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  1. Topics & Tools
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  3. What Does the Kronos and Ultimate Software Merger Mean for HR?
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News

What Does the Kronos and Ultimate Software Merger Mean for HR?

Prepare to ask about new contacts, product changes

February 21, 2020 | Roy Maurer

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​Users of Kronos and Ultimate Software—two of the largest HR technology vendors—may want to get in touch with their account representatives. The two companies have announced a merger, creating the largest pure HR tech company by market share, which could bring changes and new possibilities for customers.

Announced Feb. 20, the deal creates a formidable competitor to enterprise human capital management vendors such as ADP, Ceridian, Microsoft, Oracle, SAP and Workday.

"It makes sense—they're both large, successful companies with similar cultures, leadership and revenues, and the products complement each other," said Madeline Laurano, an industry analyst and founder of Aptitude Research, a Boston-based HR technology research and advisory firm. "Both companies have a lot of customers but very little overlap, with only about 400 customers that they share, so there are a lot of opportunities for both customer bases to get a stronger product suite."

She explained that Ultimate Software's core HR products are strong in payroll and talent management, with workforce management software a secondary strength. Kronos is a leader in workforce management, scheduling, and time and attendance technology.

The companies did not reveal their plans for future product lines or addressing the duplicate functionality of current offerings, and said nothing will change in the short term.

Holger Mueller, vice president and principal analyst at Constellation Research, a technology research and advisory firm based in Cupertino, Calif., said that customers should expect a single software suite combining elements of both Kronos and Ultimate Software within two to three years. "Kronos/Ultimate will have to convince customers to move from a very mature UltiPro product to a nascent Kronos/Ultimate HR core suite," he said.

Laurano said the deal could be an opportunity to do more with talent acquisition (TA). "Neither are exceptionally strong in TA" she said, but Ultimate brings "a very large SMB [small and medium-size businesses] customer base, which uses its applicant tracking system."

Mueller speculated that the KronosWorks 2020 user conference in November will probably be the earliest opportunity to hear publicly about a combined product strategy.

Get on the Phone Now

HR users should be reaching out to their Kronos and Ultimate reps now. "HR customers should be asking, 'Will the points of contact change?' " Laurano said. " 'Will customer support or sales reps change? If I'm in mid-implementation, does that get interrupted?' There will surely be a transition period where it's business as usual, but it's appropriate for customers to start to have that dialogue now."

On the latest HR Tech Weekly podcast, HRExaminer's John Sumser and Sierra-Cedar's Stacey Harris discussed whether the two companies will eventually cut off relationships with other vendor partners that are now in direct competition with them after the merger. 

Harris said that HR buyers can suffer when "two partners who used to work really nicely together … are no longer as friendly as they used to be."

Sumser added that "it starts to poke a big, giant hole in the idea that you get something special by buying into a single vendor and their ecosystem. That has been good, conventional wisdom for four or five years now, that if you really want to succeed, you sign up with a single vendor, and you don't look at the rest of the HR tech market. You only look at the things that have good relationships with your partner, your preferred platform, and this will poke a hole in that. If you want workforce management functionality, you're going to have to go outside of the ecosystem."

Mueller said Ultimate customers using Infor's Workbrain workforce management product (in partnership with Ultimate) should explore switching to Kronos Workforce Dimensions, which will be the combined company's long-term solution. "Proactively plan the switch—it will be painful but worth it," he said.

Lance Haun, editor of TLNT.com and former practice director at The Starr Conspiracy, an HR technology marketing firm based in Fort Worth, Texas, said, "Both Kronos and Ultimate Software will have a lot to figure out in the coming months as the executive team gets settled and a new-product road map is defined. No merger is ever easy, but in a few months we'll likely hear rumblings on how it is playing out both internally and in sales and renewal conversations."

Deal Closes Next Month

The two companies are expected to become one legal entity by March 28. Hellman & Friedman LLC, the controlling shareholder of both Kronos (acquired in 2007) and Ultimate Software (acquired in 2019), will be the controlling shareholder of the newly formed company.

Lowell, Mass.-based Kronos serves 16,000 organizations, and Ultimate Software, headquartered in Weston, Fla., serves about 6,900 customers. Aron Ain, Kronos CEO since 2005, will be the CEO and chairman of the combined company, which plans to add over 3,000 employees in the next three years.

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