Kronos-Ultimate get new name; Workday gets a co-CEO
The newly merged Kronos and Ultimate Software will be called UKG or Ultimate Kronos Group. Its big competitor, Workday, had an announcement of its own this week, a co-CEO.
The newly merged Ultimate Software and Kronos Inc. have settled on a new name: UKG, short for Ultimate Kronos Group. The name change was announced Friday.
The news is more of an exclamation point to the merger, which was completed in April. Analysts are waiting to see if UKG can combine their similar but distinct product lines in a way that makes sense for HCM customers.
"Our new brand, UKG, truly unites Ultimate Software and Kronos, both as a business and as people," Aron Ain, CEO of the joint company, said in a statement.
The merger happened after Hellman & Friedman LLC, a private equity firm, which owned Kronos, paid $11 billion for Ultimate Software in 2019.
The formation of UKG creates a much larger firm. Kronos-Ultimate are the fifth and sixth largest HCM software vendors respectively, according to IDC data. Kronos has 6.1% of the $18.5 billion HCM market, and Ultimate 4.2%.
The combined Kronos-Ultimate market share puts it close to the No. 2 HCM vendor, Workday, which is moving like a freight train in terms of growth.
Workday posted a nearly 20% revenue gain Thursday, after the markets closed, compared to the same quarter from a year ago, and beat analyst expectations.
Workday also announced that Chano Fernandez, its president, will become the company's co-CEO alongside Aneel Bhusri, Workday's co-founder who had served as its sole CEO. Bhusri served as co-CEO with co-founder David Duffield until 2014, when Duffield stepped down from that role.
Bhusri will have oversight of product development, technologies and corporate functions. Fernandez will have responsibility for the entire customer relationship.
Holger MuellerAnalyst, Constellation Research
Workday's HCM market share is 12.9%; the leader is SAP at nearly 14%, according to IDC.
Kronos-Ultimate customer choices
Kronos is known for its workforce management software and timekeeping systems, but also an HCM product line. Ultimate is primarily focused as an HR software vendor.
"Scale is very important in a globalizing business," said Holger Mueller, an analyst at Constellation Research Inc., who said that he sees the Kronos-Ultimate combination helping with international expansion.
"Ultimate made only very little progress internationally, Kronos was better," he said.
Mueller said the combined HCM firms face "an uphill battle against long-term international players like ADP in the HCM segment, and SAP, Oracle, Workday in the ERP segment," he said. "But there is no alternative to Kronos-Ultimate trying it."
Trevor White, an analyst at Nucleus Research, said Kronos-Ultimate need to figure out its sales strategy, and how it goes to market with products. When it figures that out is "when they actually become one company."
For Ultimate customers, the major change is it now has a "quality workforce product" via Kronos, White said. For Kronos customers, "you will see a large expansion in the functionality for HCM" from Ultimate.
"The combination of the two companies is mostly complementary," said Josh Bersin, an industry analyst who also runs a professional HR training academy.
Bersin believes the combination will grow Ultimate's customer base, in particular, "but Workday grew by over 20% this year, so it would have to be a pretty significant growth rate for them to increase market share."