Twelve days after announcing its imminent merger with Kronos Inc., Ultimate Software kicked off its 2020 users conference with a concerted effort to assure customers any resulting changes would be good changes.
“I believe with everything in me that this is a merger like no other,” Kronos CEO Aron Ain, who will lead the combined company, told attendees during Tuesday morning’s keynote at Ultimate Connections 2020. “When did two organizations that are so similar in size—but more importantly, so similar in culture, in orientation about how they think about training their people and how they think about treating their customers—come together?”Ultimate Software's message at Connections: "UltiPro is here to stay and here to grow." @UltimateHCM @Kronos #HR #HRTech Click To Tweet
Ain positioned the merger as the combination of two companies with strong products, complimentary customer sets and exceptional cultures. As Ultimate founding CEO Scott Scherr and his successor, Adam Rogers, did in previous years, he stressed the importance of workplace culture to the company’s success, and said Kronos has a similar commitment.
“Great organizations are powered by great people. Great people produce better products and deliver better services. You have better outcomes,” he said. And while he shared no specifics, Ain indicated the new company viewed culture as a strategic tool. “Great people have choices about where they work, and if you don’t create an engaged environment for those people who want to stay, great people will do what they can do every day—which is go get another job,” he said.
As they have from the beginning, Ultimate, Kronos and Hellman & Friedman, the private equity firm that controls them both, positioned the merger as a growth strategy. “This is not a cost-savings story,” said Ain. The company plans to add “thousands of jobs … in the coming years because we’ll need thousands of people to meet the plans for the goals and ambitions we have.”
Kronos and Ultimate have said the new company will hire around 3,000 people over the next three years. However, at Connections some sources said they were told the actual number may be 6,000 over six years.
New Products, Not Necessarily Integration
What will all of those employees work on? More product, for one thing. Today the two companies spend a combined $500 million annually in product development, Ain said. That will increase by $350 million a year.
Ain soft pedaled the notion of integrating Kronos’s and Ultimate’s products, though he allowed that their technologies could be integrated at the database and application layers in “ways that make sense.” Saying he wanted to be “crystal clear,” he told the audience that “UltiPro isn’t only here to stay, but it’s here to grow and it’s here to improve.”
Together, Kronos and Ultimate Software will be a company with $3 billion in revenue, more than 12,000 employees world-wide, and an enterprise value of $22 billion.
Analysts say the merger is logical and plays to each company’s strengths. While there’s much discussion as to the precise thinking behind the move, there’s general agreement that Ultimate doesn’t have a particularly strong workforce management component, while Kronos isn’t known for its HCM solution. Together, the companies will offer a suite of tools that touches nearly every facet of workforce and human capital management.
The merger was announced just about a year after Hellman & Friedman took Ultimate private in an $11 billion transaction. (H&F acquired Kronos in 2007.) At the time, H&F declined to acknowledge whether it saw any synergies between the companies, saying only that Ultimate would “operate independently within H&F’s portfolio.”
Disclaimer: Ultimate Software is a sponsor of the HCM Technology Report.
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Image: Lynne Goldman