Analyst Perspectives

At its annual user conference in Las Vegas, Kronos unveiled the next stage of its approach to workforce management to its customers and partners, showing an aggressively confident posture after completing its fiscal year 2010 with revenue increased 9 percent to $741 million. Kronos is the largest provider of workforce management systems for time and attendance, scheduling, absence tracking, hiring and workforce analytics. Kronos offers the software in several delivery options: through conventional licensing and deployment on-premises, as a managed, hosted service and now software as a service (SaaS). Kronos has made progress since my in-depth analysis last year of its roadmap for its workforce management applications.

The Kronos conference provided insightful research findings in regard to today’s workforce and activities. For example, one in four employees are not able to go more than four days without using e-mail, and 62 percent check e-mail over the weekend. In the U.S. people work two months longer than in 1970 for the same adjusted income. One in four work 48 hours a week. The average of days off per year in the U.S. is 13, and the average American spends more time annually in the bathroom than on vacation. All of these facts point to the need for more efficiency in workforce activities by both employees and managers.

The main focus at the event was to highlight new Kronos product releases along with a demonstration of its highly anticipated suite of mobile access for business through the Apple iPhone and iPad, the Android operating system and RIM BlackBerry devices. In addition CEO Aron Ain outlined its path to developing software that helps workers engage more fully in their roles and make better decisions.

Kronos uses rich Internet application (RIA) technologies in its applications and highlighted some dramatic changes to its Workforce Central suite, now in version 6.2. The Adobe Flash-based technology provides a sophisticated but simple approach to scheduling and tracking the workforce. Kronos also is building native applications for mobile technologies from Apple, Google (Android) and RIM, which should be available in the first part of 2010.

Workforce Central 6.2 includes a new user interface, advanced graphical workflows, user wizards called genies and prompting in defined situations called proactive alerts. Those experienced in the dynamics of managing workforces and seeking efficiency in interactions will appreciate the advanced capabilities in this release. The Kronos Timekeeper 6.2 module supports weighted-average overtime, missing time, tracking time to target, and roll-ups and control of moving hours. Absence Manager 6.2 has added online leave requests, enhanced documentation and other features for tighter compliance with less effort. Scheduler 6.2 improves employee self-service, schedule editing tools and coverage graphs. Forecast Manager now has seasonal algorithms, can export forecast data to Microsoft Excel and provides zero-edit forecasting. Activities 6.2 support duration entry in time cards and resource utilization reports. The Analytics module has productivity measurements and administration access at the work-unit level. The HR and Payroll systems include navigation, search, workflow, alerts, reports, single log-on, stricter password requirements and role-based permissions. These various enhancements should enable management to reduce costs and time spent in conducting oversight or addressing issues in the workforce.

The so-called next-generation user interface (NGUI) and navigator was shown off by early-adopter customers including American Girl, Ceradyne, Hannaford, Pep Boys, Starbucks and Valley Medical Center. The application suite will be further advanced in 2011 to support more features for employee self-service (such as time cards, accruals, schedules, time off and shift requests) and guided decisions. Having the applications available on smartphones will support punching in time cards from the phone, and GPS based location intelligence will ensure employees are working, enable managers to approve time and labor, allow employees to request time off, and provide visibility into schedules to adjust to individuals’ needs. This mobility and location aware advancements changes the dynamics of workers and the traditional time clock and attendance approaches used in the majority of organizations.

I had a chance to meet with some of Kronos’ major customers to discuss how they use the software. Polo Ralph Lauren is using it for labor-law compliance, payroll management, business performance and associate satisfaction, trying to change the mindset of employees and align best practices and policies to focus processes on people, not products. The City of El Paso, Texas, originally selected Kronos when it was facing lawsuits from disputes on overtime generated by its paper-based records. Now managers can minimize overtime by tracking individuals’ hours and adjusting schedules. Banner Health, with 13 facilities and 38,000 employees, uses Kronos for scheduling and time and attendance, to interface to Lawson for grant management, and to improve efficiency of healthcare for patients.

Kronos expanded its hosted service significantly over the last year, growing from about 50 customers to over 230. Kronos is also providing managed services for customers that do not want to manage the administrative aspects of its software. In addition, Kronos is simplifying the selection and hiring functions. The recently announced Workforce Acquisition 8.7 supports salaried positions in addition to hourly, integrates with social media, and provides analytics to assess processes and determine hiring strategies. This step makes them more than competitive to many of the recruiting based talent management providers trying to expand into this market.

Kronos has been expanding its global business with direct growth in China, Brazil and other major developing countries that have large manufacturing workforces. Kronos also is advancing its efforts in vertical industries and moving to address the needs of customer service organizations, which have similar needs in scheduling and planning deployment of agents for workforce optimization. I would like to see Kronos integrate its applications to learning management and performance management systems like Plateau and Saba, which would add more value for customers who need to schedule and plan required e-learning and determine its effectiveness. I also look forward to seeing advances in its workforce analytics; our recent research on the topic shows that the continued use of spreadsheets and manual processes plagues organizations with increased costs, resources and time required to support them. Kronos is adapting its applications for a new generation of needs from mobile workers and managers to simpler ways for an organization to maximize its value of its workforce.

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Regards,

Mark Smith – CEO & EVP Research