M&A in Gamification

Jennifer is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

SAP, Salesforce and IBM technology acquisitions now embrace gamification by leveraging innovative strategies in loyalty and engagement. Mergers and Acquisitions set record highs, with most acquisitions going towards smaller companies. In 2013, gamification will be adopted as standard practice within organizations and business processes. Acquisition revenue totaled $4 billion in 2012, an 18 percent increase from the $3.4 billion earned in 2011.

2013 is still showing signs of a growing competitive market for cloud-based human resource management services. Enterprise organizations will have to adapt through expansion to lead in gamification. Investments also in this sector fell 57 percent to $853 million. Investment transaction value was led by middleware and gamification at 35 percent, mobile at 31 percent, MMO at 18 percent, followed by social, console, and advertising. The total gaming industry is expected to reach $83 billion by 2015.

Gamification and Enterprise

As gamification becomes standard process, training management, leaders, and executives requires monitoring such digital business innovations through gamification by measuring user behavior. There are many areas that can be tracked with such analysis. Enterprise objectives will be centered around engagement priorities.

IBM (NYSE: IBM) in December 2012, announced the closing of its acquisition of Kenexa for an estimated $1.3 billion. Kenexa helps clients embrace social business capabilities and connects through social networks. Kenexa is a leading provider of recruiting and talent management solutions. IBM does understand the importance of HR objectives and the business. IBM recently announced its Smarter Workforce Initiative in 2013. The campaign is to position IBM as a leading provider of HR and talent management solutions.

IBM Mar. 25, 2013 Market Close: $ 210.74 and Key Stock Data

Dividend Yield 1.61%

P/E Ratio 14.45 Trailing 12 months

Market Cap $236.36 Billion

Shares Outstanding 1.11 Billion

Public Float 1.11 Billion

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"By creating a smarter workforce, employees can drive innovation to bring products and services to market faster, resolve problems before they arise to improve customer service, and increase sales by building new skills -- linking the right experts to the right clients," said Alistair Rennie, general manager, social business, IBM.

Salesforce.com Inc.  (NYSE: CRM) acquired Rypple in 2011. Rypple had just launched a native Android app prior to the acquisition that connects managers with employees. Rypple’s helps managers improve employee performance through “social goals” and engagement. This came at a similar time when SAP had bought out SuccessFactors. Rypple was founded in 2008 with 45 employees. Its customer base includes companies such as Facebook and Spotify. Success of Salesforce and SuccessFactors will factor in its use of integrated talent management solutions versus stand alone. Salesforce has already proven significant in making cloud mainstream within the industry.

Salesforce Mar. 25, 2013 Market Close: $ 172.76 and Key Stock Data

Dividend Yield CRM has not issued dividends in more than 1 year.

P/E Ratio N/A

Market Cap $25.78 Billion

Shares Outstanding 146.45 Million

Public Float 135.01 Million

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SAP and SuccessFactors (NYSE: SFSF) announced on February 23, 2012, that SAP has completed the acquisition of SuccessFactors. The company had acquired for $3.4 billion SuccessFactors in the year 2011. SuccessFactors is a cloud-based maker of human-resources software. 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 customer base includes companies such as Advanced Micro Devices, Comcast, and BlackRock. SuccessFactors competes with the company Workday.

"For more than a decade, SuccessFactors has created and led this space," said Lars Dalgaard, founder and CEO of SuccessFactors and member of the Executive Board of SAP AG. "The biggest core-HRIS cloud deal ever done with 300,000 users. We will continue to invest more aggressively in delighting our customers and leading in this field."

SAP Mar. 25, 2013 Market Close: $ 79.86 and Key Stock Data

Dividend Yield N/A

P/E Ratio 26.09 Trailing 12 months

Market Cap $99.79 Billion

Shares Outstanding 1.23 Billion

Public Float 1.23 Billion

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2013: Investing in Gamification

The HR solutions and software market is highly competitive,, with companies that have been competing in this market for a very long time. The growth of the Global Gamification market is driven by many factors such as the market’s ability to optimize in consumer engagement. Investors following gamification for enterprise companies should consider innovation areas, engagement and collaboration, organizational culture and growth expansion. With present economic conditions, investors are optimistic, but seek out value in gamification.


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