BlogERP: Jim Holincheck's HCM Software Blog

Innovation Around the Edges of HCM Software

Bill Kutik had a great article in HR Executive magazine about ongoing innovation in the E-Recruitment software market.  I agree with him.  We discussed a lot of the areas of innovation around the edges in recruiting in the Magic Quadrant for E-Recruitment Software (Gartner subscription required).  As Bill points out, there are new vendors popping up all of the time (even since we published our research).  There is always innovation occurring around the edges of established application areas.  E-Recruitment (formerly Applicant Tracking) solutions have been around for around 20 years.  It is clearly a well-established area. 

Yet, we have had profound changes driven by technology (the movement from applicant tracking to e-recruitment solutions driven by the internet and web-based solutions).  In addition, we have seen innovation because these solutions still have not solved all of the business challenges in the domain.  This is a common pattern that we see in many different business software application markets.

There are two implications from this.  First, there are a lot of new vendors that will pop up trying variations of the themes with a variety of different business models.  Most of these will not be successful (or will have limited success).  Few will change the world.  That is not necessarily bad, but it is important to make sure that you do not put all of your eggs in one basket (and make sure that you are easily able to end your relationships) as you try some of this innovation to solve your business challenges.  Second, once innovation starts to become accepted wisdom, it starts to get absorbed into the established solutions (either directly or through preferred partnerships with the "winning" vendors).  This cycle of assimilation occurs all of the time.  So, it becomes important to understand how your core/strategic vendors are moving related to innovations you find useful.

Remember your HCM application portfolio requires active management.  Technology will not solve all of your challenges today, but it is constantly evolving and you need to continually look at your priorities and what is possible to make sure you get the most from your investments, especially in these challenging economic times.

The Changing Face (and Needs) of Enterprise Application Users

I did a presentation yesterday Gartner's Symposium/ITxpo about how to align IT with ERP, CRM, and SCM users.  I thought I made a pretty compelling case.  Most CIOs think that IT does not lacks the flexibility to respond to business change, that it could do more to deliver technology innovations needed by the business, and is not as effective as it could be in delivering against the enterprise strategy.  Enterprise applications are a root cause because they are often viewed as inhibitors to business change (lacking the flexibility to change as the business changes).  In addition, they often lack the decision support capabilities needed to ensure that the business is executing against the enterprise strategy.  This situation has a potential to get worse.  Users are increasingly blazing their own path.  They are not afraid to go find solutions to meet their needs.  These often take the form of Software as a Service and even consumer-grade software (the use of consumer grade software at work is surprisingly high compared to the expectations of both end users and IT -- we have done some survey work that highlights this result).   Add to that, there is new generation of workers coming into the business world that are tech savvy and have had their user experience expectations set by consumer-grade software.  The bar is defining moving higher for IT to meet enterprise application users needs.

I provided some context about how the user needs are changing and what they can do to better align with those needs.  The reaction of the audience was relatively subdued (I hope it was not my delivery!).  There were a few people who asked questions afterwards who seemed to feel this was an issue for them.  However, many, I think, felt that this was not that big a deal.  They were working with the users and understanding their needs.  I have seen enough self-service projects stumble to know that just dealing HR or Finance users is not enough, you have to reach the ultimate end users.  Am I overstating the importance meeting these more casual user needs?  Do you think IT is doing enough to understand these needs?

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? 

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?

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.

The Influence of Non-HR Leaders on HR

I was reading Workforce Management magazine yesterday and there was an item in the cover story that stood out.  The magazine reported that: 

A quarter of the Fortune 1000 have selected HR chiefs from outside divisions, according to the Center for Effective Organizations ...

Many HR organizations on the leading edge of Workforce Analytics practices (that I have spoken with), for example, have had senior executives that came from outside of HR (and the HR profession).  However, I have to admit I did not realize that it had become such a common practice.  The Workforce Management cover story about Kohl's and the move of its CEO out of that role to focus on Talent Management is certainly unique.  However, in my view, it certainly bodes well that HR organizations are getting an influx of talent from the business.  It can only benefit HR by improving alignment with the business.

What do you think?  Will this influx of "non-HR" executive talent change HR organizations (and the HR profession) for the better or not?

Some Recent Gartner HCM Research For Your Consideration

I wanted to make you aware of some of my more recent HCM research (Gartner subscription required).  For those wanting to know about Service-Oriented Architecture (SOA) and its impact on HCM software, the two notes below will be a good starting point.  In addition, the note on the leveraging business application suites should also be thought-provoking.  Enjoy.

The Impact of SOA on HCM Applications
29 July 2008
James Holincheck

Service-oriented architecture-based solutions promise to address some of the key challenges of developing, implementing and maintaining traditional human capital management applications.

New SOA-Based HCM Applications Emerge
29 July 2008
James Holincheck

New applications from Lawson, SAP and Workday give human capital management customers a glimpse into the potential of service-oriented-architecture-based solutions.

ERP, SCM and CRM: Suites Define the Packaged Application Market
25 July 2008
Yvonne Genovese   Jeff Woods   James Holincheck   Nigel Rayner   Michael Maoz

Users searching for ERP are often looking for the level of integration provided by ERP, but for functionality that extends well beyond ERP. Understanding suites and leveraging their value is important to a successful application strategy.

Rethinking Reporting

I have been doing a lot of briefings for the "Magic Quadrant for E-Recruitment Software" update.  One of the things that has stood out to me is the lack of innovation (for the most part) around reporting and analytics.  Most vendors have three components to their reporting/analytics offering:

• Standard Reports -- These include both regulatory-related reports as well as common reports that most recruiters, and to a lesser extent, hiring managers want to see.
• Ad-Hoc Reports -- All of the vendors I have talked to thus far have an ad-hoc report writer that allows the vendor or the customer to create their own reports beyond the standard ones.  The standard reports are usually created with the ad-hoc reporting tool.
• Dashboards -- Many of the vendors offer some sort of role-based dashboard that provides what they vendor believes are key metrics for the role.  The metrics are configurable so if a customer wants different ones on the dashboard for a particular role (or in some cases the user can change it themselves), they can make the change.

The challenge with the offerings is that it puts the onus on the user to find the information that they truly need.  A user has to go into the list of standard reports and find which one will answer the question.  If that does not work, then they need to create a new one in the ad-hoc reporting tool.  Similarly, if a user is lucky, a dashboard will provide the information that they need to answer a question (or the ability drill-down into metrics will provide the information).

Given what we have learned from the world of search, why does it still work this way?  Why can't a user just enter a question and have the system suggest which reports, graphics, or dashboards would best answer the question?  I am not suggesting Natural Language Processing (NLP).  I am thinking about an approach akin to a Google search.  Google does not provide "the answer".  It provides links to what it thinks best matches what the user asked for.  The user can navigate the suggestions and choose which one will work best.  It can work the same way for reporting.  Even if the "best fit" report suggested does not quite provide the answer, at least it provides the starting point for using the ad-hoc reporting tool to answer the question.

An HCM application also provides context for the search.  So, if I am a hiring manager and I am creating a requisition, then there may be a set of common questions that the system could suggest (e.g., what are the characteristics of high performers in this position?  what is the market rate of pay for this position relative to our budget?).  If you ask a vendor during a demonstration, "How long does it typically take to fill a requisition for this position?".  They can easily navigate to the "Time to Fill" report and then drill down into the specific position data.  They should be able to do it -- they are experts on how to use the reporting tools.  You can get training so you can do it too, but why should you?  Since the vendor knows the best way to answer the question, why not build that intelligence into the system (and have the system learn as users choose which reports best answer specific questions)?  If I ask the same question multiple times, then maybe the system can save the question and the report I typically use to answer the question as a "favorite".

In this age of Web 2.0, there is a lot of focus on improving the user experience.  In reporting, it has focused on providing more graphical views of information and drill-down.  What do you think?  Are vendors doing enough to provide users the information they need to make decisions and take appropriate actions?

Virtual HCM Conferences

Bill Kutik has a nice article in HR Executive about HR.com's VIEW conference.  Gerry Crispin weighs in on the conference here.  I wanted to attend and participate in a virtual analyst panel, but I had a scheduling conflict.  So, I do not have first knowledge of the experience.  I would really like to see virtual conferences succeed as it would reduce travel for everyone (and probably allow greater participation from around the world).