vr_HCA_06_technology_for_human_capital_analytics_improvementMost HR technology practitioners and vendors attend the annual HR Technology Conference and Exposition. One of the largest industry gatherings, it provides an indicator of their levels of investment and the hottest trends. This year’s event revealed new technologies and approaches to two key human resources processes – recruitment and retention. They included predictive analytics and big data as well mobile delivery to allow employees easier access to applications. Regarding the first two, these technologies can help managers make better informed and more intelligent decisions from their masses of HR data. It seems that investment in recruiting applications has increased with the growth of the economy. Earlier this year I described how many vendors are investing in recruiting applications. At HR Tech I saw this trend continuing, hearing from vendors that are focused on evolving their recruiting software. Among the new products in recruiting is HireVue Insights, which uses predictive logic and big data to analyze the desirability of candidates. HireVue recently won our 2014 Ventana Research Technology Innovation award for this offering. In addition, talent management vendor Cornerstone OnDemand announced an agreement to acquire Evolv, whose primary product also uses big data and predictive models to match candidates to positions. Our benchmark research on human capital analytics shows that many organizations are considering investments in big data for human capital analytics in almost half of organizations, so these and other products appear to be in step with market demand.

For employee retention several products show the growth of this market. Among them is a newer company called Fuel50, which demonstrated software focused on improving employee engagement by enabling employees to do career development planning. Another newcomer, Qualtrics, offers cloud-based surveys and analytics that measure employee engagement to help improve retention of the workforce.

More established human capital management providers also apply new technology to employee engagement and retention. For example, IBM recently announced an analytics and workforce science offering to improve employee engagement and organizational performance. Oracle features new Work Life Solutions to improve engagement through the use of new social technologies, which I recently wrote about. In addition, PeopleFluent announced at HR Tech predictive and deep analytics technologies applied to talent management system to retain employees and improve organizational performance. Kronos demonstrated its advancements in analytics and accessibility of them across mobile technologies that have been part of its continued growth in workforce management. Saba announced a new compensation management module as part of its suite that uses predictive capabilities to help managers understand better how to reward and retain their people. Ceridian demonstrated how use of wearable computing through smart watches can be used to engage hourly workers from punching in and out to getting access to schedules and notifications critical to their daily work.

vr_HCA_02_key_benefits_of_human_capital_analyticsAs these examples indicate, many long-time HCM vendors are using new technologies to identify, retain and reward key people inside organizations as well as increase overall productivity. This is consistent with findings in our research on human capital analytics, which show that organizations see as the two leading benefits of analytics improving efficiency and productivity and better engaging and retaining their workforce.

I expect the focus by HCM technology companies on using big data and predictive analytics, as well as mobility and collaboration, to benefit organizations by learning more about their candidates and employees and making better decisions to attract and motivate them. In fact the imperative of wellness and looking after employees health was highlighted by Tanner Labs and its Wellbe and Gratzi which brings a new form of engagement and self-motivation through contests using mobile and collaborative approaches through wearable computing. Currently, however, many organizations still rely on relatively basic processes and technologies to recruit, retain and engage the workforce. Our benchmark research on optimizing payroll management shows that only one in six (15%) organizations have an integrated talent management system, which is a precursor to fully using these technologies. We conclude that they have work to do to prepare to take advantage of them. On the other hand, for those starting from scratch leading talent and human capital management system providers are starting to embed advanced technologies into their core product offerings. We encourage businesses to take a fresh look at tools that help them create a more engaged, productive workforce.

Regards,

Stephan Millard

VP & Research Director

This year Oracle OpenWorld conference opened with a fiery speech by Larry Ellison, who has stepped down from his role as CEO to become Executive Chairman and CTO. Filling his rhetoric with claims of market leadership and attacks on competitors SAP and Workday, Ellison set an aggressive tone for those who followed him. In a talk relevant to my research practice, Chris Leone, senior vice president of applications development, asserted that Oracle is making progress in human capital management (HCM) as it enters the fourth year of offering the Human Capital Management Cloud. Leone asserted that Oracle now has 13,500 overall HCM customers, roughly half those being global customers, which is significant as Oracle touts its global capabilities as a differentiator. He provided statistics on growth of the cloud products; one was that over the past year Oracle has gained over 1,000 new talent management customers for its Cloud HCM business.

Oracle made several HCM product announcements to back up its growth claims, starting with general availability of Release 9 of HCM Cloud. Speaking of this release Leone and his team focused on improvements to the user experience, mobile applications and employee wellness and engagement tools in the suite.

VR2014_TechInnovation_AwardWinnerHowever, I found the most interesting development to be related to the Oracle Cloud Platform on which the application suites are based. With the new platform as a service (PaaS) capability customers can create custom applications through existing services in the Oracle Cloud such as the mobile service, database service or Java service. Oracle’s efforts in the Oracle Cloud Platform won it our 2014 Ventana Technology Innovation Award for Cloud Computing. The new PaaS will serve HCM users as well as others. In his afternoon keynote Ellison demonstrated this by showing an “employee of the month” extension built with the new tools and presented in the HCM Cloud.

PaaS represents a significant functional advance in Oracle’s Cloud HCM applications because until now cloud applications were able to handle broad requirements within in a specific HR process (such as compensation management), but they have been difficult to customize. Within the SaaS HCM landscape, this is the first demonstration of that limitation being lifted. While other cloud vendors have PaaS capabilities, including SAP’s HANA platform, salesforce.com’s Salesforce1 platform and Microsoft’s Azure platform, Oracle is the first to provide a means to build custom HCM apps using functionality from its packaged applications that maintain benefits of the SaaS, such as not requiring customized code to be rewritten after the core HCM applications are upgraded. However, at this stage it is difficult to know how many customers will use it. Many of them will most likely need to involve an Oracle partner to do that, and as Oracle co-CEO Mark Hurd admitted, most IT budgets are not growing. Time will tell whether customers choose to use the new PaaS capabilities with HCM and how much value they gain from that.

As I mentioned, in Release 9 of Oracle HCM Cloud, much of the focus is on usability. The company has worked to unify the user experience of HCM Cloud applications with those of Taleo Recruiting and Taleo Talent Management so that they function as a consistent suite of applications. One aspect where this has improved the applications is the new “smart cards” for the recruiting application, which organize candidate information in a readable graphic format. Leone espoused the larger goal of providing the same user experience in all the enterprise cloud HCM applications.

Related to usability are Oracle’s efforts to make it the mobile user interface and the browser user interface look and operate in the same manner. To that end, Release 9 of HCM Cloud enhances functionality in the Oracle Mobile application. It aligns several parts of mobile recruiting including the hiring work list and interview evaluation screens as well as parts of performance management to look and work similarly to the user interface for the Web-based version of the application. Future versions will continue the effort to harmonize the mobile and Web user interfaces for talent management. Oracle is wise to make these investments as better mobile applications will increase the reach of its applications to people not able or interested in using the browser-based application. In addition, our benchmark research on human capital analytics shows that a solid majority (65%) of organizations are using mobile applications for talent management today or plan to do so over the next year.

Oracle has also invested in enhancing the Work Life Solutions capabilities in the HCM Cloud suite, formally launched as part of Release 9. It is comprised of three tools: Reputation Management, which helps employees see and understand their social presence and reach within the company; Wellness Management, which allows employees to monitor their wellness data; and Competitions (now available only as a preview), which enables creation and management of contests linked to various goals.

vr_HCA_06_technology_for_human_capital_analytics_improvementAmong interesting aspects Work Life Solutions are that Reputation Management enables employees to monitor their personal brand within the organization and that Wellness Management can read data from wearable computing devices, such as a FitBit, as input for the application. Oracle first discussed wellness capabilities for the HCM suite at its HCM World event in February, and this release executes on the promises.  In addition, our benchmark research on human capital analytics shows that organizations most want collaboration as a technology for improvement of HCM analytics. The Work Life applications combine wellness and collaboration in ways that companies may find appealing.

One area in which I believe Oracle needs to continue to invest is integration of its other HCM product lines (E-Business Suite, JD Edwards EnterpriseOne and PeopleSoft) with HCM Cloud. While Release 9 does improve integration to payroll management systems from both third-party providers and the other Oracle application suites, at OpenWorld some HCM Cloud customers said that it is a challenge to manage and test interfaces between the older applications and HCM Cloud. While other HCM suite vendors have this challenge as well, part of Oracle’s value proposition is that its applications can coexist with legacy applications; more focus is necessary to completely deliver on this promise.

Overall Oracle is continuing to invest in HCM Cloud. Release 9 shows progress in capabilities such as the PaaS and Work Life Solutions. Improvements in application usability and mobile functionality should encourage adoption of these applications. Organizations that evaluate human capital management suites should include Oracle’s HCM Cloud suite in their considerations.

Regards,

Stephan Millard

VP & Research Director

ADP recently held its annual analyst day in the company’s new innovation center in the Chelsea district of Manhattan. The location emphasized what ADP wanted to get across to the analyst community at the event: that it intends to become a significant vendor of human capital management (HCM) software based in the cloud. ADP hopes to broaden its business from being largely an outsourcing vendor of payroll and related services (such as for auto dealers) to one that provides software for a range of HCM activities.

Carlos Rodriguez, ADP’s president and CEO, discussed several steps the company has taken in the last year to focus solely on HCM. One of the most notable was the spinoff of the Dealer Services business, which generates more than $1 billion in revenue annually, into a separate publicly traded company. Giving up a business that generates such a significant revenue stream indicates management’s determination to focus on its HCM cloud business. In addition, Rodriguez positioned both ADP’s 2014 revenue growth of $1.4 billion and changes it made in customer hosting as indicators of success in transitioning to being a cloud HCM vendor. And while the overall number of customers ADP claims to have moved to the cloud from 2009 to the present is impressive (450,000), a large percentage of them still appear to be using ADP’s established payroll, HR and workforce management products rather than adopting its other talent management offerings. For example, ADP Vantage, the integrated HCM suite for large enterprises, is presently deployed by only 155 customers.

vr_Payroll_Management_01_integrated_payroll_management_provides_valueNevertheless, throughout the day ADP demonstrated several advances in its current product releases and revealed a roadmap for the future of HCM. This year it has focused on improving usability of the applications, increasing its global reach both directly and through partners, addressing the needs of customers to comply with the Affordable Care Act (ACA) and adding next-generation capabilities to the HCM applications. Our benchmark research on optimizing payroll management shows that organizations that integrate payroll and talent management make their HCM processes more effective, and we observe the market overall moving toward integrated suites.

Release of ADP Health Compliance for addressing the Affordable Care Act is a significant advance. ADP executives and one customer present at the event asserted that it is drawing attention to the rest of the company’s products. As yet, however, our benchmark research on governance, risk and compliance (GRC) shows that fewer than one in seven (14%) companies manage compliance-related documentation with a dedicated application; most use email to execute such processes. We recommend automating complex compliance requirements to avoid risk and potential penalties.

ADP Health Compliance helps companies comply with the Employer Shared Responsibility provisions of the ACA by tracking and automating the measurement, documentation and reporting of these provisions. Used with other ADP HCM applications, it helps determine the number of employees eligible to be covered, assesses health plan affordability, automates reporting of required IRS forms and provides a dashboard to track related facts about each employee.

ADP also previewed the ADP Developer Community, which will be formally launched at the HR Technology Conference in October. The site is aimed at expanding the number of ADP partners that are independent software vendors (ISVs) and broadening the functionality of its HCM application ecosystem. The first release will offer to developers a library of prebuilt APIs that ADP has used to develop several of its own newest applications. While several other HCM vendors have also announced partner marketplaces this year, ADP’s initiative may be helped by its marketing approach with ADP Streamline, which offers international payroll and HR services through a network of ADP’s managed partners. Perhaps the company could use the developer community to expand the talent management capabilities of Streamline to compete more effectively in the global market.

As I mentioned above, ADP is focused on improving the user experience across all its applications. Demonstrations suggest that its new user interface is a definite improvement on those found in older versions of ADP applications. It is application screens are less cluttered, easier to understand and in certain places more intelligent. For example, the new compensation application can show employees how to take advantage of unused compensation or plan better career paths for themselves. An early version of this new user experience has been released in ADP’s online pay statement for customers’ employees.

Finally ADP discussed several next-generation capabilities now available or to be released over the next year. One of the most noteworthy is the ADP Mobile Solutions, currently used by 3 million users.  Available on both tablets and smartphones, a single mobile application provides 15 functions.

vr_Payroll_Management_09_technology_innovations_for_payroll_managementDon Weinstein, ADP’s vice president of product management, said that next year the company will focus on analytics and big data. Our payroll management research shows that by far the technology innovation most users (61%) want is analytics. ADP’s improvements in payroll management are focused in three areas. First, benchmarking, scheduled for release in the first half of 2015, will provide benchmark data to several applications in ADP’s human capital management suite, including fine-grained market data (such as employee turnover rates in casual dining restaurants in southeastern states).  If ADP can deliver on these promises, it should have a strong integrated benchmarking offering.

The second focus of ADP analytics is to provide a set of standard adaptors to integrate third-party information from common sources. This capability is essential for HCM analytics today, and several vendors already offer it in their products. Third, ADP will add predictive capabilities to its analytics. Similar to the predictive analytics available from vendors such as Oracle, Ultimate and Evolve, this functionality will use big data tools to provide packaged predictive models to help management and HR professionals address key issues such as employee retention and best fit for hiring. ADP customers that are smaller companies may find this an affordable way to acquire easy-to-use predictive capabilities.

ADP has demonstrated a commitment to shift its business focus to integrated human capital management. However, such change for a large, established and profitable company typically demands significant effort, as it requires changing the culture of the organization while continuing to support legacy customers whose profits fund the future direction of the company. But ADP’s product roadmap and upcoming innovations are moving the company in the right direction. Current ADP customers should find the new products a compelling reason to stay with ADP, and new ones should examine what it will now offer.

Regards,

Stephan Millard

VP & Research Director

VR-BUG-WEBThe human resources management system (HRMS) have been a central part of human resources departments for decades. Though useful to HR, these systems have also been static. Speaking generally, their functionality has not advanced greatly while other technologies have made great strides, and the information in them has been restricted to mostly use by HR professionals. However, along with growth in distinct and integrated talent management systems and in workforce management systems, this has begun to change as the HRMS is being integrated with these newer systems. The changes make it possible for HRMSs to become more strategic as HR professionals use them in new ways. To that end, Ventana Research will conduct a benchmark research project to evaluate the evolution of these systems and processes to determine where they are becoming more strategic applications for HR.

HRMSs are evolving from basic uses in maintaining core identifying information for employees, information on organizational structure and positions (often referred to as position management information) to providing talent profiles that include skills, competencies, certifications and interests, both at previous jobs and projects within employees’ current jobs. HRMSs also now maintain employee directories.  While these used to be limited to simple identification data, the growth of social collaboration systems enables users to find others who are expert on specific topics, enjoy specific activities or may have worked on specific projects and then connect with them. Such contacts can help increase productivity and engagement.

vr_HCA_03_widely_used_types_of_human_capital_analyticsModern HRMSs also can track more strategic talent metrics. Previously, the data in an HRMS was used largely to track compliance with government regulations, and that remains an important function. But now, by integrating HRMS data with data from talent management and workforce management systems, business and HR leaders can track metrics such as performance, leadership effectiveness and others identified in our human capital analytics benchmark research.  In addition, as HRMSs are now part of an ecosystem of HR applications, embedded analytical applications can analyze this information and help make it more useful to the business. Our research on human capital analytics finds that while spreadsheets are still the most widely used tool to analyze HR information, the use of dedicated and embedded human capital management (HCM) analytical tools is growing fast; more than two out of five (43%) participants said they plan to use them in the future.

The research we are preparing to conduct on the next generation of human resources management systems will assess the degree to which organizations are relying on these systems as an integral part of their talent management processes and their relation to systems for management of performance, compensation and succession. It will try to determine whether organizations are using talent management applications dedicated to these processes, manual processes for these functions or an HRMS.

vr_nextgenworkforce_mobile_device_deployments_increasing_updatedThis new research also will investigate adoption rates for next-generation technologies including integration with mobile technologies, business collaboration, big data, cloud and even wearable computing, in an effort to understand where companies are planning investments. In other research, we have found strong adoption of mobile technologies in workforce management and human capital analytics and less adoption in payroll management, despite the fact that employee self-service is considered an important part of the value proposition by more than half of participants in our payroll management optimization research. Similarly, in cloud computing, despite many more product offerings for HCM, our research shows many companies staying with on-premises applications and yet a larger number of them to examine the shift to this computing model. Please stay tuned as we conduct new research to publish best practices and insights in our education and guidance to our clients and through future analyst perspectives to determine if how and where these technologies are elevating the productivity and performance potential of employees.

Regards,

Stephan Millard

VP & Research Director

Now available from Ventana Research is our Value Index on Total Compensation Management for 2014.  Total compensation management directly addresses one of an organization’s largest investments – employee pay. As such it is a critical activity for supporting other human capital management and talent management processes.

VR_TCM_VI_2014Our Value Indexes are informed by more than a decade of analysis of how well technology suppliers and their products satisfy specific business and IT needs. For each we perform a detailed evaluation of product functionality and suitability to task in five categories as well as of the effectiveness of vendor support for the buying process and customer assurance. In this case the resulting index gauges the value offered by each vendor and its products in supporting total compensation management, which is necessary for running an organization efficiently and managing its largest controllable expense.

Total compensation management has evolved significantly over the four plus years in which we have published a Value Index on the topic. From both conversations with reference customers for this report and analysis from our benchmark research on this topic we conclude that it is still evolving as practice in organizations today. The research shows that spreadsheets are still the primary tool for compensation planning in one out of four (26%) organizations and used often by an additional one-third (35%). But it also shows that others use stand-alone compensation management products and still others have integrated the process and technology within a human capital management application suite. Regarding the latter our benchmark research shows that three in four (76%) participating organizations said that it is important or very important to have compensation management and talent management systems integrated; in addition lack of integration to talent management is the most widespread impediment to successful compensation management, selected by two-third (66%) of participants.

For compensation management to be fully effective in today’s organizations it also must include several next-generation technologies in use in other parts of human capital management. The most important of these is analytics that help managers make better compensation decisions. The increasing importance of compensation analytics is evident in our human capital analytics benchmark research, which reveals that the metric most often used by executives (75%) today is compensation.

Mobility and collaboration are becoming important to total compensation management.  Mobile capabilities are found in six of the compensation management products we reviewed for the Value Index; our human capital analytics research reveals growing adoption: one-third  of companies are using mobile technology for these analytics today, and more than half (52%) intend to use it. Collaboration, though less widely adopted, is important in larger organizations to enable managers in various roles to comment on the correct total compensation for their employees.

The 2014 edition of the Total Compensation Management Value Index evaluated both products that are part of a larger suite of talent management products, which was the most common type, and others that stand alone. In general, we find several benefits to a suite. Among them are analytics integrated with other talent management applications, a common user experience and centralized administration, which make ownership and adoption somewhat easier for the customer.

TCM_2014_Weighted_OverallAmong the compensation management products we evaluated, all cover core compensation management of salaries or hourly wages as well as merit pay, bonus pay and some kinds of incentive pay. Functionally, the differences among the nine products appear in areas such as support for complex plan rules, the number of geographies covered and the ability to support various types of compensation plans (for example, focal vs. anniversary plans) as well as the implementation of next-generation technologies. Some products offer more effective application management tools and better product documentation for support and business case development. While we recognize that some organizations may need only basic salary or hourly wage capabilities, we believe that many organizations with 1,000 or more employees will require more advanced functionality.  Therefore we based our overall assessment partly on the array of capabilities that comprise total compensation management.

Based on these evaluation criteria, the top vendor in our 2014 Total Compensation Management Value Index is SAP SuccessFactors, followed closely by PeopleFluent. This finish mirrored the ratings in the 2012 Total Compensation Value Index. Eight of the nine vendors in this year’s Value Index we rated Hot; this close grouping indicates the general maturity of this market. In this year’s Value Index following the two leaders are those also rated Hot who are: Oracle, Towers Watson, beqom, IBM, Decusoft and SumTotal Systems, and then ADP who was rated Warm. Two new vendors to this Value Index are Decusoft and Towers Watson, and then beqom who was previously known as Excentive.

In today’s competitive business and employment environment, more companies see compensation as a differentiator for their employer brand and want technology that can help them advance their compensation programs to attract and retain top talent. Next-generation technologies such as mobility and analytics enable employees to understand the total value of their compensation packages. As compensation plans become more complex, the need for capabilities like integrated budgeting and modeling become greater so finance departments can ensure that plans adhere to budgets. Furthermore, integrating compensation and performance management, as well as other key talent management applications, helps businesses judge and motivate their top performers. If these critical issues affect the performance of your own business, I urge you to utilize our 2014 Total Compensation Management Value Index for insights on how to address them most effectively.

Regards,

Stephan Millard

VP & Research Director

In the past year Workday has been making efforts to improve its human capital management (HCM) suite focused directly on the core human resources management systems and talent management software. In my previous analyst perspective about Workday I looked at its mobile capabilities for HCM. These additions, in concert with the enhancements discussed here, offer useful improvements. I have also noticed changes in the HCM market that impact all large competitors in it, including Workday. Before discussing these changes, it might help to summarize the company’s past three major releases.

vr_HCA_02_key_benefits_of_human_capital_analyticsWorkday Release 20, which came out in September 2013, added a Big Data product to Workday’s current HCM and financial suites. This advancement can help HR use range of analytic discovery capabilities on big data that can exploit value from HR and external data. Workday provides a set of prebuilt templates companies can use to quickly analyze questions most commonly asked of the human resources department by management, such as who might leave or who the best performers are. In addition, Workday Big Data Analytics, which was launched with Workday Release 20, offers basic tools to import and analyze structured and unstructured data, allowing users to go beyond the packaged templates. Taken together these two tools and templates allow companies to see value quickly and encourage them to invest in skills needed to work with the data in ways that answer questions specific to their business.

The big data capabilities can benefit companies that invest in them. Organizations need to better understand the relationship between investments they are making in HCM software and business outcomes. In our research into big data analytics the most-often named benefit of big data analytics is better communication and knowledge sharing but if you look at our research in human capital analytics the top benefits are improve efficiency and productivity (61%) and engage and retain more of the workforce (52%) which indicate part of the opportunity and challenge for Workday to ensure it meets the HCM value of big data for HR. To be successful in human capital analytics will require more linkage from its big data analytics and its workforce planning and analytics and ensure these offerings are intuitive and provide guidance for HR professionals and not just present easier to read reports and charts.

Workday Release 21 came out in January 2014 and made major improvements to the Web browser user interface. It simplifies navigation and makes the application more intuitive to use. As with other human capital management applications, Workday’s new user interface utilizes design principles of consumer applications such as Google+ or LinkedIn, providing cleaner screens and graphical elements to cue users on where to find information quickly. Technologically this release moved the Workday user interface base from Adobe Flex to HTML5. This followed other Web-based applications moving in this direction; HTML5 offers more responsive design capabilities.

Workday Release 21 also improved application usability was primarily in its Performance Management application. It enables managers and employees to execute performance reviews on mobile devices. This will appeal to the increasing number of organizations that adopting mobile devices for HCM. According to our research on human capital analytics, one-third of organizations currently use mobile devices for talent management and roughly half (52%) are planning to adopt it in the future. As I have written in previous perspectives, product usability is a leading buying criterion for most HR applications, and mobile capabilities are increasingly part of that requirement. Workday is smart to continue to focus on usability within the suite and will need to demonstrate why they are simpler and faster than others in the market and their own previous releases.

Finally, Workday Release 22, which debuted in May 2014, features a new recruiting application. Workday Recruiting focuses on delivering applicant tracking capabilities within the recruiting process. Other HCM vendors have added similar features in the past 12 months. (I wrote about this trend in an earlier analyst perspective.)

vr_socialcollab_most_important_workforce_metrics_updatedWhile Workday Recruiting is fairly standard in terms of core functionality, the release includes a mobile capability as in Workday 21, which makes the application more usable for a significant percentage of people in talent management tasks. In addition, the recruiting application includes robust analytics including a dashboard to track important metrics. Templates in both Workday Big Data and Workday Recruiting can track metrics important to recruiters and the company overall. Two of our research projects, on social collaboration and human capital management and human capital analytics, find that employee retention and engagement are among the five most important recruiting metrics.

As we look ahead Workday and others will need to invest is in functionality for sourcing and recruitment marketing. While Workday has several partnerships with vendors such as Jobvite and Broadbean, applicant tracking vendors should make it easy to use these partners’ tools so customers gain the information they are seeking without feeling like they are managing multiple applications. Workday will also need to invest further into video interviewing technology like that from its partner HireVue, as leading vendors which offer applicant tracking applications and candidates can personalize their resume and interactions with HR and hiring managers. The use of video is important to HCM across the spectrum of manager and employee needs from learning, performance reviews to work scheduling and collaboration.

Looking at these releases in a larger context, I see Workday’s value proposition as twofold: first, a single complete HCM suite that provides market-leading functionality to drive more efficient processes and workforce productivity, and second, competitive total cost of ownership by offering it all through cloud computing. The three recent releases deliver on these value propositions, adding several pieces of competitive functionality on the HCM suite. Workday is missing a complete compensation management set of capabilities like that found in other HCM suites which is becoming increasingly important to integrate with payroll, performance management, recruiting, succession and overall employee retention efforts. But to fulfill on delivering the HCM suite Workday will have to make critical decisions in regards to the gaps it has and where it works with partners still makes sense. This becomes more important as going forward Workday will also be competing with their partner’s for both mindshare and products in the places they don’t partner. For example, Workday is partnering with Kronos for offering a complete workforce management offering as it only offers basic time and attendance tracking along with time-off capabilities but Kronos has its own HR, payroll and recruiting applications as part of its workforce management suite. In addition the partnership with Cornerstone OnDemand for learning management is another example where Workday is competing in its focus for providing its talent management applications in the cloud.

But as I said at the beginning of this perspective, I believe the HCM market is beginning to resemble the consumer applications market. Large vendors such as Oracle and SAP, and mostly midmarket focused vendors including Ceridian and Ultimate are all investing in cloud HCM suites and seeing results from doing so. In addition, cloud-based partners like Cornerstone OnDemand offer competitive, and in some cases stronger, functionality in some aspects of talent management. In sum, strong functionality offered on a cloud platform is becoming table stakes. Differentiation will now is likely to come from ease of use, intuitive applications and customer relationships with clients. Workday appears to be aware of this evolution and is investing in it, but the company will need to rationalize the reality of its partnerships and its product suite to provide better clarity to its customers and the market.

Regards,

Stephan Millard

VP & Research Director

Cornerstone OnDemand is a large pure-play vendor of talent management software, with more than 1,700 clients, more than 14.5 million users and more than 60 percent growth in revenue over the past 12 months. At the company’s annual customer conference this year, CEO Adam Miller talked about a trend in the market of talent management applications going beyond automating a series of processes to help engage employees within organizations. I agree with this analysis and would extend the trend to cover the full range of human capital management (HCM) applications.

vr_bti_br_whats_important_in_choosing_technology_updatedFrom our benchmark research and discussions with vendors in this market, I see four main fronts vendors like Cornerstone must focus on. These are usability (and accessibility) of the applications, collaboration among users, the value of a suite over a collection of individual products, and advanced analytics. Considering the first, usability is the top criterion for technology product selection in our business technology innovation benchmark research and also in our two most recent HCM research projects, on payroll management and human capital analytics. The second, collaboration, is the area in which most research participants want improvement by vendors of human capital analytics.

Cornerstone’s recent product announcements indicate recent investments in advancing usability and the value of the suite. At the conference, it announced two new products: Cornerstone Onboarding and Cornerstone Marketplace. Both connect parts of the Cornerstone Talent Management platform and provide the framework for extending the platform. Onboarding links its recruiting, learning and performance management products, providing a more seamless experience for users as well as including standard capabilities for onboarding new hires, such as forms automation and task management. Marketplace provides a framework for purchasing and working with Cornerstone’s partners, whose products and services supplement the suite, and it makes integration and management of partner products easier for customers to manage.

The company also announced an update to the suite that includes several enhancements to improve usability. Specifically, the June ’14 Product Release improves the user interface for Cornerstone Learning and streamlines the performance review system of Cornerstone Performance. The release also adds a high-volume hiring capability to Cornerstone Recruiting. Together these enhancements show Cornerstone investing in building a talent management system that promotes employee engagement.

In addition, in the past year or so Cornerstone integrated collaborative and mobile capabilities into the suite; these are competitive with what others have done, as I have written.  Nevertheless, there are still more areas where Cornerstone should work to create a complete system that impacts employee engagement.

vr_HCA_02_key_benefits_of_human_capital_analyticsSpecifically it should invest in analytics and its Universal Profile, which provides a substitute for a human resources management system (HRMS). Our benchmark research on human capital analytics finds that the benefit organizations realize from these products second-most often in over half of organizations (52%) is better engagement and retention of the workforce. Toward that end, Cornerstone said it is developing analytics that it will release later this year as a stand-alone product. That should fill some of its gap in analytics, though there is still more to do.

Cornerstone Universal Profile has some strong capabilities, but in my view the market favors having an integrated HRMS in a suite as do Oracle, SuccessFactors an SAP company, SumTotal Systems, Workday as well as others, which competes with Cornerstone on learning management. All these vendors have strong talent management products to go with an integrated HRMS.

Another trend that may affect Cornerstone is the entry into talent management of vendors that are strong in HRMS and payroll. Among them are Ceridian and Ultimate Software, both of which I have written about recently. While presently these vendors don’t have talent management products to equal Cornerstone’s, both are well-funded and have started to invest strongly in this area.

I think Cornerstone’s management understands what is required to provide a talent management system that supports employee engagement. The product enhancements released over the past year show a consistent focus on areas needing improvement to achieve that goal. But competitors are also releasing products that offer the same value proposition. Cornerstone will need to continue to execute well to maintain its leading position in the talent management market. I recommend that if your organization is evaluating talent management products it should consider Cornerstone’s.

Regards,

Stephan Millard

VP & Research Director

vr_Payroll_Management_02_motivation_for_payroll_investmentOur recently released benchmark research on optimizing payroll management assesses how organizations use payroll information, processes and technology. It finds that most of them still need to improve. Our analysis compared the forces motivating investment in payroll management systems to broader strategic drivers for human capital management (HCM) that I previously outlined and found substantial agreement. Three of the five leading factors – demand for higher employee productivity (48%), limited alignment between pay and performance (36%), and inconsistent execution of performance goals (24%) – are part of a broader HCM agenda as seen in previous research projects and discussions with clients. But apart from that the research found a disconnect between what motivates companies and what they actually are doing.

While organizations generally are accomplished at managing their core payroll processes, not many are making investments in technology tools to help achieve their HCM objectives. Specifically, in the Technology dimension of our Performance Index analysis, half rank at the two lowest of four performance levels. A key reason for this is that many have not integrated payroll management with other HCM proces­ses. While organizations long ago auto­mated their basic payroll processes, the Performance Index analysis in this research places only one in five organizations at the top Innovative level of overall performance; they have taken steps to integrate their payroll processes with other HCM systems.

This contrast shows up in several areas of the research. For example, four out of five organizations said that their payroll processing system is accurate (61%) or very accurate (21%); only 1 percent said theirs is not accurate. Yet seven in 10 participants reported that their organization uses spreadsheets universally or regularly to track payroll management functions or compliance activities, and 39 percent said reliance on them has made it difficult to manage payroll efficiently. More importantly, only half of participants said they have a human resources management system (HRMS); these systems track and report on information needed for compliance with state and federal employment requirements.

vr_Payroll_Management_03_integration_of_system_lagsElsewhere the research shows that only 8 percent have integrated payroll management with their talent management system; while 22 percent said they plan to do that in the next 12 to 18 months, fully half have no such plan. Similarly, 29 percent have a dedicated workforce management system, but only one in five have integrated their payroll management system with it; nearly half (48%) export data from the time and attendance system and import it into payroll manually. The research shows benefits in more systematic operations. Among organizations that have integrated workforce management and payroll management, 62 percent said they have reduced their payroll error rate, which is one of the top five metrics used to measure payroll process effectiveness. So while organizations are focused on improving efficiencies within payroll itself, most are not yet investing in the areas where broader gains can be made.

vr_Payroll_Management_01_integrated_payroll_management_provides_valueTo attain greater workforce productivity, which is the second-highest priority found in our research, organizations need to connect payroll management to other processes such as performance management, goals and benefits. In the research three in four (77%) of those that have integrated their payroll and talent management systems reported having an effective or very effective payroll management process, compared to 62 percent of organizations that do not integrate these systems. Additionally, two-thirds of companies reported better alignment between incentive compensation and performance after integrating their payroll and pay-for-performance systems.

In the next year, as the employer mandate of the Affordable Care Act takes effect, it is likely that one part of this integration will get more attention and I have assessed – integrating workforce management and payroll. Businesses will need to make sure that the actual hours that employees work match precisely with what is reported in their time and attendance and workforce scheduling systems. Beyond that we urge companies to evaluate broader integrations to achieve the goals that lead them to invest in payroll management to start with – demand for higher productivity, greater alignment between pay and performance and inconsistent execution in performance.

Regards,

Stephan Millard

VP & Research Director

Ultimate Software is one of the larger players in the market for human capital management (HCM) software, with roots in providing human resources and payroll management products. Recently I attended its annual Connections conference. Last year the company focused attention on expansion of its global capabilities, which I analyzed, while this year it highlighted broadening and modernizing of the product suite.

A major effort in modernizing the suite was to improve the user experience for UltiPro, its HCM suite. This update reduces the number of clicks it takes to execute any task in and makes the applications visually more intuitive. In addition, the home portal design elements now resemble some that other vendors have introduced which provides pictures of a user’s team members. The user interface team, led by Patañjali Chary, VP of user experience, used advanced application design approaches such as eye-tracking models to provide information on the screen in places users expect to find it. The result feels lighter and provides visual cues to guide the user through the product’s features.

Also as part of the redesign of their user experience, Ultimate used HTML 5 to enable mobile access to  UltiPro. During the event company representatives described its approach to mobility as “responsive design.” Essentially that means the application can automatically detect the device being used and deliver a user experience designed for that device. This is an evolving capability we are seeing as more vendors strive to provide compelling user interfaces.  However, using responsive design and HTML5 to develop for mobile devices still produces some application screens that do not render cleanly for all mobile devices. I find developing native mobile applications to be a better approach, at least for the present. However, this capability should improve over time.

vr_Payroll_Management_06_what_to_integrate_with_payroll_managementUltimate’s speakers showcased three new products which expand the breadth of the suite, two of them in talent management. There is a new compensation module called UltiPro Compensation Management. This is a necessary addition for Ultimate. Our recent benchmark research in payroll management optimization shows that compensation management is a very important application to integrate with payroll management for nearly half (45%) of organizations. Ultimate’s product enters a segment in which many mature products are available; it is likely to find most use for midsize companies that already use UltiPro and have basic compensation planning needs. This addition enhances Ultimate’s expansion from a payroll and HR management vendor to providing a more complete human capital management suite.

The second major module recently released is UltiPro Recruiting, which provides applicant tracking capabilities to current UltiPro customers and follows other HCM platform vendors that have released a recruiting product in the last 12 months. I recently wrote about growth in the recruiting market.

The third new announcement expands the functionality of the core product through a time-capture device, UltiPro Touchbase. Based on technology from the company’s acquisition of EmployTouch in 2013, it is a hybrid device that users can unplug and use like a tablet as well as meeting all the needs of a standard time clock with employee punch-in and -out methods. It also adds features designed to avoid “buddy punching,” such as photo verification. This addition should help Ultimate stay competitive in the workforce management and payroll management markets where others vendors also have introduced their own time-capture devices.

Following last year’s emphasis at Connections, Ultimate has continued to expand UltiPro’s global capabilities. It released the product in three additional languages and continues a partnership with Celergo to provide international payroll capabilities. As Ultimate tries to compete in more deals for organizations that have an international presence, I believe it must invest more rapidly in this area to catch up with other vendors that have strong international capabilities, such as Oracle and SAP.

vr_Payroll_Management_01_integrated_payroll_management_provides_valueIt is clear that Ultimate Software is making significant investments in its products. In 2014 the company plans to invest more than US$100 million in product development, which represents approximately one-quarter of its total revenue for 2013. This effort should benefit its customers and perhaps win new ones. Our research in payroll management optimization finds that companies that invest in integrating their payroll and talent management functions end up with more effective core payroll processes than those that keep them separate.

Ultimate Software’s strategy is further evidence of the continuing trend of vendors of HR and payroll management software broadening their product offerings toward complete suites of human capital management applications. In recent years ADP and Ceridian have invested in this strategy, as Oracle and SAP did earlier by acquiring Taleo and SuccessFactors, respectively. While specialized stand-alone products will continue to drive innovation in segments of HCM, the move toward integrated suites is coming to dominate. This is happening for reasons on each side of the relationship. As organizations struggle to make their array of human capital management applications work together, having fewer vendors to support and more consistent product release cycles to manage can provide hard cost benefits and softer benefits of better communications between customer and vendor. From the vendor perspective it is much less expensive to cross-sell to an existing customer than it is to find and sell to new ones.

Ultimate’s investments in expanding and modernizing its products make sense, and the company is proceeding in a logical fashion. The new individual products provide expanded coverage, and the improved user experience should please customers. For organizations, especially midsize ones, that are evaluating HCM platforms and have not looked recently at Ultimate’s I recommend including them in the evaluation process.

Regards,

Stephan Millard

VP and Research Director

At Saba’s recent global customer conference executives discussed the company’s latest product enhancements, progress made during the past year and plans for the future. Saba provides a talent management suite that includes all capabilities except compensation management and is a leading vendor of corporate learning management systems. The majority of its 2,200 customers and 31 million users in 195 countries use the learning system, Learning@Work.

vr_HCA_06_technology_for_human_capital_analytics_improvementIn conjunction with the customer conference, Saba announced the spring release of its talent management suite, Saba Cloud. It has added predictive analytics to help with candidate selection, improved the Web conferencing application with peer-to-peer high-definition video and added mobile goals management to the performance management application. Our benchmark research shows that organizations are seeking improvements in these areas. For example, in our research on human capital analytics the three areas in which the most companies seek improvement are collaboration, big data and cloud computing.  Among its investments in these areas, Saba has improved collaboration in Web conferencing, in big data with new predictive capabilities and more generally for cloud computing with their release of Saba Cloud.

Presenters also demonstrated a recently released recruiting system, Recruiting@Work. This component is a necessary part of a complete talent management suite and should be welcome to Saba’s existing customers. Combining the recruiting product with the learning management system could accelerate onboarding and training of new employees and reduce their time to productivity, which is a compelling value proposition for the software. The heart of Recruiting@Work is applicant tracking, but Saba is using technology partnerships in its Saba Marketplace to add functionality in key areas such as talent sourcing, provided by Simply Hired and TalentBin. The recruiting product also has embedded mobile and social capabilities that could help it compete in the market. Recruiting@Work is one of several such products introduced in the past year; I recently analyzed growth in the recruiting market.

vr_HCA_05_capabilities_sought_in_human_capital_analyticsAt the conference Saba executives emphasized the in-line predictive capability of Saba Cloud, called The Intelligent Mentor (TIM). Currently it is included in the new recruiting product and the succession planning and learning management systems. TIM enables managers and administrators to take actions based on the information it gleans from the applications. Our human capital analytics research finds that taking action based on outcomes is the most important capability for analytics systems.

Presenters offered an example of this functionality within the learning management system, where TIM provides a recommendation engine for choosing courses based on information about the user such as courses signed up for and taken or topics expressed interest in. This is useful for the end user, who can find useful learning content, and for administrators, who can upload course libraries without having to index the courses in the system, which can be a time-consuming process. This predictive capability enables the learning management application to track users’ behavior and information and eventually make recommendations based on their profiles.

Also at the conference Saba announced plans for releasing two new modules: compensation management, to round out the talent management suite, and a benchmarking capability that helps customers compare themselves to their peers in a variety of areas of human capital management. This will be the second compensation management application for Saba; several years ago it released one that it eventually discontinued. I will track these products as they are released.

Overall, Saba is broadening the functionality of its suite, adding predictive capabilities, enhancing collaborative and mobile capabilities and more generally moving the applications to the cloud. These steps should help it remain competitive in the human capital management market. However, Saba faces challenges with its financial management from years past and resulting management changes. As a result of these setbacks, Saba has had challenges in its growth while having the products and services readily available. It is competing in a crowded market and to be successful Saba needs to grow with more new customers and continued retention and cross-sales of new products to existing customers. Despite these business and financial challenges we recommend to organizations looking to update their talent management systems especially with a focus in learning and collaboration examine Saba’s latest products.

Regards,

Stephan Millard

VP and Research Director

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