Cornerstone acquires Clustree. This was announced today.

One of my first customers at Otter Advisory was Clustree. I have been impressed with their deep technical understanding of ML/AI , and the pioneering work they do to gather, collate, classify and manage a vast repository of skills and competencies. I helped them tune up their positioning, and in full disclosure, I also advised them on the deal with Cornerstone. Thanks  Bénédicte and Guillaume. I look forward to seeing the company do great things as part of Cornerstone.

So why did Cornerstone buy Clustree? Making machine learning actually useful for HR work is hard, far harder than most imagined it to be. People and jobs are complicated to classify meaningfully. It takes more than just a couple of smart data science people. Cornerstone is acquiring a proven solution, team and top notch customers, and a polished, refined dataset, and GDPR aware.

Paris is arguably the center of AI in Europe. Of all the US vendors, Cornerstone has done best at making Europe (Paris) a second home. It will provide critical mass from an engineering perspective, and Bénédicte will be an accomplished addition to the Cornerstone leadership team. The cultural fit will be good.

This is part of a broader trend. Workday has worked hard on its skills offering, and it is likely to be at the centre of its marketing and sales efforts in 2020, after several years in gestation. Degreed recently acquired Adepto. Josh covers that here. This is bigger than just matching people to training. The Netflix metaphor needs to be put to bed.

I recently met with Aneel, Workday CEO and co-founder, and it became crystal clear to me that over the next few years, data will play a far greater role in software selection and deployment that it does today. ( Josh Bersin has a report on the Workday skills cloud and Phil Wainewright’s post is v good too.) How vendors use data (your data, and aggregated other data) in a secure, compliant form, to actually deliver real insights and processes, will be what determines which vendors win or lose. Buyers of software will need to get a lot smarter about evaluating vendor data strategies. Today buyers evaluate transactions and processes, but it is time to start evaluating data, data curation, and data use. Over time data will move to centre of the value proposition. It will mean software will be assessed in very different ways that is today, vendor R&D will shift from just building processes and transactions to acquiring, curating, safeguarding, refining and utilizing data.

For instance, Microsoft has a massive opportunity with Linkedin, but it is yet to really figure that out. Other HR tech vendors will need to respond. Interesting times.

Advice for Clustree customers.

  • This is positive news for you, in that it will accelerate Clustree development.
  • Risk of engineering and executive turnover is low.
  • Insist that Cornerstone continues to maintain APIs to other HR systems.
  • Once dust has settled, seek roadmap and contractual clarifications.

Advice for Cornerstone customers.

  • As with any acquisition, don’t expect magic integration to follow just behind the press release. Look for areas of product overlap, and seek guidance on roadmaps, but be realistic.
  • Use this as an opportunity to figure out your data strategy.
  • Clustree Product is well suited today for organizations where English or French are business languages. (Several large French multinationals use the tool) but there is work to do for Chinese, for instance.
  • Cornerstone will need to balance between embedding Clustree into its own products, and keeping Clustree open to integrate with other products. Work through user group to drive that balance.
  • Start with a practical use case, rather than a grand library project. Work with Cornerstone /Clustree on use cases that add immediate business impact that are quick wins. Also look for use cases beyond “pure” HR, for instance in project staffing.
  • Cornerstone ecosystem will also add use cases over time.
  • Cornerstone partners will not have Clustree expertise at first. Seek expertise via Clustree initially.

General market advice.

  • Start to think about your data strategy. Ask your existing vendors what their strategy is for data curation / aggregation etc.
  • GDPR is an excellent litmus test.
  • Which vendors will you rely on for curated data and ML, and who are simply transaction providers. The next few years will see a lot of action around data. Learning vendors, core HR, recruiting software providers will all clamour to say that they have the best skills and competency tools and catalogues. Focus your initial efforts on workable use cases that have direct business benefit.
  • Expect more acquisitions, as other vendors respond. HR tech acquisitions will continue at pace, so don’t be surprised if your favourite startup is acquired.
  • Matching skill tools as a stand alone category will not last long, as it is only through use cases that customers actually get value.

Happy to discuss further, drop me a note at thomasdototteratotteradvisorydotcom.

(Disclosure: I’ve attended Cornerstone Analyst days, and I follow them closely, but they aren’t a client).