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http://www.hreonline.com/HRE/images/BillKutik106x106.jpgDeloitte Buys Bersin: Are We Winning or Losing?

The ground we all stand on is constantly shifting. Wouldn't business get boring otherwise? The latest tremor is Deloitte's acquisition of HR research and analyst firm Bersin & Associates. Yes, we're losing another one of our younger, nimble firms, but the new "Bersin by Deloitte" may be better than without Deloitte.

Monday, January 7, 2013
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Don't for a moment think you are in some corporate backwater as an HR executive or practitioner, HR-IT person or technology vendor. The latest small evidence you're not are the sleepless nights you may have just spent getting compliant with the new payroll and tax rules from the federal government. Washington acts, and you need to respond fast.

Sounds like being on the front lines to me, even though this time in a traditional role.

Our industry is constantly changing: the pieces are always moving on the chessboard; areas of business concern rise and fall; occasionally new products change the game. Even those of us who follow these changes full time as part of our jobs often throw our hands up in despair at ever really keeping up. It's one (truly unselfish) reason I can't believe some people think attending the HR Technology® Conference every two or three years is sufficient. They miss so much in-between.

These musings are prompted by the recently announced acquisition of HR research and analyst firm Bersin & Associates by Deloitte, following the October acquisition of Knowledge Infusion.

I lump them together not because they do the same thing (though there is some overlap), or because I happen to be friends with the founders of both, but because, to me, they represent the "teen-aged" start-ups in our services world now going off to college.

Each has been thriving by doing some of what much larger and older firms do (Gartner, Forrester, Corporate Executive Board for Bersin; Accenture, Mercer, Towers for KI) differently, more nimbly and often at about one-fifth the cost!

If you're not yet a client of either, I don't think you've missed out on that fee arbitrage. I've already written about KI, so let's focus on Bersin.

Founder Josh Bersin was already an experienced computer industry executive (10 years at IBM, six years at Sybase), when he was laid off in 2001 by DigitalThink, an e-Learning vendor which had acquired Josh's own e-learning start-up, Arista, the standard 18 months earlier. Later Convergys bought them both.

He was joined nine months later by his colleague Chris Howard. Together they wrote a report under contract for IDC about 50 e-learning companies, later expanded into a book, The Blended Learning Book: Best Practices, Proven Methodologies, and Lessons Learned, published by Wiley.

In 2003, Josh started the website www.Bersin.com simply to sell the book. "I was amazed" he says, "when someone actually bought it, and I realized people would pay for research!" He started selling subscriptions to the expanded site for training professionals for $395 a year.

"Later people started bugging me to call it a 'membership,' not a 'subscription,' he says. "And I thought, 'A member of what?' and we decided to offer a 'high-touch' experience where everyone at the firm would talk to clients on the phone."

Josh broadened the company's coverage into the performance arena with the help of client Adam Miller, CEO of Cornerstone, who was doing the same on the product side. But really, until 2005, the company thrived solely as a specialist learning management system research firm for two reasons: Josh knew more about the subject than anyone on the planet and still does! Plus the firm nailed how to do research based on broad customer surveys, not just through talking with vendors and sharing the smart thoughts in analysts' heads.

That year, Josh hired Leighanne Levensaler to research this new category called "talent management," and in a few years, the firm broke out of its LMS niche into the full world of HR.

It may be hard to remember how utterly chaotic TM was seven years ago, with vendor claims, counter-claims and outright lies flying in every direction. But through incredible hard work, piercing intelligence and a little necessary obsession (I suspect), Leighanne figured it all out, explained it to everybody else and came to be seen as the area's leading expert.

No dummy, I recruited her to write the scripts for four talent-related Shootouts at the HR Technology Conference, starting in 2006 with the first Integrated Performance and LMS Shootout (when no vendor had all the apps) and ending with her fourth on Integrated Talent Management in 2009. Moments after the winner was announced, Leighanne started work as vice president of HCM product strategy at Workday. No dummies, either.

By 2009, Bersin & Associates was firmly established as an HR research firm. Then Josh started pushing the market with his maturity models and frameworks. And finally got serious about making some money.

By creating a better website platform for information retrieval (called Bersin Insights®), the company moved its 400-500 research members from a flat yearly fee of just $10,000 for five seats (actually sat in by dozens of employees at each member, of course) to company fees ranging as high as $150,000 a year. Finally about 18 months ago, Josh says the firm started breaking even.

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After years of ignoring potential investors and acquirers, Josh hired an investment banker and Deloitte stood out from those interested.

"We realized they would not take us apart," he says, "but instead want to do something big with us." That includes building a product business, now called Bersin by Deloitte, that Deloitte has never had before. He was also attracted by the fact that unlike other Big Four firms, Deloitte had not spun off consulting from accounting and audit, and the partners still ran the place on accounting's arm's-length principles of independence and being a "trusted adviser."

The question of Bersin's continued independence after this acquisition has been roiling through the Conference LinkedIn Group since the announcement. I have long thought about the subject this way:

Every technology analyst firm positions itself as objectively reporting on vendors and their products for its corporate clients. Yet those firms also have many of the same vendors they're writing reports about as paying customers: The vendors are looking for product, positioning and marketing advice they can use with their corporate prospects, potentially even the analyst firms' clients!

You want to talk about conflict of interest? There it is, and everyone in a position of influence in our world has one. OK, the Corporate Executive Board never took vendor money, but it just became a vendor itself by buying SHL!

So the question isn't whether an analyst or consultant has a conflict of interest, but how much integrity and good judgment they bring to managing their conflict of interest. Frankly, with the power and resources of Deloitte (about $6 billion in U.S. consulting revenue) now behind it, I think Bersin & Associates will become as independent as it always wanted to be!

For more of Josh's take on all this read his blog.

HR Technology Columnist Bill Kutik is co-chairman of the 16th Annual HR Technology® Conference & Exposition, returning to Las Vegas, Oct. 7-9, 2013. Speaking proposals are due now. You can comment on this column at the Conference LinkedIn Group, which does not require prior or future conference attendance to join. He is also host of The Bill Kutik Radio Show®. He can be reached at bkutik@earthlink.net.

 

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