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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. However, 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. Among 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, Ventana Research

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