Interest Grows In Workforce Performance Management SoftwareInterest Grows In Workforce Performance Management Software

You've probably heard about the aging workforce dilemma: more than 75 million people from the "baby boomer" generation will retire in large numbers by 2011, and there aren't enough younger workers to replace them. Add to that a number of studies that are showing people feel increasingly unsatisfied with their jobs.

These issues are helping to grow interest in workforce performance management software. In a report last year, IDC forecasted that worldwide spending for workforce performance management software and services would grow at an annual rate of 16.3 percent between 2006 and 2010.

It's enough to embolden SuccessFactors, which provides workforce performance management software in a software-as-a-service model, to pursue an initial public offering of stock. In its S1 filing with the Securities Exchange Commission in July, the company cites 1,300 customers, including American Airlines, AmerisourceBergen, Kimberly Clark, Lowe's, and Wachovia.

SuccessFactors' revenue grew 150% to $36.2 million last year, but it's been losing money for several years -- a common predicament for small companies selling through a SaaS model. Since they don't get big license fees up front, yet spend a lot on marketing and non-commission salaries, it can take years to build up the momentum to achieve profitability.

The market's potential also prompted Taleo, a provider of recruiting and human capital software, to announce this week its first foray into this area with Taleo Performance. Products in the suite include Performance Management, Goals Management, Career Management, and Succession Planning.

Taleo says, based on a survey it conducted online with Harris Interactive, lack of growth opportunities was cited as the top reason employees voluntarily leave a company, and only 12% of respondents said their employers give them a career path plan. Also, 57% of respondents said they have never had a performance review or said it was neutral or not useful. The offerings in its Taleo Performance suite, it says, will help companies eliminate this type of dissatisfaction.