Analyst Perspectives

The annual HR Technology conference in Chicago provided a glimpse into the activities of HR organizations and their technology investments. It was a busy event with large attendance and much movement between sessions and the exhibit floor as attendees sought to learn more about the technology and what it can do for them. As always event organizers presented a large number of awards and announcements on the latest in technology for managing the workforce. The months leading up to the event saw various vendor consolidation activities that were part of the dialogue and discussion at HR Tech. First Kenexa acquired Salary.com to gain a talent management suite to complement its compensation and performance management software. Then ADP acquired Workscape for its compensation and performance management software, Taleo acquired Learn.com to bring learning to its suite, and SumTotal Systems acquired Softscape for its HRMS and talent management suite. All of them attended the conference. Also present were large providers of a range of business applications Infor, Oracle and SAP, which have several offerings for HR environment both HRMS and talent management applications. Oracle just made a move in talent management with the announcement of Oracle Fusion for Human Capital Management that I assessed; it is part of the larger Fusion family of new applications shown at Oracle OpenWorld. WorkDay continues to promote its blend of HRMS and talent management in its HCM offering appears to be making progress in catching up to the maturity of other offerings in the market.

The consolidation and product developments made HR Technology more exciting than in previous years. While the suppliers need to integrate mobility and collaboration into their technology, their core capabilities are evolving rapidly, which is exciting to keep track of and develop in-depth recommendations about. An ongoing challenge for most vendors in this segment is to establish a credible dialogue with finance and operations management on the business case and value of investment in broad, multi-featured systems for human capital management.

It would take too long provide an exhaustive review of all the announcements and events at HR Technology. But rather than settle for the kind of superficial reviews seen elsewhere, I want to add some depth to help the buyers who attended the conference or wanted to, by placing them in the key groupings of HR and talent management. I hope this will contribute to making decisions about improvements in HR and the overall workforce.

Talent Management Suites
Having an integrated set of applications for talent management continues to advance and attract HR organizations looking to reduce time and costs in managing disparate processes across applications from different vendors. The main players in this space – Plateau, Saba, SuccessFactors, SumTotal Systems, Taleo and others – were at the event, and some made news announcements. Plateau announced it version 6 of its offering with improvement in goals, compensation and administration of its suite, which should help it grow. SumTotal and Softscape were together as one entity on the exhibit floor after only a week after the acquisition announcement and will be a vendor to watch with its broad and deep offering. New to this market but well-known for employer and payroll services, ADP made itself visible with a demonstration portfolio of its applications and announced growth in sales of Workforce Now; now ADP must further rationalize its disparate portfolio into an approach that is clear to any size of company. Lawson showed its latest release in talent management since it already has workforce management and HRMS applications, this addition makes it one of the few to have a comprehensive package. Now Lawson must prove it can scale and grow faster than the others.

SilkRoad Technology is a leader in social recruiting with its OpenHire application which is integrated to onboarding, performance management and learning management; what they call the life suite of applications brings some new perspectives to talent management. Halogen introduced version 10 of its talent management suite prior to the conference but was showing how it can offer an affordable suite tailored to meet specific industry needs with prebuilt content and information for healthcare and others.

The combined Peopleclick Authoria focuses its efforts on the dynamic change of workforces to contingent labor covering talent acquisition and management along with  its tools for workforce compliance and diversity. I had a productive conversation with CEO Joe Licata, Jr., about the advances to its Talent Lifecycle Suite as announced at the conference.

Performance Management
Performance management is a core component of talent management and one of the more mature applications also. However, many HR organizations are not progressive in fitting that piece into the legacy applications they still use. Our benchmark research on performance management for talent management finds that only 30 percent of organizations are operating at the highest Innovative level of maturity overall, and only 18 percent are Innovative in the technology they use. Organizations are rather mature in terms of their processes and information but least so in the people-related skills for managing talent.

There are dozens of providers for this application area, so I will highlight only a few that presented new applications or approaches to managing workforce performance at HR Tech. As noted, Oracle was previewing Oracle Fusion for HCM, which introduces a new approach to performance management using predictive analytics in an intuitive application for measuring performance and determining compensation and incentives. This was one of several more sophisticated applications to augment performance management. There were two that offer new methods to perform appraisals and monitor or examine performance of the workforce. Sonar6 provides an engaging visual approach to performance reviews and succession planning and has been advancing its product and gaining customers since coming into the U.S. market several years ago. The other is Human Concepts, sometimes known as OrgPlus, which announced a couple of new applications. Workforce Monitor applies analytics to organizational data to provide easily understandable metrics from people and performance to risk and compliance. It also introduced OrgPlus Mobile that provides mobile review of employees on the Apple iPhone and RIM BlackBerry devices and encourages productivity advancements through identifying individuals, examining metrics and interacting with the workforce through mobile technology.

Compensation Management
The theme of compensation was not as prevalent at the event, which is unfortunate as our benchmark research on total compensation management shows a need for automation and improvement over older systems and spreadsheets. I expected more educational sessions and vendor demonstrations. Vendors of compensation software had demonstrations going on, but only a few had enhancements to show. ADP announced that Workscape Compensation Planner now integrates peer or benchmark statistics. Plateau, Softscape (now SumTotal Systems) and others demonstrated their talent management suites and linkages to performance management. In this area, I am busy building the 2010 vendor and product assessment we call Ventana Research Value Index for Total Compensation Management that will come out before the end of the year to help buyers make better assessments of the many vendors in this area.

Learning Management System (LMS)
Though there are other events dedicated to learning systems, no one should underestimate its importance in optimizing workforce performance through self-service and educational forums. While there was nothing dynamically new at the event, Taleo was reviewing its technology acquired from Learn.com, and the combination of SumTotal and Softscape brings more depth to learning management. Plateau presents its LMS as part of its suite, and that has been helping its growth in the market. Saba was demonstrating its LMS but focused more on a new announcement that evolves collaboration into a dynamic and engaging system for management and managers of an organization. I believe that learning is a critical component of workforce performance and talent management, and month by month this is becoming more true as organizations strive to help employees be more productive.

Recruiting and Applicant Tracking
Most organizations could significantly improve how they recruit talent. That starts with compiling a full profile of candidates to judge whether they can reach the performance required. At the conference job boards and social media still are core part of recruitment discussion. Monster.com continues to grow as a place where people come looking for jobs and where employers look for access to a larger group of candidates. Monster’s recent acquisition of HotJobs and advancements of its technology for supporting mobility have enhanced its attractiveness. For organizations that do not have their own recruiting teams dedicated software from Taleo, Kenexa and others can help them prepare for the uptick in hiring by organizations of all sizes that we all hope for.

A newer provider in the U.S. market, Bond Talent is adding its perspective on how to recruit and onboard talent. Silk Road Technologies and JobVite are growing providers of what is called social recruiting, and JobVite partners with SuccessFactors to integrate that into its talent management suite. Its recruiting intelligence approach brings a practical approach to integrating Facebook, LinkedIn, Twitter and other social media sites as part of the hiring and validation processes. Simply getting to see and know someone has advanced with the use of video by Expressume which assists in profiling candidates from their interaction and discussion with recruiters and hiring managers. The fast-growing company Talent Technology has products called HireDesk and Resume Mirror that are integrated into HR solutions from Lawson, Oracle, SAP and others. This is a lively sector of the market that does not always needed to be integrated into talent management, which most vendors still lack.

Workforce Management
The need to manage the costs and value of hourly workforces is still a major issue for most organizations. Major providers in workforce management were present, and their category of software is beginning to include social media and mobility and the use of analytics to drive improvement. Kronos unveiled two products: its next generation of workforce management and version 6.2 of Workforce Central, which adds a new intuitive interface to integrate forecasting, analytics, absence, time and attendance with HR and payroll. Kronos continues to innovate and is preparing for its own Kronos Works conference where we expect demonstrations on the use of mobility across workforce management as outlined in my analysis of last year.  I did not see anything new from Infor WFM Workbrain and am not sure where the applications are heading in the rapidly changing environment of mobility and collaboration that requires more than just tracking a workforce with scheduling, attendance, absence and forecasting.

I got acquainted with another provider in workforce management, Workforce Software. It helps organizations with time and attendance, policy compliance and management and announced new absence management software. This vendor has a unique financial management approach to employee management through activity-based costing. As well, Cybershift announced a new contingent labor management product that expands its workforce and expense management offerings.

Analytics and Intelligence
Organizations need to gain better insight and information not only to understand their human capital but also to optimize talent-related processes. Analytics are a valuable tool for both issues, but there was not a lot of education on the topic at HR Tech. Almost all of the talent management providers are advancing their analytics and intelligence; for example, I recently assessed Taleo’s advancements in this area, which it was demonstrating. Organizations interested in adopting workforce analytics should look for a provider that can integrate data from a variety of application sources, apply analytics to data on a common employee master file and generate insightful metrics and what I call key people indicators. Our just released benchmark research on workforce analytics finds a need for diversity of analytics, metrics and data, which is more difficult to get from one HRMS or talent management provider than a dedicated provider of workforce analytics.

Along these lines, at the event eThority’s DataTalent was gaining some buzz, and the vendor unveiled its zero-cost license (ZCL) to reduce the cost barrier to adoption while its product’s simplicity helps reduce the resources necessary to establish workforce analytics. Kronos has long been providing workforce analytics to help drive insights on labor and work habits and is expanding it to the needs of managing large hourly labor workforces. Also at the event but not exhibiting and receiving an award from HR Tech was Accero, whose workforce analytics product I have assessed recently. Also the longstanding provider of workforce analytics from a content and metrics perspective DoubleStar was an exhibitor; its product I believe is a critical foundation for the more-often discussed tools approach to analytics.

I also saw the latest from Aquire, its new InSight product that is bringing simplicity to workforce analytics. I previewed an innovative product called SonarVision from OrcaEyes that launched during HR Tech; it applies analytics and generates a summary document you can read in English and not just in charts and tables of data. This is a fresh approach that has roots in what in the 1990s was called CoverStory and was designed for the consumer packaged goods industry.

I also spoke with SAP about its efforts in workforce analytics, which actually are substantive but have not been marketed well and communicated to its customers who have data spread across HRMS and talent management systems. I expect to see progress here as SAP is beginning to advance its analytics across industries and lines of business as I recently reviewed and has presented some very sexy demos using the Apple iPad. I was expecting more announcements from SuccessFactors which acquired InfoHRM to create Inform and has workforce analytics and planning tools but was did not highlight that at HR Tech. Others in the business intelligence market have been missing this market opportunity as they are not sure how to market and sell to the HR buyer; they typically are committed to dealing with the IT organization, and their price points often are too high for buyers who are used to renting software rather than buying it.

One of the largest challenges for suppliers of workforce analytics is to access and integrate data across applications and systems in ways that can be automated and operate across on-premises HRMS and ERP to cloud-based talent management applications and systems. This data dilemma is addressed by technology providers I have assessed: Informatica, Jitterbit and Pervasive. Others have not progressed to this point yet, and most of the application providers look to protect their application portfolios rather than take on interoperability in the HRMS and talent management markets.

Vendor Buzz and Discussion
There was some buzz on Cornerstone OnDemand which filed the S-1 form for taking the company public as a traded stock, but reviewing the filing that was missing in their press release and SEC filing shows some significant risk in that the vendor had massive losses including $5.3 million on $29.4 million of revenue in 2009 and even worse in 2008 with an $8.6 million loss on $19.6 million of revenue; the first half of 2010 showed great revenue growth of $20.2 million but a $4.1 million loss from operations. I could not find positive dialogue about this financial situation but with underwriters like Goldman, Sachs and Barclays Capital, Cornerstone will probably raise enough capital to get its finances back into shape. The largest impact of this type of transaction though is dilution of the value of shares for the employees who brought the company to this point and probably will find that they do not gain a significant ROI on their hard work.

In addition, longstanding provider Workstream was at HR Tech with a completely new management team and board of directors after a couple of stagnant years with little to no marketing and sales, though many customers stayed loyal and its recent financial filing showed a positive position and a healthy quarter of profitability that will fuel it going forward according to new CEO John Long. We industry analysts are working to understand its direction and impact and the industry. Three years ago Workstream was one of the first to unify its applications into a common platform and application suite, but the company overextended itself with a unfriendly position in the public market and then got hit hard by the economic downturn. I think it is possible for Workstream to get back into the game because it has a good portfolio of applications.

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Regards,

Mark Smith - CEO & EVP Research