AllyO: HireVue buys up AllyO - an interesting HCM M&A move

HireVue buys up AllyO - an interesting HCM M&A move Brian Sommer Wed, 10/07/2020 - 02:20Summary:Casting an eye over an intriguing example of HCM M&A...(HireVue CEO Kevin Parker) HR vendor HireVue has announced the acquisition of AllyO. The deal is an interesting one as it puts two innovative HR technology firms together - a combination that can make firms really, and radically, reimagine how recruiting should work. To understand how cool that combination could be, here's some prior perspective. Late last year, I mentioned AllyO in a Fall HR recap piece:AllyO is the place to go to see a lot of bots in action in HR and Recruiting. That means there are lots of AI/ML-powered bots to better source, connect, engage, onboard, etc. candidates and employees. Any software selection team needs to, at a minimum, see AllyO's solutions as a way of understanding how HR must change and what opportunities exist to eliminate more low-value-added work and improve the recruiting and work experience for jobseekers and employees.In a lengthy review I did of HireVue in mid-2017, I noted:But while the company's start in video interviewing is an interesting historical fact, it's the incredible improvements in Internet access, high-speed, mobile communications and almost limitless and cheap technology storage that allow HireVue to now supplement this technology with its intelligent assessment service. In a nutshell, this service can analyze some 25,000 data points during a 15 minute or less video interview.These assessments utilize the big data gleaned from some 4 million prior video interviews as well as the insights of industrial and organizational psychologists as part of their algorithmic assessments of a job seeker and their interview.According to HireVue CEO Kevin Parker, the number of video interviews will soon surpass 17 million. As to the assessment technology, that same article also stated:The value in this intelligent assessment technology comes from a more consistently applied set of criteria being used in comparing jobseekers, the elimination of a lot of bias in the process and the saving of time.Time savings can be material as operational and recruiting personnel are spending markedly less time with individuals who will not proceed to the next level of the recruiting process. Greater workforce diversity was also mentioned as a benefit.ImplicationsThe deal is all about changing the way innovative firms will approach recruiting / talent acquisition. AllyO is a mobile-first solution that uses bot technology to make the candidate user experience super-fast and attentive. It not only just efficient, it's also a far cry from the old way of engaging candidates. It's not about completing lengthy, time-consuming recruiting forms online. It's about putting the right questions and information across a straightforward electronic conversation. And, it turns out that large numbers of jobseekers would rather interact with a bot than a hard to connect with recruiting person. The HireVue solution really picks up at this point. The candidates that warrant an interview go through a video interview process that does much more than just capture data. It can also make a number of assessments as to a person's skills, intelligence and more. The product also has the potential for helping eliminate recruiting biases by capturing responses, assessing skills, etc. while shielding a candidate's race and gender from recruiters. The product can determine the proficiency of a candidate's technology skills and other attributes depending on the kind of role and/or industry that the employer is in. Both firms' solutions can be used for external hires and internal transfers/promotions. This deal is interesting as both vendors operate in the white space many traditional, transaction processing focused HR solutions avoid. Where many talent acquisition products are automating the application process, processing paper (or electronic resumes) into an Applicant Tracking System (ATS) and solving the recruiting process, they have done so in a traditional manner: a manner that serves the corporate recruiter almost exclusively and not the job candidate. AllyO's solution is very much focused on both the jobseeker and the employer. Their UX is a mobile-first user interface. Details According to Forbes, HireVue was formed in 2004. AllyO was founded in 2015 (see this Crunchbase report on their capital structure and other data) and claimed to be: ... the most funded and highest valued AI for HR company worldwide; AllyO has partnered with 15% of Fortune 50 to automate talent acquisition and management. Backed by tier 1 investors such as Google, SAP, Randstad, Bain and Cervin Ventures... HireVue appears to be a materially larger firm than AllyO. One of HireVue's early priorities will be to put AllyO in front of their 800 or so customers. That cross-selling could make the deal accretive in a hurry.AllyO will become part of HireVue and be known as AllyO by HireVue. All AllyO personnel will join HireVue. Combined, both firms deal with the top of the recruiting funnel. Using both firms' automation, employers could materially compress the recruiting process, reduce non-value-added spent by HR/Recruiting personnel and improve the quality of new hires. Assessment challengeNo deal is without its challenges. Often these come in creating a single culture, rationalizing redundant support functions, etc. This deal has a different issue to contend with. HireVue has been way out in front of other HR firms in its use of artificial intelligence and the rate with which large firms have adopted one of their solutions, the assessment, has caught the eye of others. A Washington Post article in November last year covered this issue in some detail. The HR industry will certainly want to see how this matter comes to closure. My takeWe're in a time where firms should be spending a lot less energy and capital in re-automating, re-platforming and repairing their old school transaction systems. There's so little economic value in doing this relative to the risk involved. Worse, these efforts do little to advance a firm's competitive advantage. It's time to re-engineer and re-imagine every business process including the HR ones. Products like AllyO and HireVue make HR and other executives realize how much improvement opportunity exists even in a process area like talent acquisition. Executives can also see that:Chatbots, AI/ML, etc. technologies can also make processes considerably faster and possibly fairerReimagined processes and technologies can make for a more positive experience for users, customers, suppliers, and other internal and external constituentsOld methods and old tech have a useful life and that some of their own firm's tools are approaching end of lifeDo you want your firm to be perceived as modern, current and supportive of new ideas, methods and practices or as a slavish defender of a nostalgic and growingly irrelevant business world of yore? That's today's business issue...Image credit - HireVue CEO Kevin Parker at HireVue Disruption 2019 - Used With Permission From TechVentive, IncRead more on: Future of workHR admin and payrollHCM and the digital future of work