Microsoft bought LinkedIn for $2.6 billion back in 2016, however, the company’s enterprise Software-as-a-Service (SaaS) business has been losing ground to other cloud computing and enterprise SaaS competitors, such as Amazon.
To combat this, Microsoft as the potential to leverage LinkedIn and similarly aggressive acquisitions in order to kick the unit into higher gear and boost revenue from its Microsoft Dynamics enterprise software segment by up to 13 percent, according to BMO Capital Markets analysts.
“Given that we believe Microsoft feels emboldened with the success of LinkedIn, we think such a renewed focus on SaaS applications could include M&A,” BMO Capital Markets analyst, Keith Bachman said.”One area that we think could be a new growth opportunity within the SaaS market is in HCM, or talent management in particular, which would further leverage LinkedIn.”
According to Markets Reporter at Business Insider, Graham Rapier, Microsoft purchased LinkedIn for $26.2 billion in June 2016. But for fiscal year 2017, the service brought in just $2.3 billion, or 2.5% of Microsoft’s total annual revenue.
Bachman reported that Microsoft could leverage the data it harvests through LinkedIn profiles, job applications, etc. to power its Dynamics platform for talent management or HCM. BMO estimated that Dynamics made up just 2% of Microsoft’s total revenue in 2017.
“Microsoft has a relatively modest presence in the SaaS applications market segments, relative to both Microsoft’s total revenues and various SaaS market segments. Moreover, we believe that Microsoft is underperforming its potential,” Bachman said. “We believe that total Dynamics revenue could grow by 13% to $2.5 billion in FY18, driven by cloud CRM and ERP suites.”
Below is an image provided by Markets Insider about the current state of Microsoft shares. So far, they’re up to 11.7 percent this year.
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