Salesforce.com Enters HR Software Business

(Reuters) - Salesforce.com Inc is entering the business of selling human resources software in a move that raises the stakes in its battle to woo customers away from bigger rivals SAP AG and Oracle Corp..

The provider of web-based software for managing sales, customer service and marketing said on Thursday that it has agreed to buy Rypple, a closely held company with 350 customers including social networking giant Facebook.

Salesforce said it expects the deal to close in the quarter ending April 30, 2012, and that it won't have a material impact on revenue in the coming fiscal year.

The company described the acquisition as the first step in an effort to build out a line of web-based human resources software for corporations.

Companies use Rypple to manage goal-setting, manager feedback, recognition and coaching using an interface that has the feel of modern social networking sites like Facebook.

Salesforce.com is internally developing additional human resources software to help companies in areas including recruitment, adding new workers and training them, said Executive Vice President John Wookey, who will run the new HR business unit.

Salesforce.com Chief Executive Marc Benioff credited Facebook for introducing him to Rypple, saying that the social networking site's chief information officer, Tim Campos, first told him about the three-year-old company.

Benioff told Reuters that human resources is the last major category of business management software he plans to introduce. This is enough, he said. We're in the major categories.

He said it would be several years before the human resources products account for a material share of revenue because his existing products are already relatively big sellers.

Analysts expected the company's revenue to climb 30 percent to $2.9 billion in the coming fiscal year, which ends in January 2013, according to Thomson Reuters I/B/E/S. That's more than triple the comparable forecasts for SAP and Oracle.

The company is currently the biggest seller of web-based business management software, but is a far smaller company than either SAP or Oracle, which provide broad lines of software that is installed inside corporate data centers.

Oracle and SAP have invested heavily over the last few years to catch up with Salesforce in the business of selling web-based programs.

SAP announced earlier this month that it planned to spend $3.4 billion to buy SuccessFactors Inc, one of the biggest providers of web-based human-resources software.

Officials from SAP and Oracle declined comment on Salesforce.com's plans.