Having spent the last decade mainly in workforce management technology, it shouldn’t be surprising that I followed the IBM acquisition of Kenexa last year with great interest.  While many of my colleagues had a What on Earth? sort of reaction, my reaction was a toss-up between It was inevitable and This could be interesting.  It was inevitable in that IBM’s enterprise software offering lacked much of anything workforce management related.  And it might be interesting if they can actually infuse Kenexa’s products with some of IBM’s technical stature.

A few of my colleagues agree with me on the inevitability factor, but I think for the wrong reasons.  They believe IBM was playing catch-up to Oracle and SAP’s recent talent management acquisitions; I believe there might just be a more interesting reason behind the Kenexa acquisition.  They believe the Kenexa acquisition was just another step along the path of IBM becoming more a services and software company and less a hardware company (a little trivia for the younger readers out there: the M in IBM actually stands for Machines).  And while an acquisition of Kenexa obviously advances that objective, so could the acquisition of any number of other interesting software companies ripe for the picking (the reason for picking Kenexa might just be the topic of an upcoming blog).

A disclosure before I continue: Kenexa was one of the first companies that approached me to acquire Emerald Software Group.  The NDA has long expired, and obviously a deal never happened.  We never formally partnered with Kenexa either, so I don’t have a significantly deeper perspective than most.  Suffice it to say, though, I have since greatly respected Kenexa and their strategies and have kept a close eye on them.

I think the light is starting to shine on what might be interesting behind the IBM-Kenexa deal.  Late January, at what used to be called Lotussphere (now redubbed Connect), IBM announced their Smarter Workforce initiative and laid out a high-level strategy for the Kenexa products.  The more skeptical of my colleagues view this as hype, but I see a strategic melding of IBM’s technical muscle with Kenexa’s vertical technology and distribution channel.

Just consider for a moment the blending of the IBM Cognos products with the Kenexa products.  Few in our industry would say that reporting, analytics, and business intelligence is done even pretty well in workforce management.  Couldn’t then the marriage of a top BI platform with a top talent management platform give the offspring a huge competitive advantage?

But then realize the depth of IBM’s capabilities.  At Connect in January hints were dropped that IBM Watson could be applied to problems in workforce management.  I doubt this was just a trial balloon.  Predictive analytics and correlative analysis are the kinds of things that IBM is good at but nobody in workforce management has even dreamed of bringing to market.  Imagine the vast web of an enterprise’s employees, their skills, their relationships, their interests, their contacts, their objectives, their performance–and expand that to prospective employees, alumni, and the open market.  Now remember the depth of IBM’s prowess: tens of thousands of patents in their library, with more than 6,000 new ones granted every year.

My skeptical colleagues wonder if there truly are applications here.  I know there are, because humans–the building blocks of the workforce–are predictable creatures.  If we weren’t, there’d be no science of economics.  And where there’s predictability, businesses who figure out how to read the tea leaves before everyone else always gain a huge competitive advantage.

With IBM’s Smarter Workforce, IBM has shown their intent to sell products that allow customers to read the tea leaves in workforce management.  There’s definitely no hype here.  I think the inevitable case studies will be quite interesting.