This week I attended the Peopleclick Authoria (PCA) Global Customer Conference (#GCC2010). I gave a couple of presentations at the conference on Talent Management market trends which is always fun. In contrast to my usual practice of attending customer case study sessions, I used a different strategy at this conference. I attended the “big tent” sessions where PCA’s relatively new CEO, Joe Licata, laid out their positioning. One interesting tidbit included investment in R&D of $23.4 million expected in 2010 which is comparable to the spend of SuccessFactors in 2009. The clear message was that PCA was investing in growing the business both organically in addition to acquisitions (by parent Bedford Funding).
They also had Jack Welch (@jack_welch), former CEO of General Electric, as a keynote speaker. PCA Chairman (and Bedford Funding CEO) Charles Jones interviewed Welch. The interview covered a wide range of topics (see the Twitterstream at #GCC2010 to see more details). Welch is definitely a strong advocate for HR’s role in leadership development. GE’s goal during his tenure was to be able replace someone in a key position within 24 hours. To do this requires a significant investment in readiness and having adequate bench strength (it also explains why GE has been a furtile ground to find executive talent). There were many great one-liners, but it was an analogy that resonated with me the most. It was around the importance of HR vs. Finance. My apologies in advance to my colleagues that focus on the Finance organization, but the example he used was a professional baseball team. Whose advice should the President of baseball operations (substitute our favorite sport) trust in making a decision on making an offer to a player: the CFO or the Director of Player Personnel? Who is going to know best how to allocate that budget to achieve the best results? It is pretty obvious in this context, but given that people-related costs are anywhere from 20-70% of total costs in most organizations, it makes sense that CEOs should view HR leaders as vital to their success. However, good Directors of Player Personnel bring a lot of player performance data to the table to help the organization make good decisions. HR leaders that do not bring something to the discussion will likely not be heard.
I also enjoyed the other keynote session, a panel discussion with Elaine Orler from Talent Function, Brad Smart from Smart & Associates (best known for TopGrading, a practice developed and used at GE), Kim Seals from Mercer, and Gerry Crispin from CareerXroads. Again, you can check out the Twitterstream for more details on the discussion, but to me the most interesting part of the discussion was around performance vs. potential. Kim was of the opinion that you promote based on potential (assuming at least adequate performance), but reward based on performance. Gerry has the viewpoint that performance is more important. High performers should be given the opportunity to show potential in new roles if it aligns with their career aspirations (assuming at least adequate potential for the new role). I am not sure there is one right answer. To me, a lot of the answer depends on how well your organization can judge performance and potential and your promotion track record. Examining your own data around this will be illuminating. It may also highlight changes you need to make to make in how you do performance appraisals and talent reviews. From a technology perspective, remember garbage in = garbage out. I can have the best succession planning process and best technology supporting it, but if I am not looking at the right attributes of performance and potential, it is all for naught.
Ok, back to the change in my conference routine, instead of going to customer case study sessions (though I did have some good conversations at meals with customers), I went to sessions led by thought leaders I admire and who I rarely get to see present. Gerry Crispin (@GerryCrispin) did a session on candidate experience that was very thought-provoking. For those not familiar with Gerry, he does the most in-depth research on this topic of anyone I know. For more than a decade, he has “mystery shopped” as a “candidate” at all of the Fortune’s 100 Best Companies to Work For.
Near the beginning of his presentation, Gerry asked the audience a simple question: how do you define a candidate? Needless to say, the audience definitions were all over the place. I thought he had an interesting taxonomy for thinking about this in terms of customer experience. In his view, a candidate was someone who has applied for a job (an applicant being someone who is a qualified candidate for a job). Prior to applying for a job, the person was a prospect. Gerry points out that experience needs to be different for prospects, candidates, and applicants (and new hires). Once someone becomes at least a candidate, they have affirmatively expressed interest in your organization. If they are treated poorly through the rest of their experience, there can be repercussions not only for your employment brand, but also your customer brand because in many cases candidates/applicants may also be customers and/or influence other customers. That taxonomy also got me thinking about the parallels with Customer Relationship Management. Many large employers already have people responsible for just candidate sourcing this is akin to the role of Marketing in CRM. Marketing is responsible for generating leads that turn into qualified prospects. Sourcers are responsible for finding prospects and converting them into candidates (I am simplifying here a little to make the analogy, but stay with me). Sales is responsible for taking qualified prospects and converting them into paying customers. Recruiters are responsible for determining qualified candidates (applicants) and facilitating the process to hire the best one. So far so good, there is nothing terribly new in this line of thought. What I had not thought about previously was the third pillar of CRM, Customer Service. In the CRM context, Customer Service helps ensure a customer is happy (based on customer satisfaction, net promoter scores, etc.) as well as to find additional cross-sell and up-sell opportunities (in some cases). It was not so much finding the analog for recruiting (or more broadly talent management for the new hire), but that it made start to think about why we do not have a group responsible for candidate (and applicant) service. If organizations really want to take the candidate experience seriously, it needs to do more than just design a candidate-friendly, employer brand reinforcing, self-service web site. Why shouldn’t a candidate/applicant be able to interact with your organization in a variety of channels as they go through the process. Yes, it can be more expensive to provide this level of service, but for many organizations, especially with the viral nature of social media, it may be more expensive in the long run not to offer a high level of service.
I also attended a session conducted by Dr. John Sullivan and his associate Master Burnett (@masterburnett). Dr. Sullivan is always provocative and expresses a strong point of view. His topic was the important of contingent labor on workforce planning. He cited a study of 200 companies where they looked at the workforce-related spend and found that only about 36% of the spend was on regular employees, the rest was for various forms on contingent labor. That is an eye popping statistic and should give any HR leader heartburn. It means that the vast majority of HR leaders have ignored how their organizations recruit, manage, develop, and separate from a significant part of its workforce. In fact, it is even worse than that. If organizations are actively managing it all, it is driven by procurement whose role it is to help negotiate contracts and manage vendors. This is one of Dr. Sullivan’s arguments for why Workforce Planning is so important. Organizations need to make intelligent decisions about where they source the most appropriate talent based not just on cost, but on agility (the ability to scale up and scale down the workforce), speed (how fast are the capabilities needed if we do not have them internally) and how long the capabilities are required (for example, is it just for a project or is there an ongoing need). We have published a number of research notes on Workforce Planning and Analysis this year, but we still find a relatively small number of clients focused on either contingent workforce management or workforce planning. This should be a wake up call to HR leaders and the IT organizations that support them.
There is a lot that happens each year at OpenWorld (#oow10). This year was quite notable from a HCM perspective because Oracle has finally committed to more specific delivery of Fusion applications. Oracle is working with early customers today and plans to have a controlled release (Oracle called it a GA release, but they are being selective about to whom they will sell it initially) in Q1 2011. One of the early adopter customers, a large insurance company, is in the middle of implementing Fusion Talent Management (performance and compensation management). I also talked an E-Business Suite (EBS) customer that has asked to be an early adopter (EA) customer for 2011 for performance and compensation management). So, let’s start with Fusion and then discuss PeopleSoft (PS) and EBS.
Fusion HCM Applications
Much of what I said last year at OpenWorld still holds true in terms of scope of Fusion HCM. The one notable addition is Workforce Predictions. As the name suggests, it is analytics that uses HCM data to predict things like retention and performance. It leverages Oracle’s technology, Crystal Ball, to do the modeling and forecasting.
Contrary to some reports on Twitter, Fusion HCM applications are multi-tenant. There are some aspects of Oracle Fusion Middleware (OFM) that are not yet multi-tenant, but those elements are primarily related to business intelligence and data warehousing and really do not impact the actual HCM transactional applications themselves.
Oracle plans to offer customers choice in licensing and delivery model for Fusion applications. A customer could choose to buy a perpetual license and implement on-premise at one end of the spectrum or a SaaS deployment at the other end of the spectrum. Oracle has been touting “like for like” pricing. There will also be support for multiple countries (initially U.S., Canada, UK, China, Saudi Arabia, and UAE) which would have the corresponding up charges. There is no published subscription pricing to compare against so it is not clear how it will compare to alternatives. Some of the Fusion HCM modules are new. These include Workforce Predictions, Talent Review, Network At Work, and Workforce Lifecycle Management. These would not be “like for like” because they do not exist in PS, EBS, or J.D. Edwards.
By offering customers these licensing and delivery model choices, Oracle has created some complexity for itself in terms of delivering new functionality. Oracle will have multiple code lines that it will “true up” on a periodic basis. For the SaaS offering, Oracle plans to do quarterly updates that alternate between technology and functional updates (though initially some of the technology updates will likely include some functionality). For on-premise, the update will be less frequent and timed to correspond at a minimum (though it could be more frequent) with the rollout of other major components of the full ERP suite. So, a 2.0 version of Fusion apps would be the next on-premise release and would be expected in a 2 year timeframe and would “true up” the code line with the SaaS offering. From a practical perspective, this truing up can be difficult to manage, but Oracle believes it has the code management tools in place to do it.
In my discussion with customers, it appears most are interested in a co-existence strategy. They want to use Fusion Talent Management on top of their existing PS or EBS core HRMS applications. A main reason why is that they feel like they will need to do less (or no) customization to support their unique business processes. The embedded business process management (BPM) in OFM provides a very flexible and graphical way to define business processes. There is at least one customer that is implementing Fusion core HRMS functionality, but it is not far enough along where they are ready to discuss its experience.
Though customer experience is very limited, many of Oracle’s consulting partners have been working with Oracle on various aspects of development and testing (as well as working on some of the EA implementations) of Fusion applications for several years. Accenture, Cognizant, Deloitte, Infosys, PwC, and Wipro were on a panel where they described their involvement with Fusion applications. Also, other consultancies like KBace are also working with EA (or potential EA) customers.
PeopleSoft HCM 9.1
Even with all of the excitement around Fusion, most of the PeopleSoft customers are focused on their upgrade decisions, especially those customers on 8.9 or earlier. There are good examples of large, complex organizations that have made the move to 9.1. I attended presentations by Boeing and of a Large Financial Services Company (which could have been American Express who was scheduled to be there) presented by IBM. Boeing and the Large Financial Services company used the upgrade as an opportunity to reengineer global processes and to retire customizations so they decided to do a reimplementation as opposed to an in place upgrade. This seems to be an interesting trend that I expect other relatively highly customized customers to adopt.
Probably the biggest news is that Oracle will now be doing annual updates called Feature Packs (FP) to correspond with PeopleTool updates. They plan to have a 9.2 release in 2012 (scope has not been finalized) which will be a cumulative release (as well as new functionality not included in the FPs). We have seen a lot of customer interest in the upgrade with some customers even looking to add on new modules. More frequent delivery of capability will likely encourage others including 9.0 customers to move to 9.1. Though some are predicting the imminent demise of investment in new functionality for PeopleSoft with Fusion imminent, I believe it is premature.
Oracle E-Business Suite HCM 12.1
Much like PeopleSoft 9.1, 12.1.x seems to be the “go to” release for EBS HCM customers. I talked to a large, global conglomerate and a global financial services company about their upgrade experiences and they were relatively smooth. The one gotcha both organizations reported was related to Internet Explorer (different issues depending on which IE release you were on).
One of the most interesting additions to EBS 12.1 was full multi-tenancy. This has spurred some of the consultancies such as KBace and Caliber Point (Hexaware) to deliver SaaS offerings. They are in the early stages, but I can see them as useful not only for new implementations, but for upgrades (upgrade HCM separately from Financials in a previously single instance environment).
There were some things that I thought I would see, but did not. With Oracle’s increasing emphasis on hardware, I thought we would hear more discussion of an appliance strategy, especially for Fusion applications (even with some remote management capability). I also thought I would see demonstrations that went beyond the things that they have been showing for the past year. Workforce Predictions is relatively new and the demo of Payroll Dashboard gave a glimpse into some of the rethinking that Oracle has done around the core HRMS apps (trying to streamline the tasks of professional users), but I was hoping to see more in the core HRMS applications.
As I reflect on my time at the conference, it definitely was a coming out party. The Fusion apps team has worked for a very long time without being able to really talk in detail publicly about what they were doing and why. OOW was the beginning of that conversation with customers and prospects. The timing is important because the competitive threats have never been greater. If the quality of Fusion HCM applications is high, I think Oracle will have a reason to be confident.
This is going to be a quick one as I am at Oracle OpenWorld and will need to get busy on that Trip Report soon. Certainly, the Learn.com acquisition was a big deal. I am working on a note discussing that acquisition as well as another note on the broader subject of M&A in the HCM world. I am also trying to finish up the Magic Quadrant for Employee Performance Management Software (all of the acquisitions are not helping – the latest in case you had not seen it is SumTotal announced today it had acquired Softscape).
Back to Taleo World. The thing that struck me about the event, in stark contrast to most vendor user conferences I attend, was the interview of two CEOs as keynotes. The first keynote was an interview with A.G. Lafley, former CEO of Proctor and Gamble. He put the importance of human capital management and talent management in the context of the business challenges his organization faced as it tried to turn around its performance after a lackluster period. There were many lessons to be learned from keeping things simple to create leverage of talent outside the enterprise to drive innovation (his book “The Game-Changer” is a good read to get the details). I hope that the Taleo folks recorded the session as there were many gems that could provide compelling use cases for workforce planning and analysis.
The second CEO interview was with Ken Thiry, CEO of Davita. It was quite inspirational. Davita is in a business that literally has life and death implications (dialysis treatments). Many of its workers are not highly paid. Yet, it has created a unique culture that not only has driven strong business performance, but has substantially improved employee engagement and reduced turnover. It was a strong lesson that there is much more to talent management than technology. Technology can help enable better talent management, but if the fundamentals are not in place, the best technology does not matter.
I had the opportunity to spend the day (plus some additional time) this week with a group of about 20 influencers (analysts, bloggers, press) at the Workday Technology Summit. It is not the first time a group of influencers have been brought together by a vendor for in-depth discussions. However, this was a little unique because it was relatively small group that largely knew one another and were avid participants in social media (specifically Twitter). The insights, not to mention the volume, from this online conversation was impressive (see #Workdaytech on Twitter).
The focus of the day was on Workday technology. There was a spirited discussion of the end-user benefits of SaaS (for more information, see here, here, here, and here). I actually have a little sympathy for Josh Greenbaum’s point of view (see the first link above) as I had posted a thought experiment of how a single tenant provider could offer similar benefits to customers. My conclusion though is that it is very hard for an existing vendor to move to a single tenant version of SaaS without great upset to its business model. Only three vendors that I am aware of, Ariba, Concur, and Ultimate Software, have made the transition from an exclusively on-premise, perpetual license model to a primarily externally hosted/subscription license model successfully. The reality is that every new vendor I have seen for the past 3-4 years has utilized a multi-tenant SaaS model. So, the argument is really can, and should, the providers of on-premise, perpetual license solutions move to a SaaS model? At the end of the day, I think you will see most offer both and some will try to transition as best they can to the newer model once it is well-established.
Workday shared a lot about its development model (its development lifecycle to deliver 3 releases per year), its technology (in memory database – with a DBMS for persistence only, model-driven, object-based, with embedded analytics), its scalability (horizontal and vertical as well as performance tuning), and its vision (administrative ERP, device-agnostic, faceted employee search, social capabilities). We covered a number of these things off in Workday 10 for Human Capital Management Emerging as a Global Alternative (subscription required).
Workday is growing at a rapid pace (bookings growth up 200% and average deal size greater than $1 million – for typically a three year or longer term). They are looking to double their headcount by the end of 2011. If our inquiries are any indication (and they often are), interest in Workday has dramatically increased thus far in 2010. It is hard for Workday not to be on the radar screen of various HCM competitors given its pedigree, but a totally different competitive posture is required when customer adoption starts to accelerate.
Have you had a chance to do a deep dive? What do you think? Is Workday ready to take on the ERP and Talent Management Suite providers?
I review a lot of documents and provide pricing and contract negotiations advice to clients. Something that bothers me having started my career in consulting is how abysmal the implementation statement of work (SOW) is from most software vendors. For those that do not know what a SOW is, it is pretty much what is says. It is a document in conjunction with your software contract that outlines the work the service provider will perform for the client to implement (or more) the software application. It is a very important document because it enables the service provider and the client to have clear understanding of the scope of work to be performed (and how changes in scope will be managed), the resources required to do the work, and the expected cost. You would be surprised how many SaaS contracts I see where there is no accompanying SOW, just a line item in the contract that provides a price for implementation. There may be a marketing brochure/document that outlines the implementation approach, but nothing concrete that the client can go back to if there are problems during implementation. Even small organizations that are buying relatively inexpensive applications should insist on at least a basic SOW that includes the following items:
Scope - This section would give the provider's overview of the project as they see it and the solution proposed.
Approach - This section would tell the customer how the vendor is approaching the project. This includes what methodology they use and how they want to work with the client to achieve a successful project (including confirming how success is defined). Ideally, the methodology would spell out for each stage of the project what the customer and provider responsibilities would be. There can be a disconnect on approach. Some vendors have a very structured, "fill in the blanks" approach to package configuration that requires customers to provide specific inputs at very specific times to support rapid implementation. For some customers, especially in consensus-driven organizations, it can be difficult to provide that information in a timely fashion which causes frustration for both the customer and the provider.
Resource Requirements/Staffing - This should include a proposed project organizational chart with external staffing roles identified. If the project is scheduled to start within 2 months of the SOW agreement, specific named resources should be included for key roles (like Project Managers and Team Leaders). Resumes for these individuals should also be included with references (for larger projects, you should do due diligence on the people in the key roles). It should also be clear about what work will performed on-site vs. off-site.
Roles and Responsibilities - Provides additional detail for the roles identified on the organization chart so expectations are clear about responsibilities in each role.
Implementation Tasks and Estimates - This is pretty straightforward. This should list the major tasks and activities and the estimated effort for those tasks (ideally broken down by provider effort and customer effort). It is a high-level workplan often accompanied by a Gantt chart that shows the timeline for the project.
Assumptions - These are the assumptions the provider made in estimating the work effort and duration in the previous section. Transparency is key here. A customer needs to make sure that the assumptions are valid.
Billing Rates - There are two choices here: billing rates by role or blended average rate. I think it is easier to manage a blended average rate, but it depends on what kinds of roles are required for the specific project. The main point is that the desired state is to know by role how much work effort is expected and at what cost. For providers you will be doing ongoing work with, it is often desirable to create a master service agreement which includes agreed to terms and conditions and billing rates for all service engagements with the provider.
Costs - There should a summary of costs by either high-level task/activity or role (or both) and how the client will be billed for the services performed (time and material, fixed price, milestone-based, etc.) This can be combined with the implementation tasks and estimates as well.
Engagement Guidelines - This would include things like issue management, change order management, and travel and expense policies.
Software vendors may push back and say that we are doing a fixed price contract so you do not need to worry about this level of detail, especially for a relatively small purchase. I think that is plain wrong. Without this level of detail, you do not know what you are buying and cannot compare bids from multiple providers. Customers often are frustrated by the large differences in cost and effort for implementing similar solutions. HCM software vendors need to step up there game. There is no excuse for not doing a proper SOW as much of the work can be automated (just as RFP responses are now largely automated).
What do you think? Am I missing something important in the minimum SOW? What have you found in dealing with software vendors (SaaS or not) in terms of implementations SOWs?
I had wanted to do a First Take on this acquisition, but for the moment, I do not have the time and will point you to some other sources of information and a few thoughts of my own. Jason Corsello does a nice job summarizing the facts of the acquisition, the history of StepStone Solutions, and why StepStone is interested in MrTed. Naomi Bloom points out some important factors about why recruiting should part of an integrated talent management suite (though we had some doubt about this back in 2005 when we published our initial research on talent management suites, we still think architecturally it is the right way to think about it). She also speculates on additional M&A to come. Here are a few quick thoughts that were not focused on in those blog posts:
What do you think? Is this a good thing for StepStone and MrTed? Is consolidation good for the market?