Analyst Perspectives

At Oracle OpenWorld this week the company announced its next generation of business applications call Oracle Fusion Applications ,  which Larry Ellison touted in his closing day keynote at last year's conference, as I noted then. Oracle's head of strategy, Gretchen Alarcon, and head of development, Clive Swan, presented the introduction to one of the seven Fusion families, Human Capital Management, and afterward many sessions provided depth on the product. Though this application suite is not ready for sale to the public yet, Oracle Fusion Applications for HCM has many new capabilities that will be welcomed not just by HR professionals but by line-of-business managers and employees. After all, human capital management (HCM) or what many in the industry call talent management matters as much to people whose career it affects as it does to those who use it in HR.

This is the direction that the applications industry in this segment has been moving for about five years in what is most often discussed as talent management or workforce performance management. Oracle has a very large stake in the old-style human resources management system (HRMS) for administrators and analysts, though it has a broad customer base using old HR applications that are managed by IT organizations. Even HR needs more robust and interactive applications, and various providers have brought out a series of newer applications in the last few years. Yet more still is needed, as our benchmark research into talent management found out: 63 percent of organizations place high importance on making improvement in this area while only 10 percent are very confident in their existing efforts and only 17 percent are very satisfied with the software they have.

The latest version of Oracle's middleware platform and technology forms the foundation for the Fusion applications. Fusion HCM is built around analytics that help users understand a variety of workforce activities and processes and make them more productive. Our new benchmark research on workforce analytics and personal perspective on importance of workforce analytics that is rapidly become the focus for talent management. Oracle has made the modules more narrowly focused and adoptable without purchasing a large suite upfront. As well as the approach of buying, installing and deploying software on-premises, Oracle is also making Fusion available through a rental approach via cloud computing. Oracle did not really have a choice here, since other suppliers in HCM (and other application areas) have already been retraining business buyers in this simpler way to rent and deploy applications.

The first release of Fusion HCM has typical core components in HR, Payroll and Benefits, but it also includes compensation management, performance appraisal and goals management with new modules called Workforce Predictions, Workforce Lifecycle Manager, Network at Work and Talent Review. Oracle has concentrated on simplifying the user experience, adding extensibility for collaboration, and global processes, information and deployment. The company claims a 40 percent improvement in user productivity from older versions of Oracle and PeopleSoft human resources applications. It has prepared the way by spending time communicating the value of collaboration between managers and employees, although this collaboration capability does not appear as simple as in other products such as Salesforce Chatter that I have already written about (See: "The Buzz Is about Salesforce.com Chatter ").

The demonstration of Oracle Fusion HCM at the conference showed a simple but sophisticated application framework where, for example, users need only click and review to examine an organization chart or to see basic information about themselves individually or as a team. It gives managers a quick way to navigate across activities, availability, benefits, career planning and compensation. This graphical approach is exactly what everyone in the workforce expects in this day and age.
Oracle emphasized the global aspects of its products including multiple languages, currencies, number formats, time zones and even support. In addition the extensibility of Fusion HCM relies on a common data model to present the historical aspects of performance that are a basis for improvement. The applications can be personalized in how processes, content and structures appear to the individual user.

Fusion HCM draws on the analytics and business intelligence from Oracle's middleware technology that we have already assessed (See: "Infrastructure and Analytics Power Oracle BI 11g to New Levels ") but puts them into the context of managing employees and the workforce. Oracle's Action Frameworks provide workflow and prompts that help users apply a range of historical and predictive analytics to workforce data. This is brought to users in the Oracle Workforce Predictions module that uses predictive analytics and rules technology to examine past, present and future potential issues with talent. For example, using insights about a team, its manager can take and review actions to increase productivity.

The Workforce Compensation module provides features to determine rewards and approve and communicate actions for the team to perform. Oracle has embedded the ability to make recommendations on incentives, to improve guidance and to determine compensation changes for individuals being reviewed. Analytics is an essential tool for aligning compensation to performance according to our benchmark research on total compensation management.

Fusion HCM provides a simple "portrait view" that enables employees and managers to see details regarding individual aspects of the person from position and role to aspirations for advancement. It can present a "spider chart" analysis to study information about potential and improvement. Oracle gathers these capabilities in the Fusion Manager Dashboard, which actually is more than just a dashboard because along with a historical view it provides embedded analytics and navigation. This organizational approach makes it easy to review individual performance and employee information, as well as side-by-side comparison for performance reviews and assessing potential advancement. Oracle has embedded in the application collaborative capabilities for voice calls, e-mail or instant messaging.

In the Workforce Lifecycle Manager users can design, implement, monitor and optimize interactions to create and assess positions, onboard employees and help line managers monitor new employees' performance, and it provides for HR analysts methods to help optimize the workforce, such as invoking prompts for review of policies and rules using electronic forms and approval. It also can invoke benefits administration and examine the costs of choices. A business composer and process view enables HR analysts to review policies and HR processes.
Oracle Fusion HCM also has enhancements in Payroll including the ability to make changes and track activities with status identification. It, too, has embedded analytics, and the global payroll dashboard has access points to help payroll managers work more easily.

As mentioned, a main focus of Oracle Fusion HCM is improvement of usability and unifying applications. It significantly advances the ability of analysts and administrators in HR to work without IT involvement. Oracle's next step will be to interest a large number of customers in examining the new approach. The multiple deployment options for Fusion HCM should encourage this interest. Oracle is touting this product as the new standard for HCM, but at this point that is wishful thinking. The market is well developed, and other providers include ADP, which recently acquired Workscape , Peopleclick Authoria, Plateau, Saba, SumTotal, which recently acquired Softscape, SuccessFactors and Taleo; to date these have dominated the cloud computing spend of HR.

For HR organizations and management looking for applications to deploy between now and the end of the year, Oracle Fusion HCM is something to assess but not ready immediately. We advise those companies not to wait as every day counts in the effort to optimize human capital. We make the same recommendation for those who run Oracle or PeopleSoft HRMS. There are plenty of vendors that have an integrated approach to providing both HCM and HRMS capabilities today along with talent management that can be easily adopted and complement existing application deployments. If you want more detail on the options, just let me know as we already are helping other organizations determine if they should wait for the release of Oracle Fusion Applications for HCM.

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Regards,

Mark Smith - CEO & EVP Research