BlogERP: Jim Holincheck's HCM Software Blog

The Importance of (Being) GUI

There has been a lot of discussion recently in the blogosphere about how crummy graphical user interfaces (GUI) have been an impediment for broad adoption of enterprise software.  The genesis of this debate was blog post from a New York Times writer, Khoi Vinh.  He makes the important point (among many) that the usability enterprise software does not have the same level of critique as consumer software.  He is quite right.  Others have weighed in on the importance of focusing on the GUI.  Dennis Howlett sums up much of this discussion in his post.  I certainly have weighed in on this topic before in this post.  As you might guess from my previous posts on this topic, I do think this is pretty important.   I get asked a lot by clients about which vendor has the easiest to use product.  I think GUIs are like beauty -- it is in the eye of the beholder.  One is heavily influenced by what one is used to using and what one intrinsically thinks is easy to use.  Since I get the good fortune to see many solutions, my perception is a lot different from someone who has been using the same particular system for the last fifteen years.

However, the bar for highly usable applications clearly is being raised as the line between consumer and business technologies blurs and digital natives enter the workforce.  As more enterprise software capabilities move to employees and line managers (typically via self-service applications), the consumer software experience from Amazon.com to Google Search to Facebook is fast becoming the standard that needs to be met or exceeded.   However, we must recognize that there is not one right answer to the question of usability.  The important thing, from an enterprise perspective, is that you select and implement applications that are highly approachable and usable for your users.  If all of users already use Outlook, for example, then maybe leveraging Outlook for a new application would be a pretty good idea.  Many times though, it will not be that simple.  So, it is good to get users involved in the selection process, especially for self-service applications.  HR and IT folks have a different perspective on usability from line managers and employees.  HR folks know all of the HR jargon and IT folks are used to figuring out how to use many technologies.  Line managers and employees have a whole different viewpoint.  They have become very used to buying things on Amazon or searching on Google.  However, for the most part, they do not understand HR jargon like "competency proficiency levels or merit matrices".  They also do not intrinsically understand, like an IT person, that a button labeled "Details" would take you to a new screen that may require additional detailed information to be entered.  I will end the rant now, but ignore these differences in perspective at your own peril, it is one of the major reasons self-service initiatives fail.

Platforms and HCM Applications

Jason Corsello has a post about platforms with a HCM lens (based on a post from Marc Andreessen about three levels of internet platforms).  Jason points out that HCM applications are at the first platform level (Access APIs).  I think there is a simple answer to this though.  HCM application providers have not tried to be platform providers.  We may see that happen down the road.  However, I think what will be more interesting in the short-term is how new and existing vendors leverage level 2 (Plug-In APIs) and level 3 (Apps Run Inside the Platform Itself).  I imagine that we will see numerous Facebook plug-ins emerge (Jobster for example has already created one).  I expect that we will also see someone build serious HCM applications on the Salesforce.com Force.com (used to be Apex and before that AppExchange) platform.  CODA, a financial software vendor, announced this week that it is building financial apps on the platform (see Dennis Howlett's post on this).  It is only a matter if time for HCM for the reasons Andreessen outlines about level 3 platforms.

The Return on Human Capital

Jon Ingham had an interesting post on the "Return on Human Capital".  I agree that value chain analysis can be useful to create a linkage model that connects individual attributes (manager and employees) to business outcomes.  I am also a believer in a testing that linkage model against the actual data from your company to determine if the linkage is truly there.  I do not have as much of a problem as Jon does with the notion of calculating ROI.  I agree that ROI can obscure some of the qualitative value of HCM investments (as in the example of Learning metrics discussed).  However, my bigger issue is that HCM investments, as they are typically presented to C-level executives, have a much worse business case than proposed investments from other parts of the organization.  It does not need to be that way.  Too many HCM investment business cases rely on "soft" savings such as effort reduction (e.g., a manager will spend 50% less time creating a performance review) or "hard" savings such as reducing paper, printing, and distribution costs (which are not typically large savings).  There is not enough focus on the impact on business outcomes as associated metrics.  The business case, especially for talent management, should be on how talent management can be used to increase customer satisfaction, grow revenues, support growth into new markets, and more.  With the right linkage models, supported by the right data, the ROI for HCM investments can be quite compelling.

Recent Published HCM Research

As previously promised, here are some links to some of my recently published research (Gartner subscription required):

Hype Cycle for Human Capital Management Software, 2007 -- The Hype Cycle for HCM software helps companies plan their HCM technology investments by providing insight into the maturity of key applications and technologies.

SuccessFactors' Initial Public Offering Filing Confirms High Growth but at a Steep Cost -- SuccessFactors has shown high revenue growth, but it is accompanied by high sales and marketing costs. By spending to grow its customer base and market share rapidly, it has made a big bet to become a leader in the emerging talent management application suite market. Yet, its strategy has some risk.

More on Workday

Workday recently announced its Financials products and it has received a lot of coverage in the press and blogging community.  Here is some of the coverage:

• Dan Farber and Larry Dignan describe the announcement from Workday (along with some graphics from the pitch)
• Nicholas Carr weighs in about Workday's pitch calling it potentially "The End of ERP" much like Salesforce.com pitched "The End of Software".
• Phil Wainewright does a nice job discussing the implications of Workday's in-memory database architecture approach and the flexibility it affords over the traditional RDBMS approach employed in ERP solutions.
• David Dobrin does an excellent job of exploring in more detail Workday's use of in-memory database and walks through an example (this goes in the I wish I had thought of doing that department) of how it can potentially enhance flexibility.  It is well worth the read.
• Dennis Howlett does a great job of explaining why Workday's approach to Financials is both old and new at the same time.  In addition, he discusses specifically in the context of Financials how Workday's approach provides additional flexibility.

Gartner published (now archived on Gartner.com) a First Take at this time Workday launched its HCM applications in November 2006 for those interested in our discussion of some of these points.

Another Viewpoint on HR Being Strategic

The Taleo Blog points out a comment from Peter Weddle about the Deloitte/EIU study.  I provided my take on this study here.  Peter's comment was:

"Now, I admit I have an old world view of leadership, but I believe that the CEO is responsible for everything that happens on his or her watch. To be sure, they reap the accolades when times are good, so they should be held accountable when things go wrong. And, I would say that a 96% failure rate for their HR function would rise to the definition of something going wrong, seriously wrong on their watch. To put it another way, I'd like to see a survey of those business CEOs and other executives who are willing to put their money where their opinions are. Instead of griping about HR and then investing a measly 0.9% of total operating costs-the U.S. norm for the last ten years-I'd like to see how many would sign up to invest 5%, 6% or more of their operating costs to fix their gripe. Frankly, I'm tired of CEOs' vapor capital approach to HR; all they invest is hot air. If they want a world class HR function, they're going to have to pay for it."

I think this is an extremely valid point.  As much as HR organizations need to change their focus to be strategic contributors, C-level executives can be equally at fault.  If C-level executives do not make the proper investments in a strategic HR capability, it will not emerge.  It is that simple.  However, HR can do its part to get the investment they need to be a strategic contributor.

See my post from earlier today.  There is a lot senior HR leadership can do in a 100 days to start to convince C-level executives to make the investments.  Do not be afraid to start small.  Pick one particularly thorny business problem that is plaguing the C-level set and show them how you can help solve it in that first 100 days.  Then, do it again and again.  You get the picture.  Once the track record for delivering business value exists, the investments will surely follow.

Beyond the First Hundred Days for a CHRO

SystematicHR had a great post that critiqued a Mercer write-up about what a CHRO should do in the first 100 days on the job.  For anyone thinking about how to make HR more strategic, both are a good read.

It started me thinking about why limit it to the first hundred days on the job.  Many of the recommendations should be done every 100 days.

• "Connect the goals of the HR function to the goals of the business. By starting with the broad business challenges and strategy, you’ll convey to senior executives that you understand the need to link workforce investments to business results." 

A strategically-focused HR organizations should do this exercise every 100 days to make sure workforce investments continue to be linked to business priorities.

• "Identify the greatest sources of pain for immediate attention and prioritize longer-term issues. While you won’t be able to address all of the organization’s workforce or HR issues in the first 100 days, you can identify the most critical ones, assess the available resources and develop a plan of action." 

A strategically-focused HR organizations will use a portfolio management approach to assess the priorities of workforce investments at least every 100 days to make sure the right priorities are addressed.

• "Build the case for change within the function and throughout the organization. The scope and magnitude of change will be different in each organization, but there’s no question that people will expect action – and business challenges will demand it." 

Managing change is not a one-time event that just occurs in the first 100 days.  It is an ongoing process that needs to be addressed well beyond the first 100 days.  It is a good idea to take a checkpoint every 100 days and see if needed changes are really taking hold, and if not, what actions can be taken to move change forward.

Is your HR organization on this kind of 100 day plan?  If not, should it be?

Will HR Ever Be Strategic?

Thomas Otter on the Vendorprisey blog throws down the challenge to a variety of bloggers and analysts to discuss the disconnect between survey data that shows most C-level executives believe people issues are strategic, yet do not see HR leaders as playing a crucial role in creating corporate strategy.  I will take up the challenge.  So, why is the HR organization not playing a crucial role in creating corporate strategy?

• It may not be doing the basics well -- If HR cannot deliver basic services with high quality at competitive costs, then it does not have credibility with C-level executives.  HR should also take the lead in, not be forced into, evaluating alternatives such as HRO.  It is important that HR has the data (showing the facts to C-level executives will be a common theme here) that it can share with C-level executives that shows that it is doing the basics well compared to alternatives (or a plan to take advantage of an alternative if this is the best answer). 
• HR does not really understand the business strategy -- If HR does not understand the business strategy, it cannot proactively provide insight on how to leverage human capital to achieve that strategy.  This is not a new concern and I think HR leaders are getting better at understanding the business strategy.  However, I still see a lot of companies making HR technology investments without thinking through the ties to business strategy.
• HR does not provide the information C-level executives need to make strategic decisions about human capital -- Even if an HR organization understands the business strategy, it needs to have something to meaningful to contribute to the strategy discussion.  Too many HR leaders come to the table without the necessary facts to help make strategic decisions.  Many HR leaders provide anecdotes, cite studies, or suggest the best practices of others to answer strategic questions about human capital.  These can provide color around strategic decision making, but make a poor substitute for facts based on data that comes directly from the company. 

This is the area I believe that HR needs to improve the most.  I was at a conference earlier this week held by InfoHRM on Workforce Planning.  One of the speakers was an EVP of Workforce Planning at Countrywide Financial.  He was a CFO earlier in his career.  So, he had a unique perspective of HR and its position as a strategic contributor.  As a CFO, he was often put in the position of shooting down the ideas of HR, not because they were not good or necessary, but because they did not have the proper substantiation (i.e., business case).  He pointed out, rightly, that investments in human capital are not made in a vacuum.  Investments in human capital need to be weighed against alternative investments that the company may make to achieve its strategy.  So, that was where HR fell down, in his mind.  It did not make the case it needed.

If HR is going to be strategic, it needs to understand the business strategy and support managers and executives in executing that strategy.  It needs to provide the necessary facts about the impact of human capital on business strategy and then provide the insight and experience to make the best decisions. 

It sounds simple.  It is not.  HR needs to develop competencies in new disciplines to be successful.  It is starting to happen.  As more non-HR professionals (an HR professionals get more direct business experience) take leadership roles in HR organizations, we are starting to see new thinking emerge.  To me, it is not a question of if, it is when, fact-based, strategic HCM decision-making becomes a mainstream concept.  So, I look at much of the survey data as a "call to arms" for HR leaders.  If they do not answer the call, they will be pushed aside by those who do.

Upcoming HCM Research

I have not posted much to the blog recently as I have been trying to finish the update to the MarketScope for Employee Performance Management Software.  It has been a long (longer than expected) process.  We are near the finish line and should publish by the end of the week (maybe even tomorrow, but probably Friday).  I'd better be finished as I am leaving on vacation at that point.  I will not have ready access to the Internet so posting may be very infrequent (if at all).

I am working on some other notes that will get finished when I get back from vacation.  I am in the process of completing our first Hype Cycle for HCM Applications.  In addition, I am finishing up a note that provides our definition of Workforce Analytics.  Also, I hope to have some good news to report to you about the future of this blog when I get back from vacation.

SAP SAPPHIRE 2007 - Rio Tinto

I had a chance to go see a presentation by Rio Tinto, a global mining company, today on their efforts at Talent Management.  There were a few extremely important points made in the presentation:

• Understand the business need -- In Rio Tinto's case, the business imperative for talent management was a talent shortage for critical talent (e.g., mining engineers) to support growth
• Focus on defining the process first, then look at the technology -- Rio Tinto did a really good job defining talent management processes that work for them.  They have implemented integrated technology (SAP) for some of the processes, but have not implemented automation for all (though they will continue to automate more over the next couple of years).  Rio Tinto is a good customer for other customers to speak with about SAP's talent management capabilities, especially e-recruitment.
• Analysis is where the value is -- It is one thing to define a good process.  That is good.  It is also good to automate that process.  That is even better.  However, the best case is when you can use that data to make better decisions about talent.  One example that Rio Tinto gave was that by having a more comprehensive view of talent (and access to that data), they were able to understand their bench strength and redeploy people as needed.  In addition, when they had gaps that they could not fill internally, they had data about sourcing that allowed them to more quickly respond to new needs.

Are you doing all three in your talent management initiatives?