individual investors, including Peter Thiel, the PayPal founder.

Salesforce’s statement follows; below that is a short video explaining what Rypple does:

Salesforce.com Signs Definitive Agreement to Acquire Rypple — First Step Toward Human Capital Management for the Social Enterprise

Acquisition marks salesforce.com’s first step into Human Capital Management

Rypple’s next generation social performance management app to be re-launched as “Successforce”

New HCM business unit to be run by John Wookey

Rypple to extend value of existing salesforce.com products

Hundreds of companies like Facebook, Gilt Groupe, and Spotify embrace Rypple’s new social model to empower teams to share goals, recognize great work, and improve performance

SAN FRANCISCO, Dec. 15, 2011 — Salesforce.com [NYSE: CRM], the enterprise cloud computing company (http://www.salesforce.com/cloudcomputing/), today announced it has entered into a definitive agreement to acquire Rypple, a cloud-based social performance management company. The acquisition signifies salesforce.com’s entry into the human capital management (HCM) market for the social enterprise. Salesforce.com plans to re-launch Rypple as “Successforce” and create a new HCM business unit, which will be run by John Wookey. Rypple’s unique social technologies will also extend the value of salesforce.com’s existing core products. The transaction is expected to close in salesforce.com’s fiscal first quarter ending April 30, 2012, subject to customary closing conditions.

Comments on the News
• “Salesforce.com and Rypple share a vision for extending the social enterprise to transform the way we work,” said Marc Benioff, chairman and CEO, salesforce.com. “The next generation of HCM is not just about a cloud delivery model, it’s about a fundamentally better way to recruit, manage and empower employees in a social world.”
• “Our social enterprise strategy continues to accelerate, and is at the root of the broad-based transformation and innovation we are seeing from customers today,” said John Wookey, executive vice president, advanced applications, salesforce.com. “With the launch of Successforce, salesforce.com plans to revolutionize HCM starting with an exciting social performance management app that will delight millions of employees around the world.”
• “We chose Rypple to be the core of Facebook’s employee performance management platform because it’s designed from the ground up to be social,” said Tim Campos, CIO, Facebook. “We are delighted to see it become part of salesforce.com’s social enterprise strategy.”
• “Rypple was designed from the start to be fun, social, and mobile — an app that can delight managers and employees in entirely new ways,” said Daniel Debow, co-CEO and co-founder, Rypple. “As the leading social enterprise company with more than 100,000 customers worldwide, salesforce.com will allow us to not only strengthen our offering for the hundreds of high-performing organizations that use Rypple today, but also scale it to reach many more.”
• “We took the science of team performance and applied the collaborative, transparent, and real-time power of social networks to create a completely new model for managing people and the work they deliver,” said David Stein, co-CEO and co-founder, Rypple. “Salesforce.com gives us the opportunity to apply our expertise and extend our vision for Rypple with Successforce.”

Salesforce.com Redefines HCM for the Social Enterprise
Traditional HCM software that many businesses use today was designed 30 years ago for personnel departments whose goal was to minimize the cost and risk of employing people. While HCM software hasn’t changed in decades, the way people work has radically changed.

Today’s workforce demands new performance and leadership tools that are completely transparent and allow employees to be connected to their company’s mission and each other. Social enterprises and progressive HR leaders are embracing apps like Rypple, which focus on the inherent social nature of performance management — goal setting, feedback, recognition and continuous dialogue — to help employees align more effectively around the company mission.

The acquisition of Rypple and its planned re-launch as Successforce signify salesforce.com’s entry into the HCM market. The company plans to expand into other areas with a new social model that will revolutionize the way companies recruit talent, build teams, empower employees and achieve results.

The new HCM business unit, including Successforce, will be led by John Wookey, salesforce.com’s executive vice president of advanced applications. Wookey comes to salesforce.com with more than 20 years of experience in enterprise software, including senior leadership positions at Oracle and SAP.

Extending the Value of Salesforce.com’s Existing Products
A social revolution is taking place today. The number of social networking users has surpassed e-mail users. Nearly a quarter of all time spent online is spent on social networks like Facebook. People access the Internet more from mobile devices than from desktops. Today, companies must change the way they collaborate, communicate and share information with customers and employees to stay competitive. Salesforce.com is helping companies meet the challenge of this social revolution with its social enterprise strategy.

With this acquisition, salesforce.com will embed some of Rypple’s next-generation features into its existing products. For example, people will be able to thank colleagues, win badges and provide recognition – all from within Salesforce Chatter. And customers of core Salesforce products — the Sales Cloud, Service Cloud, and Force.com platform — will be able to connect with new employee feedback tools to help drive business goals and power the future of their employee social networks.

Rypple: Pioneers of Social Apps
Founded in 2008, Rypple pioneered a new approach to performance management — one that empowers managers and their teams to learn faster and perform better. Rypple is a social performance app built for the way we work today — in real time. With Rypple, teams can share key priorities and get the continuous feedback, coaching, and recognition they need to consistently achieve their goals, making performance management painless and effective. Hundreds of companies including Facebook, Gilt Groupe, and Spotify use Rypple’s social performance app, which is based on 50+ years of behavioral science, focusing on what really keeps people passionate about their work.

Details Regarding the Proposed Acquisition
The transaction is expected to close in salesforce.com’s fiscal first quarter ending April 30, 2012, subject to customary closing conditions. The transaction is not expected to have a material impact on revenue for FY13. Salesforce.com will initiate EPS guidance for fiscal 2013 on its fourth quarter conference call in February.

About Rypple
Rypple is web-based social performance management software that helps managers and employees improve performance through social goals, continuous feedback and meaningful recognition. Designed to build a transparent, results-driven work culture, Rypple replaces the traditional performance review with an easy, social and collaborative approach so people know where they stand and are accountable for achieving their goals. Hundreds of high-performing organizations use Rypple, including Facebook, Gilt Groupe, Kobo, Mozilla and Rackspace. Founded in 2008, Rypple is funded by Bridgescale Partners, Edgestone Capital Partners, Peter Thiel and a veteran team of angel investors. Learn more at www.rypple.com.

Taleo’s CEO, Mike Gregoire, has been in this position before. As executive vice president of Global Services for PeopleSoft, he lived through Oracle’s hostile acquisition of that company. In an interview with AllThingsD, he didn’t comment directly on the speculation that Oracle might make a bid — Oracle hasn’t hasn’t said anything on the subject, either — but it was clear that he didn’t exactly seem to relish the thought, either. Having run $2.3 billion of PeopleSoft’s $2.7 billion in revenue, he was with that company “until the bitter end,” he told me.

After a stint as an angel investor and sitting on the boards of a few companies, Gregoire decided he was “more of an operational guy.” He joined Taleo and took it public in 2005, and has been at its helm since then. Taleo was at that time the second cloud-based software company to go public after Salesforce.com. It was so early for software-as-a-service (SAAS) companies, where customers pay a subscription fee to use the application, that when he approached banks for some financing, upon hearing the word “subscription” they would initially compare it to a magazine. Eventually they understood, and Gregoire got his loan. Now some of those banks are his customers.

Cloud-based enterprise software companies are suddenly hot acquisition targets. Aside from the SAP-SuccessFactors deal, Oracle acquired RightNow in October. As a growing cloud-based rival to SuccessFactors, with a protein-rich customer base, a solid operating model and an affordable market capitalization of about $1.6 billion, Taleo’s shares have shot up on speculation that it could be next.

On Dec. 2, the day before the SuccessFactors deal, Taleo shares closed at $32.96. On Dec. 5, the first trading day after the deal, Taleo rose almost 20 percent to $39.50. The move by SAP — long a vendor of traditional on-premise business software — to embrace the cloud-based or SAAS model is an important acknowledgement that the business of selling business software is fundamentally changing, Gregoire says. Indeed, it’s a fact that SAP’s co-CEO Bill McDermott acknowledged even before bidding on SuccessFactors.

And it’s hard to argue that Taleo (pronounced Ta-LAY-oh) isn’t making an impressive showing. The company has been growing its sales at between 17 and 20 percent since since 2008, and it’s on track to hit $325 million in sales this year, up from $237 million last year. It has 5,000 customers, including 180 of the companies on the S&P 500, and its product is available in 38 languages.

Naturally, my first question for Gregoire was about his thoughts on the SuccessFactors deal.

AllThingsD: Mike, it has been a busy few days since the SAP-SuccessFactors deal was announced. What did you think of the deal? And what, if anything, does it mean for Taleo?

Gregoire: I think it started a few weeks earlier, with the Oracle RightNow deal. It’s a confirmation that the on-demand model is moving into the next phase of its adoption. We’ve got 5,000 customers. We’ve been the No. 1 on-demand player in the enterprise. No one has as many Fortune 100 customers as we do. We drive the second-largest number of transactions volume of any on-demand player. It kind of felt like we had been pushing this rope, trying to get people ready for that next phase of adoption. So Oracle and SAP are acknowledging that the on-premise solution is running out of gas, and they need to augment that solution with some off-premise cloud solutions. Second, it’s important that SAP has recognized that talent management is extraordinarily important, and it complements a back-end Enterprise Resource Planning (ERP) system. Taking care of people helps your company grow, and without it, your company is at a competitive disadvantage.

A lot of people look at the the phrase “talent management” and think it’s kind of specious — or even boring — software that only the human resources office needs. What does it mean?

If you want to talk about an application that moves the needle for business performance, there’s nothing better. The No. 1 expense in businesses is people. We see the news about the unemployment rates, and then we see that companies can’t hit their productivity goals because they don’t have the right people in the right jobs. Its absolutely crazy. That’s the problem we solve. Talent management is about getting the right people into your company, having them work on the right things, because you’ve got performance goals, measuring those goals, tying that to pay-for-performance and compensation. And, by the way, the chances that person has the right skills at the right time is about zero, so you want to tie those goals to a learning management system, and making that happen in real time, and then providing intelligence about the whole ecosystem of employees. That moves the needle with respect to business performance.

What’s a classic example of this software in action?

I’ll talk about SunGard, which is a customer of ours. They use an Oracle ERP system, and they use our learning management systems. Let’s say you’re a SunGard sales rep and you just got promoted. The day that your promotion goes through in the ERP system, it kicks off a transaction in our learning system that checks your history to see what courses you’ve taken and whether you’ve got all the certifications you need. And then it automatically builds out the courses you need to take to be successful in your new job. We also do succession planning. And the days when you’re only going to consider people inside your company are over. You’ve got to think broader than that. United Airlines, which is a customer, when they think of succession planning, they’re not only thinking about the 200 high-potential individuals within the company. They’re talking to people in the industry so they can take a look at the people inside and outside the company and consider different scenarios. Our application is graphical, so you can drag people around in a visual tree and see what each scenario looks like. And then you can save them for later, so that if someone gets promoted, fired, or leaves the company for another job, you’ll know what to do, should any of those three things happen. Most people do this sort of thing in their heads.

How do you think Taleo stands up against SuccessFactors competitively?

Going forward, we’ll have to see how that works out. [With] due respect to what I’ve read about the deal in the press, I don’t think the integration with SAP is going to be a walk in the park. There’s at least seven platforms in SuccessFactors. And in this deal, you have two companies who have struggled to do SAAS at scale. SAP doesn’t have a very good track record executing on SAAS. They spent a lot of money building Business ByDesign. Rumor has it that SAP spent as much as $500 million building it. Their track record has been very marginal. The same is true with SuccessFactors. They’ve done a good job with one product that’s on an old platform for between 5,000 and 10,000 employees. They don’t have a good track record in the upper end of the enterprise, and they haven’t been able to get revenue from outside of their core, which is performance management. They went and bought a company in learning management. We’re dominant in recruiting; they’ve been trying to build a recruiting engine for five years. I don’t know that they have any significant reference customers on that yet, but they should have some soon, because they’ve been at it for so long.

So why did SAP buy SuccessFactors, then? Was it for the customer base?

SuccessFactors has a pretty small customer base. We’ll know more after they publish the 10-Ks and 10-Qs, so we’ll see more of where the synergies really are. But the synergies that have been reported is they want to be able to take the SAP technology and repurpose it into the SuccessFactors stack, which sounds expensive and time-consuming, and then take that stack and combine it with Business ByDesign and compete with Workday. We work pretty closely with Workday, and often go in with them shoulder to shoulder on deals when a customer needs recruiting and learning. And they use our recruiting products.

So, let’s handle this one piece of business. I’ve seen no fewer than five analyst reports saying you’re going to get taken out by Oracle. Have you been contacted by Oracle, or anyone else, about a possible acquisition?

We don’t comment on that kind of speculation. But a first-year MBA student could connect those dots. We’re positioned to be the only independent full-suite SAAS player in the market right now, and that’s a good place to be. How everyone reacts to that, I can’t control. But we’re on track to do $325 million in revenue this year, and we’re growing at about 20 percent per year. We have 12 percent operating margins. Who else has that? We’ve not only figured out how to do SAAS at scale, but we’ve done it profitably. And we continue to innovate. That’s where we want to be.

What are your priorities for 2012?

Three things. Selling back into our customer base. Most of them came to us for our recruiting heritage. If you take a look at last quarter alone, 36 percent of our net new bookings were in products other than recruiting; we’ve been reporting that number every quarter. So there’s a big push to sell our other products into our existing customer base. Second is geographical expansion. We bought a company in France that effectively doubled the size of our European salesforce. Despite what you hear going on Europe, they are not going to spend as much on technology in 2012 and 2013. If they are going to spend any money, it’s not going to be on upgrades of perpetual software licenses. I think they will spend it on SAAS, and I think Europe is generally way behind on SAAS. If I were to tell you our biggest deal last quarter was going to be a seven-figure deal with a Swiss bank, you would have said I was crazy, and that it would never happen. But it did. The reason it happened is that SAAS is orders of magnitude cheaper than paying maintenance fees on perpetual software licenses. The same thing happened with Société Générale, the French bank, which stopped an upgrade of either Oracle or SAP midstream, and they went with us. There is definitely room for SAAS in Europe, and there will be more room for SAAS in Europe in 2012; I think we’ll be a net beneficiary of that. Third is innovation, both organic and inorganic. We’ve been acquisitive, and every transaction we’ve done has been accretive and has worked out well. We’re good at either buying technology or customer bases and integrating them very quickly. Organically, we’ll be doing a lot of work on mobile and social features.

Or maybe buy a tiger. Today SAP said it will pay $3.4 billion to acquire SuccessFactors, a cloud-based maker of human-resources software. The deal values SuccessFactors at $40 per share and works out to a premium of about 53 percent. SuccessFactors shares closed at $26.25 a share on Friday. The shares have fallen by more than 9 percent this year, but traded as high as $40.27 a share during 2011.

SuccessFactors’ software is a cloud-based suite of tools around managing various personnel issues in a business: Performance management, goal setting, managing compensation and even planning for succession among senior managers. Its also has a pretty rich set of customers for so small a company: Among them are chipmaker Advanced Micro Devices, cable giant Comcast and hedge fund BlackRock. The company has about 15 million active subscription seats, and boasts in its earnings reports about one customer in Europe that has 400,000 users and another in the U.S. with 2 million.

The company reported $205 million in revenue in 2010 and a GAAP loss of $12.5 million, but a 7-cent per-share profit on a non-GAAP basis. It was on track to do $330 million or more in sales in 2011.

What’s it mean for SAP? Basically SuccessFactors gets integrated directly into the SAP Business ByDesign portfolio that McDermott talked about. SAP says in its statement that the deal will be paid for with cash on hand, and by a 1 billion euro loan facility.

The question I have now is this: Is this the starting gun for a new round software acquisitions? There are numerous cloud-based enterprise application companies out there. Among those that come to mind are Netsuite, Taleo, and Workday, to name but a few.

The SAP statement is below.

WALLDORF, Germany and SAN MATEO, Calif. , Dec. 3, 2011 /PRNewswire/ — SAP AG and SuccessFactors, Inc. today announced that SAP’s subsidiary, SAP America, Inc., has entered into a definitive merger agreement with SuccessFactors, the market-leading provider of cloud-based human capital management (HCM) solutions, pursuant to which a subsidiary of SAP would offer to acquire all outstanding shares of common stock of SuccessFactors for $40.00 /per share in cash, representing an enterprise value of approximately $3.4 billion . The acquisition will add SuccessFactors’ widely respected team and technology to SAP’s powerful cloud assets, significantly accelerating SAP’s momentum as a provider of cloud applications, platforms and infrastructure. The combination of SAP and SuccessFactors will establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes.

The SuccessFactors board of directors has unanimously approved the transaction. The per share purchase price represents a 52% premium both over the December 2nd closing price and the one month volume weighted average price per share. The transaction will be funded from SAP’s cash on hand and a euro 1 billion term loan facility. The closing of the tender offer is conditioned on SuccessFactors stockholders tendering at least a majority of the outstanding shares of SuccessFactors common stock (on a fully diluted basis) and clearances by relevant regulatory authorities. The transaction is expected to close in the first quarter of 2012 and be slightly dilutive to SAP’s Non-IFRS earnings per share in 2012 and accretive in subsequent years.

The acquisition marks another stride in SAP’s strategy of delivering solutions on premise, in the cloud and on mobile devices. It builds on a series of strategic moves in SAP’s targeted growth areas to drive innovation in its core applications and analytics; introduce breakthrough in memory technology; establish leadership in enterprise mobility; and grow its cloud portfolio. SuccessFactors’ solutions are highly complementary to SAP’s core HCM offerings as well as SAP’s strong cloud assets: SAP Business ByDesign for the suite cloud market and SAP’s line of business cloud offerings for large enterprises such as SAP Sales on Demand.

“The cloud is a core of SAP’s future growth, and the combination of SuccessFactors’ leadership team and technology with SAP will create a cloud powerhouse. The acquisition will help us address the top priority for CEOs globally – managing people and talent,” said Bill McDermott , Co-CEO, SAP. “Together, SAP and SuccessFactors will create tremendous business value for customers, with potent synergies to accelerate our growth in the cloud.”

“The depth and experience that SAP brings to customers via our cloud and on-premise portfolio fit elegantly with SuccessFactors’ world-class expertise in providing high-performing, low-cost, native cloud applications that customers are passionate about,” said Jim Hagemann Snabe, Co-CEO, SAP. “Together, we will lead the industry in providing end-to-end solutions consistently to meet any deployment preference, whether on premise, in the cloud or on device.”

“This is a revolutionary combination of proven capabilities that will allow SuccessFactors to accelerate our roadmap by 10 years, and bring the world’s leading application knowledge and intellectual property to our customers through the cloud, and the largest applications customer base instantly,” said Lars Dalgaard , Founder and CEO, SuccessFactors. “Expanding relationships with SAP’s 176,000 customers with our speed to value, friendly user interface, on mobile devices and the web, and seamlessly delivering more SAP solutions in the cloud will be legendary, as organizations adopt the cloud to improve their business. SuccessFactors has proven we have the technology and people to deliver the world’s biggest cloud deployments in terms of users and countries per customer, and also the most applications per customer from the same flexible scalable cloud platform. The business world is ready for enterprise-class cloud applications and together, we can deliver incredible new innovation for global businesses.”

SuccessFactors is believed to operate the largest scale of paying cloud users with 15 million subscription seats. With more than 3,500 customers in 168 countries, SuccessFactors is growing rapidly, recording 77 percent revenue growth year-over-year in the third quarter 2011 and 59 percent revenue growth year-over-year in the first nine months of 2011. SuccessFactors’ scalable cloud application platform supports organizations of all sizes from dozens to millions of users. With proven deployments in SAP environments at companies in diverse industries, the combination of SuccessFactors and SAP holds significant growth potential considering the more than 500 million employees of SAP customers and its 15,000 HCM deployments.

With headquarters in San Mateo, California , and more than 1,450 employees, the SuccessFactors team is widely regarded for creating innovative technology, generating more than 80 percent of new sales from applications that did not exist five years ago, and as one of the fastest growing leaders in cloud applications. Upon completion of the transaction, the CEO of SuccessFactors, Lars Dalgaard , will lead the cloud business of SAP in addition to his responsibility as CEO of SuccessFactors. SuccessFactors will remain independent and be named “SuccessFactors, an SAP company”. The chairman of SAP’s supervisory board, Hasso Plattner , recommended that Lars Dalgaard be appointed to the executive board of SAP AG.

SAP and SuccessFactors Customers to Benefit from Combined Application and Technology Footprint

The combination of SuccessFactors and SAP will create a comprehensive HCM solution, marrying strength in enterprise applications with people-focused cloud applications.
SuccessFactors’ complementary solutions will be an attractive option for more than 500 million employees of SAP customers.
SuccessFactors’ applications are designed for businesses of all sizes, and offer easily adopted solutions for customers of SAP Business Suite, SAP Business ByDesign, SAP Business All-in-One, and SAP Business One.
SuccessFactors’ cloud expertise and know how, rapid cloud innovation and proven success running large scale cloud deployments will help SAP customers more rapidly adopt cloud applications.
SuccessFactors’ mobile applications combined with the mobile expertise of SAP and Sybase will offer customers a powerful business-to-employee mobility portfolio.
SuccessFactors’ focus on enabling business insight and execution fits well with SAP’s business analytics platform, promising new levels of real time decision making across the enterprise.

It should probably come as no surprise to the board and top managers of Yahoo that the just-released annual poll of its workers — called the Yahoo Employee Satisfaction Survey — paints a picture of a deeply demoralized workplace.

Apparently, Yahoos can’t get no satisfaction.

The YESS questions went out to employees the week that the company fired CEO Carol Bartz, with most of the responses gathered in the ensuing weeks.

One major drop — not much of a shockeroo — was the employee assessment of senior leadership, under the question of whether “Yahoo is an effectively managed well-run organization.” That dropped 11 percent from last year.

Also troubling, according to numerous sources who have recounted the results to me, was that 19 percent of employees said they planned to leave the company within less than a year, in case a better opportunity arises.

(I like to call that the anywhere-but-here question.)

This is a large figure for any tech company for such a survey, which is commonly done throughout the industry. Typically, those numbers are around 10 percent, according to several human resources execs I queried, although Yahoo’s chart noted that the industry benchmark was 14 percent.

In any case, this YESS is Yahoo’s highest percentage of negatives for departure intent in several years.

Worse, it is higher in the product unit, where most of Yahoo’s engineers work and which is key to any technology company’s viability. Intent not to stay is 21 percent in the division.

On the plus side, numbers for manager effectiveness, teamwork and accountability did grow year over year in the product unit.

YESS documents sentiments I have been hearing widely and ever louder anecdotally from a plethora of mid-level managers at the Silicon Valley Internet giant.

Most are worried that they cannot hold onto critical employees as Yahoo is conducting a major strategic review of its businesses, either to sell it or make sweeping changes.

The uncertainty has put its employees on edge and there has been a spike in attrition throughout the company.

And worry. At a recent meeting with its staff, interim CEO Tim Morse was buffeted with questions about the fate of employee stock options and other similar issues.

Despite all the turmoil, Yahoo has surprisingly not yet put an overall new plan into place for retention, although it has given some employees more money and other benefits.

“Can a company collapse from attrition?” one exec joked to me recently.

Yes, it can, which has to be of prime concern to the board of Yahoo, as it seeks to right itself. I cannot stress enough how many talented and committed employees remain at the company, desperately hoping for some effective leadership to finally take hold.

Because for all the swirl of what will happen to the whole company, one truism of technology innovation in Silicon Valley remains, if you want to survive: It’s still all about the talent.

[UPDATE: Here are some more YESS stats, according to sources:

"Yahoo is innovative": 42 percent agree, 27 percent neutral, 31 percent disagree.

"Yahoo anticipates changing customer needs and wants": 33 percent agree, 37 percent disagree, five points worse than the previous year.

But here is the hopeful kicker: 79 percent feel proud to say they work for Yahoo.]

Aneel Bhusri

Today, Workday will announce that it has just raised $85 million in new financing, bringing its total amount of capital raised to $250 million. Sources familiar with the terms of the deal tell me that the investments value Workday at $2 billion.

The funding round isn’t coming from traditional venture capital players, but from institutional investors who will want to be shareholders of Workday when it goes public in the second half of next year. The round, which is being described as a Series F, includes T. Rowe Price, Morgan Stanley Investment Management, Janus, and Bezos Expeditions, the personal investment entity of Amazon CEO and founder Jeff Bezos.

I’m also told, by sources familiar with the deal, that William Danoff, the manager of Fidelity’s $80 billion Contrafund, the mutual fund giant’s largest stock-based fund, has participated in this funding round. This would be the Contrafund’s third recent investment in a privately held Internet company, the other two being Facebook and Zynga. In fact, it’s the same group of funds that took part in a huge round with social gaming force Zynga in February; in Groupon in January; and which earlier this year bought nearly three million shares of Facebook for $25 each.

Previous investors include Dave Duffield and Greylock Partners, who are in for $90 million across four rounds; and New Enterprise Associates, which joined a $75 million Series E round in 2009.

Why raise from institutionals and not VCs? “Because Workday is going to go public, and probably before the end of next year,” Bhusri told me. “Rather than do a round that adds an overhang to the existing capital structure, this is a group of investors who will likely buy more in the IPO,” he said. “In some ways, it’s an early debut of an IPO.”

And while there’s no S-1 filing from Workday to peruse just yet, Bhusri told me that Workday is growing plenty fast. Having disclosed $160 million in billings in 2010, Workday, he says, is on track to do twice that — or about $320 million in 2011 — and that it’s close to breaking even. So this round of capital is insurance. With the world economy so out of joint, if no logical window for an IPO emerges in 2012 — a reasonable worry — then Workday won’t be forced, should the need arise, to raise more capital in a difficult market.

So what is Workday, exactly? For the answer, you have to turn the clock back to 2004, when the software giant Oracle made its initial hostile bid to take over PeopleSoft. Bhusri was a senior executive and co-chairman of PeopleSoft’s board. After losing the battle to resist Oracle, he and co-founder Dave Duffield decided that the next battle for enterprise software would be in the cloud. Workday was born within months of their departure from PeopleSoft.

The plan, Bhusri says, was to create the next generation of PeopleSoft’s software, or the next generation of SAP’s Human Resources and Enterprise Resource planning software — essentially, software that businesses need to run day to day. But rather than deliver it in the traditional manner — run it on machines at the customer’s location — it’s all delivered via the cloud. “It’s as if you were going to start over with a clean sheet of paper and design this kind of software all over again,” Bhusri says.

And Workday’s customers aren’t exactly small players. Its average customer has between 10,000 and 15,000 employees. Among its 250-odd customers, the biggest is Flextronics, the huge electronics manufacturing company, which has 200,000 employees. Other customers include Time Warner, Thomson Reuters, Chiquita Brands, and perhaps unsurprisingly, Salesforce.com. There are some two million employees on the system. All that after only four years of actively selling the product.

And what Workday sells is a system that tends not to get replaced very often in large companies — perhaps once a decade. That gives the company an advantage when it asks for contract commitments that last three years; most cloud companies offer their services on a pay-as-you-go basis.

Workday’s targets are Bhusri’s old customers who bought PeopleSoft software to run their businesses one product generation back, and also those who run SAP software. So when a new customer signs on it’s usually one or the other being displaced. Other rivals include Lawson, Infor and, occasionally, the payroll giant ADP.

The typical new customer, Bhusri said, is using one of those other platforms and is ready to upgrade. “To upgrade to the newest version, they get a price quote that’s so high they start looking for a better way,” he says. “That’s when they find us.”

And Workday isn’t sitting still with HR software. Its next battle will be in financial planning software that companies rely on to handle money — accounting, expenses, procurement. Workday already has 50 customers running the financial stuff. Once they try Workday’s HR, they like what they see, making for an easy upsell. Others just swap out both the HR and financial parts in one go, Bhusri said. And the competitive targets are the same as well: Oracle and SAP. One wonders if they aren’t just a little worried.

“Better check yo self before you wreck yo self”
– Ice Cube

Everyone in the technology industry seems to agree that people are paramount, yet nobody seems to be on the same page about what the people organization — Human Resources — should look like.

The problem is that when it comes to HR, most CEOs don’t really know what they want. In theory, they want a well-managed company with a great culture. They know instinctively that an HR organization probably can’t deliver that. As a result, CEOs usually punt on the issue and implement something that’s suboptimal, if not worthless.

Interestingly, one of the first things that you learn when you run an engineering organization is that a good Quality Assurance department cannot build a high-quality product, but it can tell you when the development team builds a low-quality product. Similarly, a high-quality Human Resources organization cannot make you a well-managed company with a great culture, but it can tell you when you and your managers are not getting the job done.

The employee life cycle
The best way to approach management quality assurance is through the lens of the employee life cycle. From hire to retire, how good is your company? Is your management team world-class in all phases? How do you know?

A great HR organization will support, measure and help improve your management team. Some of the questions that they will help you answer:

Recruiting and hiring

• Do you understand the skills and talents required to succeed in every open position?
• Are your interviewers well-prepared?
• Do your managers and employees do an effective job of selling your company to prospective employees?
• Do interviewers arrive on time?
• Do managers and recruiters follow up with candidates in a timely fashion?
• Do you compete effectively for talent against the best companies?

Compensation

• Do your benefits make sense for your company demographics?
• How do your salary and stock option packages compare to the companies that you compete with for talent?
• How well do your performance rankings correspond to your compensation practices?

Training and integration

• When you hire an employee, how long does it take them to become productive from the perspective of the employee, her peers and her manager?
• Shortly after joining, how well does an employee understand what’s expected of her?

Performance management

• Do your managers give consistent, clear feedback to their employees?
• What is the quality of your company’s written performance reviews?
• Did all of your employees receive their reviews on time?
• Do you effectively manage out poor performers?

Motivation

• Are your employees excited to come to work?
• Do your employees believe in the mission of the company?
• Do they enjoy coming to work every day?
• Do you have any employees who are actively disengaged?
• Do your employees clearly understand what’s expected of them?
• Do employees stay a long time or do they quit faster than normal?
• Why do employees quit?

Requirements to be great at running HR
What kind of person should you look for to comprehensively and continuously understand the quality of your management team? Here are some key requirements:

• World-class process design skills: Much like the head of quality assurance, the head of HR must be a masterful process designer. One key to accurately measuring critical management processes is excellent process design and control.
• A true diplomat: Nobody likes a tattletale, and there’s no way for an HR organization to be effective if the management team doesn’t implicitly trust it. Managers must believe that HR is there to help them improve rather than police them. Great HR leaders genuinely want to help the managers and could not care less about getting credit for identifying problems. They will work directly with the managers to get quality up, and only escalate to the CEO when necessary. If an HR leader hoards knowledge, makes power plays or plays politics, he will be useless.
• Industry knowledge: Compensation, benefits, best recruiting practices, etc., are all fast-moving targets. The head of HR must be deeply networked in the industry and stay abreast of all the latest developments.
• Intellectual heft to be the CEO’s trusted advisor: None of the other skills matter if the CEO does not fully back the head of HR in holding the managers to a high standard of quality. In order for this to happen, the CEO must trust the HR leader’s thinking and judgment.
• Understanding of things unspoken: When management quality starts to break down in a company, nobody says anything about it, but super-perceptive people can tell that the company is slipping. You need one of those.

Acknowledgement
I would like to give a very special thanks to my head of Human Resources, Shannon Callahan, who taught me everything that I know about this subject.

It’s called ADP, and it’s a $10 billion (fiscal 2011 sales) outfit that processes the paychecks received last year by some 33 million people around the world — and which processed some $1.2 trillion in payments to workers in the U.S. And it does almost all of it in the cloud.

Long before companies like Salesforce.com and Amazon popularized “the cloud” as the important technology force shaping business, before we even had the phrase “software as a service,” ADP was selling its clients on a service that in hindsight sounds very “cloudy.” Rather than shoulder the cost associated with running a payroll on their own, companies large and small would hire ADP to take that business function on for them, on a contract basis.

“If you go back enough years, we were known as a ‘service bureau,’” says ADP’s CIO Mike Capone. “It was all run off a mainframe. Payrolls would come in on a Monday or a Tuesday, and paychecks would go out on a Friday. That was the model.”

And though for a time it sold some traditional software, by early last decade ADP starting pushing its customers toward the Internet, with no software to install or manage on-site. It was so logical that no one really gave it any thought, Capone says. In the same way it made sense to outsource payroll to a third party, it also made sense to do it without selling any software, but rather let customers run it via the Web. “Back then, it was just obvious that this was the way to do it,” Capone says. “And so we just did it this way.”

And so it has been for years. About half of ADP’s revenue comes from payroll services; the other half from other things — benefits, human resources, time and attendance management, taxes — that any business with more than, say, two employees, needs to varying degrees. And ADP’s 570,000 clients run the gamut from tiny mom-and-pops to huge global companies, and more than 200,000 are cloud-based clients. Among ADP’s bigger customers are giants like Sodexo, Alcoa and Swiss Re.

Its rivals run the gamut, too. There’s Paychex in the payroll business; SuccessFactors and Workday in various bits of the human capital management business. Lawson and SAP and even Oracle’s PeopleSoft unit overlap with other parts of its business.

However, on Monday, ADP is doubling down on the cloud with what it’s describing as a “big bet” product that brings its entire stack of service offerings into one. The company has dubbed it “Vantage,” and it is essentially aimed at unifying payroll, recruiting, talent management, benefits and a batch of other things that businesses large and small need on a day-to-day basis, into a single cloud service. The company says it spent $600 million and 18 months researching and building it, and will announce it at a conference in Las Vegas.

I talked with Don Weinstein, a senior vice president at ADP’s headquarters in Roseland, N.J., recently. He told me that often companies get all these services from different vendors. The result is that data from one application ends up being trapped, because there’s no easy to way to move it into a related application from another vendor. The result is a messy kludge of in-house combinations that have been integrated, often badly.

And all these processes have costs. A study by PricewaterhouseCoopers found that large companies spend an average $1,400 per employee per year on things like payroll, workforce administration, time and attendance, and health benefits, and at midsized companies of between 100 and 1,000 employees, the costs reach nearly $2,000 per employee per year. They’re also the kind of processes that any self-respecting CIO will want to make more efficient or less costly.

The aim with Vantage, Weinstein says, is to give businesses a single vendor and a single stack of services they can use with all these processes, and with the data shared easily across applications. The result, he hopes, is that businesses will like what they see and start using more of ADP’s stuff, and add on other services over time. “We’re expecting to sell a broader array of product,” he says. “Half our business still comes just from payroll. But our intent is to offer this one integrated solution, and win a bigger share of their wallet.”

I also saw a demo, and while it’s not exactly as exciting as seeing the demo of the latest iPhone, you can see how it might make the lives of people in the back office of many companies easier. As with any SaaS application, all the data is stored in a single database, and everything runs through a common browser. Years of analysis of business processes has given it some idea of how things tend to flow in companies, and so it suggests logical next steps in every process.

It works along the same lines that Amazon does when it suggests books you might like based on the last one you bought or looked at. If you just added a new employee — say, in the job of a janitor — your next logical step may be to order him a uniform, so the system will suggest you do so, and take you to the process for doing that. Add a new sales exec, and you are guided to enable his or her access to company sales and performance tools. Not exactly riveting stuff, but if you run a company, it’s all very necessary.

Necessary enough that analysts covering ADP’s stock say it will grow its annual sales to about $11.4 billion. That’s a serious cloud.

There’s no question it’s a jarring contrast–layoffs versus champagne and cookies.

But that’s the reality at AOL as its acquisition of the Huffington Post closes this week, even as it sheds employees as part of its ongoing turnaround effort.

Sources said the New York-based Internet portal could announce layoffs as early as today.

[UPDATE: Layoffs will not come until after the Huffington Post deal is closed said other sources, although they are coming.]

AOL CEO Tim Armstrong indicated job cuts were definitely coming at a paidContent conference in New York yesterday.

“There will be job changes,” he said, when asked about layoffs.

Perhaps sooner than later.

BoomTown received several emails from worried AOL employees, noting that human resources staffers were taking steps to initiate the layoffs at 10 am ET/7 am PT this morning and that there would also be employee meetings then too.

I followed up with several sources close to the situation, who confirmed that the layoffs are imminent. Nonetheless, they could not specify the timing, size and scope of them.

[UPDATE: There will be an all-hands meeting for AOL staff with Armstrong, as well as new content head Arianna Huffington.]

The last time AOL laid off employees a year ago, it was a large action with job cuts of 2,300.

The latest slashing comes just as AOL management will try to aggressively tout the closing of its $315 million purchase of the Huffington Post.

The integration of the well-known news and opinion site will mean a significant change for AOL’s editorial efforts, as well as an opportunity to impress advertisers.

Thus, AOL is prepping boxes with Greek cookies and pricey champagne to send out to key advertising clients, to celebrate the deal’s close.

Why Greek cookies? Because it’s the original country of Huffington, co-founder and editor-in-chief of the Huffington Post.

I have emails into AOL for a comment.

The U.S. Senate late Thursday passed legislation that requires all companies with employees in the U.S. that have more than half their U.S.-based employees on H1-B or L-1 visas to pay thousands of dollars in new fees for each worker. The measure is attached to a $600 million border-security spending bill.

If the bill becomes a law, it would make on-site resources for Indian software exporters much costlier. Brokerage CLSA said on an average it costs about $2,000 to get an H-1B/L visa currently and the bill proposes an additional fee of $2,000-$2,500 per visa as filing and fraud prevention and detection fees.

Som Mittal, president of Indian technology industry trade group Nasscom, says Indian companies could be looking at $200 million to $250 million in higher human-resources costs, the WSJ has reported.

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Since it launched almost exactly a year ago with a $300 million fund, the venture firm of Andreessen Horowitz has cut a rather high-profile path through the Silicon Valley investing community.

And it’s clear the firm has been aiming to make a big splash in the sector–from its involvement in the fractious fight over the spin-off of Skype to its funding of a series of high-profile start-ups (Zynga, Asana, Kno and Rockmelt) to its most recent aggressive moves to finally win the top spot in investing in hot social location site Foursquare.

Now, according to sources and after spending about half its kitty, Andreessen Horowitz is poised to begin another round of fundraising to further bolster its clout.

While it is unclear how much the VC firm will raise, sources expect it to be much more than its first fund.

In its last go-round, the firm had a quick completion of the fund raising, in the midst of a national econalypse. So many assume the next try will be a lot easier, especially given its knack for grabbing hot deals.

A spokeswoman for Andreessen Horowitz declined to comment on future fundraising plans.

The firm is going to need the money as it expands its partners and ambitions to change the venture landscape, as iconic entrepreneur Marc Andreessen noted when he founded the firm with his longtime business partner Ben Horowitz in July of 2009.

Andreessen said then that he was essentially professionalizing the active angel investing that he and Horowitz had been doing.

Over the last several years, either together or apart, the pair have invested in a large variety of innovative start-ups, such as Twitter, Aliph, Digg, LinkedIn and many more.

Andreessen is on the board of Facebook and an adviser to Twitter too.

In an interview with me last year, Andreessen said that unlike many VC firms, Andreessen Horowitz will invest in companies at any stage of life–from early stage to late–and of any size and in any kind of digital sector and will focus on companies led by tech-savvy founders.

He also expressed a disdain for the way the venture business was run.

“For the first time in my life, I am crossing over into the dark side,” said Andreessen at the time, in a joke about VCs being like Darth Vader.

At the time, he also noted that money talked. “It’s important to have more capital,” he said. “Sometimes having a huge checkbook is a great thing.”

Well, we’ll see if Andreessen Horowitz can make that checkbook even larger.

Until then, here is a tally of investments that Andreessen Horowitz has made so far, sourced from the firm, split up into categories and size of investment round the firm participated in with other investors. The firm declined to provide the exact amount of their participation in each investment.

It should be noted that Andreessen’s and Horowitz’s previous individual investments in some of these companies are not identified here:

Board

Kno: tablet device for students; $7.5 million
Nicira: cloud infrastructure software; $13 million
Okta: cloud app management; $750,000
Proferi: analytic applications; $2 million
Rockmelt; desktop browser for Facebook; unknown funding
Skype: Web telephony; $50 million

Passive

Apptio: IT cost transparency solutions; $14 million
Asana: enterprise collaboration; $9 million
Boku: mobile online payments; unknown funding
Digg: social media and content; unknown funding
Foursquare: social location; $20 million
Fusion I/O: enterprise I/O solutions; $45 million
Tiny Speck: social gaming; $5 million
Zynga: social gaming; $180 million

Seed

Burbn; social location; $500,000
Canvas Networks: image boards; $625,000
Factual: structured data; $1 million
GoodData: cloud-based collaborative analytics; $2.5 million
Quantifind; enterprise; unknown funding
RethinkDB: database storage; $1.2 million
Mixed Media Labs: photo sharing; $370,000
SnapLogic: open-source enterprise data integration; $2.3 million
TopProspect: social recruiting; unknown funding
Vikkii: user-generated subtitling; unknown funding
Ze Frank Games: online gaming; unknown funding

And here are video interviews BoomTown has done with both Andreessen and Horowitz in the last year on their investing theories: