BlogERP: Jim Holincheck's HCM Software Blog

Authoria Acquired By Bedford Funding for $63.1 Million

Authoria announced today that it has been acquired by Bedford Funding, a private equity (PE) firm (started by alumni from Geac).  Bedford is investing an additional $8 million in working capital (it has more than $800 million in available capital).  Jason Corsello has a good synopsis of the acquisition.  Ultimately, I believe this is a good thing for Authoria customers.  Authoria has good products and a good team, but like many vendors in the talent management segment of the HCM market has struggled to obtain the necessary capital and resources to grow its market share (especially compared to publicly traded vendors such as Taleo, Kenexa, and SuccessFactors).

Existing Authoria customers should see little impact.  If anything, Authoria will have more resources to invest in the product, implementation services, and support (especially on a global basis).  Prospective customers should continue to consider Authoria. 

This acquisition signals the beginning of a new phase in the evolution of the Talent Management application market.  We discussed the likelihood of PE firms entering the market in this research note (Gartner subscription required) on the SuccessFactors IPO.  Now, the first PE firm has taken the plunge.  The current economic climate will continue to put stress on vendors.  It is likely we will see additional mergers and acquisitions.  It is easy to forget that the Talent Management application market is still relatively early on in its life cycle.  There are many large players out there that could change the dynamics significantly.  Oracle and SAP have their own offerings, but have shown they are also willing to buy established, market-leading niche vendors.  Other PE firms have already made investments in the HCM market (Hellman & Friedman/Kronos, Golden Gate Capital/Infor/Workbrain, KKR/NorthgateArinso).  They, and other PE firms (including Bedford), are potential acquirers.  Finally, there is the outsourcing crowd: ADP, Fidelity, etc. have pretty deep pockets and have made limited investments to date, but could make additional ones.

Customers need to recognize that this is part of the normal market evolution.  It does not make sense to wait for the end of the consolidation to buy solutions.  There are too many urgent talent management issues that software can help organizations address.  However, customers should put the appropriate contract protections in place so that they have the most flexibility if there is a change in ownership control including:

• assumption of any existing contract obligations
• lock in of any pricing/discounting
• guaranteed product support for a specific period of time
• lock-in of maintenance/subscription pricing, entitlements, and caps
• source code in escrow (if possible)
• allowing changes to license agreement terms and conditions through an addendum signed by both parties

There are more.  I am not an attorney, so you should consult with one about other protections that may be warranted for your specific situation (and if you are a Gartner client, set up an inquiry to discuss with the appropriate analysts).

HR Technology Conference

I have started to get a lot of requests for meetings from vendors at the HR Technology Conference in Chicago from October 15-17.  Unfortunately, I will not be able to take any meetings at the conference (I will only be there for a limited time).  If you did want to schedule a briefing, please feel free to schedule a vendor briefing through the normal Gartner process.  Also, please feel free to contact my colleague Thomas Otter.  He will be there on Thursday and Friday.

links for 2008-09-25

• Diamond and Kashyap on the Recent Financial Upheavals - Freakonomics - Opinion - New York Times Blog
  A great post on what has happened with the recent financial crisis and why. It also discusses the potential implications on the economy as a whole.
  (tags: economics economy)

Oracle OpenWorld 2008 - Day 3 (Final Report)

This was my last day at OpenWorld.  I started off with a presentation from University California-Berkeley by Jeannine Raymond and David Scronce on their PeopleSoft 9.0 upgrade. 

Update: My apologies to Jeannine Raymond from UC-Berkeley. She presented along with David, not Colleen Neymeyer (from Oracle), as originally indicated.

The upgrade was what I would characterize as a "Talent Management" upgrade.  It has been working on developing and implementing its talent management vision since 2001.  The end result is what it calls Career Compass.  It includes job standards (job definitions that include job competencies), performance management (to assess competencies), and career development.  UC-Berkeley is taking advantage of Profile Management, Talent Acquisition Management/Candidate Gateway, ePerformance, and eDevelopment to deliver this (it is integrating to a third-party, incumbent LMS) to deliver on this vision.  It is a good story about using integrated talent management to address significant workforce issues (in an up economy, it struggles to attract and retain talent because others in their geography can and do pay much more in compensation).

I spent the rest of my time at OpenWorld investigating Fusion Applications (I was not able to attend the Larry Ellison keynote so if others want to weigh in on that, please do).  I attended two sessions led by Steve Miranda that discussed Fusion Applications: one focused on the design objectives for Fusion Applications and the other focused on demonstrations of those design principles in Finance, HCM, and CRM.  I could not help thinking during these sessions of a software joke told to me by Brian Sommer a long ago.  It goes like this:

Think about the answer to two questions: "Can I see it?"  and "Does it exist"?

• If I can see it and it does exist, then it is Real.
• If I can see it, but it does not exist, then it is Virtual.
• If I cannot see it, but it does exist, then it is Transparent
• If cannot see it and it does not exist, then it is in the Next Release

So, let's ask these questions about Fusion Applications.  Can I see it?  The answer is yes, sort of.  Oracle did demo parts of the solution.  It did highlight a number of interesting design points with Fusion including:

• Role-based dashboards
• Embedded analytics (with transactional activities)
• Integrated visualization (organizational charting, 9-box, rolodex cards, person gallery, contact mesh -- graphical view of your connections in the organization)
• Worklists (ok, that is not that exciting)
• Activity Guides (configurable leveraging the BPEL engine)
• Desktop Widgets
• Contextual help with user ratings
• Tagging
• Presence
• Communities/Business Social Networks
• Accordion Panels (left-hand and right-hand panels can be expanded and contracted)
• Show more/show less (ability to configure a more detailed vs. less detailed version of the screen)

I was quite impressed with many of the design elements demonstrated.  However, the scenarios (approving a journal batch, promoting an employee, prioritizing leads) showed small bits of functionality from a broader suite of Fusion Applications.   So, can I see some of the potential of Fusion applications?  Yes.  Can I see the full Fusion Application Suite?  Not yet.

Does it Exist?  That is probably the more interesting question.  Josh is quite bullish on it.  Certainly there are "edge" applications such as Social CRM that do exist.  There are other edge applications like Talent Pool Management (Candidate Relationship Management) that are close to delivery.  There are also others like Talent Reviews that are expected in the next twelve months.  However, based on the information provided to date, it is difficult to know exactly how much of the Fusion Application Suite is built.   There was no firm commitment on delivery dates for the first release of the Suite or any indication of early customers that were implementing the Suite.  Early customers that implement and go live are the real litmus test for "does it exist".  So, do Fusion Edition (that is what Oracle is calling it) applications exist?  Yes, there are some edge applications.  Does the first release of the full suite of Fusion Applications exist?  Not yet.

What do you think about Oracle's Fusion Applications? 

Oracle OpenWorld 2008 - Day 2

Thomas and I started Day 2 with a briefing on Oracle E-Business Suite (EBS) for the upcoming MQ for Employee Performance Management software.  Oracle continues to make progress filling in some of the functional gaps and the product remains quite good in areas such as compensation management.  The adoption rate is also quite good within the EBS installed base (especially for compensation management).

Thomas and I also had some briefings with the product strategy folks for both EBS (Anand Subbaram) and PeopleSoft (Tracy Martin along with Paco Aubrejuan the new GM of the PeopleSoft BU). From a PeopleSoft perspective, I admit I was actually pleasantly surprised.  Even though 9.1 is a little later than expected, they plan to add quite a bit of functionality including cascading goals in Performance Management as well as a new Succession Management capability (delivered with core HR -- so no additional licensing required).  In addition, Oracle is revamping compensation management in 9.1 (re-writing and adding to the existing capabilities and better integration to ePerformance), adding new Talent Management Dashboards to its Workforce Analytics product (the one based on OBIEE), and bringing out a new employee survey tool (tentatively called Workforce Connect) which leverages customer survey tools from the Siebel CRM solution.  Also, in terms of leveraging Siebel CRM, Oracle is creating what it termed "Fusion Edition" applications the first of which will be what is called Talent Pool Management (TPM).  Fusion Edition applications are edge applications meant to work with PeopleSoft, EBS, and Fusion.  The name is a bit of a misnomer as it is really focused on Candidate Relationship Management (marketing and communicating with passive candidates) not talent pool management as one would think of it in Succession Management.  The next Fusion Edition application expected is Talent Review (sometime in 2009).

Speaking of sometime, that is when PeopleSoft 9.1 is expected in 2009 (though indications were that it would not be the beginning or end of 2009 so expect it to be released over the course of Q2/Q3 for new customers).  However, some of the most interesting things going on were with PeopleTools.  PeopleTools 8.50 includes a number of noteworthy features, but the one with the most immediate impact is the new Ajax-based User Experience.  PeopleSoft 9.1 is built on PeopleTool 8.50, but it is backward compatible to previous application releases.  So, 8.9 and 9.0 customers that want to enhance the user experience can do just a PeopleTools upgrade to get the necessary capabilities.

For those EBS customers out there, things are a little more definitive.  Version 12.1 is coming in Q109.  It too will include new succession management functionality (as well as Profile Management based on the design from PeopleSoft 9.0).   There are a number of incremental enhancements across the rest of the product line from interview management in iRecruitment to setup enhancements and better market data integration in Compensation Workbench.

I also went to Gretchen Alarcon's presentation on Oracle's HCM vision.  She did a good job laying out the trends (thanks for the plug) and how Oracle is looking at opportunities around workforce planning and modeling and predictive analytics.  It was a pretty good size crowd and it was a little surprising to see no one was really doing anything with predictive analytics.  There is tremendous potential business value in the right applications of planning and analytics.  What do you think?  Will the hype around social software and HCM overshadow the emergence of workforce planning and analytics? 

Gartner Blogosphere Open for Business

Gartner has now officially entered the blogosphere.  I have a blog there along with many other Gartner analysts.  For right now, I am cross-posting to both.  I will let you know if that changes over time.  I would encourage you to take a look.  There are some very interesting posts.

Oracle OpenWorld 2008 - Day 1

Here are the headlines, in my mind, from the opening day of OpenWorld:

• Complete. Open. Integrated -- This is the main theme for the conference which I saw repeated in a number of presentations.  Here is my take on what Oracle intends it to mean:
  • Complete -- Oracle is very focused on industry solutions.  That is, providing a comprehensive footprint for specific target industries.  It used the Communications industry as an example and cited its footprint in 2004 and how it has done a number of acquisitions which it has integrated together since then to fill out its solution map (the solution map is not an original Oracle concept, but it has been put to good use)
  • Open -- Oracle has been pretty consistent in its support for a variety of standards and allowing customers to "plug and play" where possible.  It has created an abstraction layer in Oracle Fusion Middleware (OFM) that includes common business objects, web services, and reference process models that customers can use out of the box or adapt with the tools as necessary.
  • Integrated -- This is where Oracle's Application Integration Architecture (AIA) comes into play.  Oracle has taken industry standards along with a modern integration architecture (leveraging process model-driven integration with an enterprise service bus and standard integration definitions).  Oracle had a number of customers touting the benefits they thought they would achieve, but almost all were still in the process of implementing (this is not a new topic, it was hot for Oracle at the last OpenWorld).
• Delays
  • We knew this from pre-briefing prior to OpenWorld, but it pretty much is official now (and has been suspected for far longer).   There will be no suite of Oracle Fusion Applications delivered in 2008.  We published this (Gartner subscription required) in 2007 based on an interview with John Wookey about Fusion Applications.  Oracle had indicated at that time the first release of the suite would be in 2008.  Then, we published this (Gartner subscription required) when we started to have concerns about whether or not Oracle would deliver Fusion Applications in 2008 when John Wookey left Oracle.  The first phase will be edge applications, like the Social CRM applications, which have been delivered in 2008.
  • PeopleSoft Enterprise 9.1 will not be delivered in 2008.  I do not know if Oracle committed publicly to this date, but they had been indicating privately that 9.1 would be delivered in 2008, not 2009.  HCM is the first pillar to be delivered in 9.1 and given the scope of the release (including new applications such as Succession Management and a rewritten Compensation Management), it is understandable that it would take some time.  However, release 9.0 became generally available in December 2006 (see Oracle's Lifetime Support Policy for more details).  So, it is going to be well over two years before the next release.  In a market where new releases from Talent Management application vendors come out as frequently as monthly, that is a very long time.  More to come on version 9.1 in a later post.
• Social Software Strategy -- I am not going to discuss this too much now as I am still trying to understand Oracle's strategy here.  Suffice to say that there are a number of products out there including Oracle Collaboration Suite (been around for a long time), Beehive (announced today and prominently placed in the opening keynote), WebCenter (the UI for Fusion Applications that includes some elements of social software), and PeopleSoft Enterprise Portal (that also now has some elements of collaboration included with it).  As soon as I get to the bottom of it with some clarity, I will post again.
• Upgrades -- As I was communicating with my colleagues and attending sessions, it became clear that sessions which discussed Applications Unlimited (Oracle EBS, PeopleSoft, JDE, etc.) product vision/roadmaps and upgrades were among the most popular.  I think that supports what we have been seeing in our inquiries in terms of the primary concern for customers:  is this the right time to upgrade and if so, to which release should I upgrade?  There are some sessions on Wednesday around Fusion applications.  I would imagine they will be popular for similar reasons.

In closing, Thomas and I had a good chat with Charles D'Souza from Emirates Bank (HQ in Dubai).  It has implemented implemented core HRMS, self-service, learning management, performance management, some compensation management and succession management (which some of its own extensions to Oracle) on E-Business Suite R12.  It is also about to embark on an implementation of iRecruitment as well.  If you are an EBS customer looking for an understanding of what is possible (to support upgrade planning) in Talent Management on R12, this is a good customer reference.  

It is always good to get the customer viewpoint, I have a number of customer sessions on the agenda for tomorrow and Wednesday.  If you are an Oracle Applications customer, what do you think the highlights were for Day 1?

TaleoWORLD 2008

First, let's go through the statistics.  Taleo stated it had 900 attendees at the conference (including 80 Vurv customers).  It also indicated it now has 3,600 total customers (including 1,600 Taleo Business Edition customers).  Taleo also reached a milestone recently with the 100 millionth candidate applying for a job through Taleo.   Michael Gregoire, Taleo's CEO, kicked off the conference with his keynote discussing their vision for Talent Management.  It has three pillars, Monarch -- the code name for its next release of its recruiting solution, Performance Management (which for them includes career development and succession management), and Compensation Management.  Monarch has a number of enhancements (the list below is not a full list), many of which leverage the Taleo Performance user experience including:

• MyTaleo (a portal-style user interface with personalization capabilities)
• Talent Scorecard (drag and drop dashboard widgets)
• Modal Usage (navigate in multiple ways through a particular screen -- includes Table of Contents to navigate a requisition and Quick Filters to more easily narrow a long list of candidates)
• At-a-Glance Summaries (extends the Taleo Talent Card metaphor to recruiting)
• Outlook Integration (Taleo Inbox is extended to support Recruiters' ability to capture candidates)

In Performance Management, Taleo has been quietly adding new functionality (for example, a "n-box" capability will be out shortly for succession management) as well as adding customers (they have licensed Taleo Performance to 12 customers).  In addition, it announced Taleo Business Edition (BE) Performance (available in November 2008) which is targeted at the SMB market (below 3,000 employees) and integrated with the existing Taleo BE Recruiting solution.

Another major announcement was Taleo's equity investment in (with an exclusive option to buy) Worldwide Compensation (WWC).  WWC is a relatively new entrant to the compensation management software space, but started by building a global library of compensation and benefit regulations and practices (which WorldAtWork makes available to its members).  Once it had learned more about the requirements for global compensation, it built a software solution.

The vision also includes development planning.  Taleo does not plan to offer its own LMS, but plans to integrate with existing LMS.  What it wants to do is provide value around the LMS by offering solutions that focus more informal and experiential learning.

Thomas (via web conference) and I spent a lot of time with Taleo today going through Taleo Performance and WWC for the Magic Quadrant for Employee Performance Management (EPM) Software research.  I am not going to comment on our findings at this point (Gartner clients should feel free to set up an inquiry if interested) because we still have a lot of work to do including getting feedback from some of the early customers.

Speaking of early customers for Taleo Performance, Taleo had a panel of early adopters talk about their experience implementing the EPM solution as part of a broader talent management strategy.  The group, TeleTech (David Gilbert), Children's Healthcare of Atlanta (Larry Mohl), and Freeport-McMoRan (Kyle Peavler), discussed the drivers for change in their organizations, the challenges they overcame, and the benefits they achieved.  It was interesting to hear them talk about the importance of usability in their decision to choose Taleo and how it was key for getting buy-in from various stakeholders.

How important should usability be as a selection criterion?  I have found the usability is a little bit like beauty.  It is in the eye of the beholder.  It depends quite a bit on what you are used to and what you want to accomplish.  It is different from organization to organization and from stakeholder group to stakeholder group (what HR and IT think is easy to use may not be the same for employees and managers for example).  What do you think?  Is usability overrated or underrated?

Meltdown in the Financial Markets -- What Does It Mean to HCM Software?

Gartner has a product offering specifically for the investor community.  We have quite a variety of investors from Venture Capitalist (VCs) to Private Equity (PE) firms to institutional investors.  The most common question, not surprisingly, that I have had from all of these constituencies is whether or not we see a slowdown in the HCM market due to the economy.  To date, the answer is that we have not seen evidence of a slowdown.  The number of inquiries related to HCM (and more specifically talent management) have grown in 2008 vs. 2007 (a banner year with close 20% growth).  However, the trouble in the financial sector and Kenexa's lower guidance on expected revenue does give one pause to think.

I started at Gartner in May 2002 at the tail end of the last of the last recession.  At that time, vendors definitely were struggling.  However, by 2003 vendors were growing again at healthy rates.  There was pent up demand that vendors filled in 2003.  It is hard to gauge the impact of financial sector crisis on the HCM market.  There could be a ripple effect that causes organizations to cut budgets or at least be more conservative with investments (as well as budgets for 2009).  It is important to realize though, even if the worst happens and the HCM market slows down for a period of time, that it should come back strong because the underlying drivers still remain:

• Demographic shifts will continue
• The need to attract and retain top talent for critical jobs will still remain
• The need to develop the next generation of leaders will still be there
• The desire to align pay for performance may be even stronger (because people-related costs are such a high percentage of total cost in most organizations)

What do you think?  Is the HCM market heading for a credit crisis/recession-driven downturn?  Is demand strong enough to weather the looming storm?  If the market does decline, how fast will it come back? 

Kenexa World Conference 2008

Peter Cappelli did the opening keynote today at the Kenexa World Conference.  His presentation focused on many of themes in his book "Talent On Demand".  Here are a couple of important takeaways/things to think about:

• Mobility in the external labor market has made it difficult for employers to invest in training and development.  By the time the investment is ready to pay off, workers can leave for other, often higher paying, opportunities.  These new employers do not have to make that training investment and do not have to recoup those costs so they can pay more.
• Uncertainty about the demand for resources is not going to go away.  What is key is how you handle the uncertainty.  Doing workforce planning where you can understand the range of likely possibilities and craft sourcing strategies appropriately is key.  It is also important to know the cost/benefit tradeoffs of both overshooting and undershooting planned demand.  If you are going to err, make sure you error on the right side (and again craft sourcing strategies appropriately).

For more check out my recent post (including a link to information on Peter's book).

I had a chance to go to a number of breakout sessions at the conference as well.  Kelley Baker and Troy Heflin from Volvo Group (the rest of the conglomerate after Volvo sold the car business to Ford) did a great presentation on workforce planning and analytics as it relates to issues of the multi-generational workforce.  They showed a lot of great macro-environmental data that they used to engage senior leaders in the conversation about multi-generational workforce issues.  Once engaged, they were able to look at critical workforce segments (as defined by the business through survey techniques, not HR).  They found that 41% of employees in critical workforce segments were eligible to retire in the next five years (either would have 30 years of employment or be 62 years old or higher).  In addition, 21% of employees in critical workforce segments were eligible to retire immediately.  Based on these findings, they crafted a number of talent strategies to deal with these emerging talent gaps. 

I also attended a session by Carolyn Nimmy from Capgemini on Corporate Social Responsibility.  What I found most interesting was the efforts to ingrain this in the culture.  Related to talent management specifically, they talked about the linkage in one of their programs, the Naandi Foundation (which helps Girl/Child education in India), to higher employee engagement.  In addition, they have used the Naandi Foundation for leadership development.  Specifically, employees from Finland have worked in India on assignments for Naandi Foundation.  This has built bonds with local employees (building on their "One Team" approach to client engagement) as well as giving them inter-cultural knowledge (IBM has similar types of program).  They know this work has improved their employment brand in Norway and Finland, not to mention India.  Capgemini is still working to understand the impact on issues such as retention.

I was very impressed by the work done at Scotiabank (presented by Cory Garlough).  They have really thought through how to put together a whole employee research metholodolgy using surveys and other data collection techniques.  These use this data to answer specific research questions that help them make better decisions about their talent.

I also heard from Providence Health & Services, an early customer for Kenexa's new 2X platform and the upcoming (Q408) Kenexa Recruiter 2X solution.  So far, they have been impressed with the improvements (over the original Kenexa Recruiter solution) especially in terms of usability.

I would be remiss if I did not mention Kenexa's big news at the conference.  They have acquired the code to a global, J2EE-based Learning Management System (contractually they are not allowed to say who they bought it from but my description should provide some clues) which forms the foundation for Kenexa Learning Management (KLM).  The solution is available now and Kenexa plans to move it to the 2X platform by the end of 2009.

The not so good news is that Kenexa lowered its guidance for the next quarter and the rest of 2008.  Kenexa's stock price is down considerably today (~25%).

Update

Plateau has asked me to update this post and indicate that its executives unequivocally deny that it is the vendor that sold the rights to the code that Kenexa is using in KLM.