BlogERP: Jim Holincheck's HCM Software Blog

SAP Influencer Summit 2007

SAP put on its annual influencer summit this week.  Here are a few quick highlights:

• SAP talked about how they would allow Business Suite customers to work "side by side" with Business ByDesign.  Essentially, this would allow Business Suite customers to leverage services that are developed as part of the BBD effort
• SAP has a focus on expanding the usage of its applications beyond task users (I would call them professional users) to business users (employees and managers)
• SAP made a point of "process integrity" as a key benefit of its approach to service-oriented architecture.  If you use services from SAP, they have made a point of making sure that there is process integrity built in (e.g., if I have a service called "Cancel Order", it makes sure that it updates all the modules impacted by the order cancellation)
• SAP showed the business process modeling environment within Business ByDesign which was pretty interesting.  It did a nice job of integrating application configuration with process models (the configurations are shown with the process model and when the configuration changed, the process model changes based on the choice)
• One of the keys to SAP's strategy of adding functionality more quickly (and allowing customers to take it on more quickly) is Enhancement Packages.  SAP is keeping the core ERP (version 6.0) application stable while using Enhancement Packages (EP) to add new functionality.  These EPs operate on a Switch Framework that allows a customer to choose whether or not it wants to turn on that new functionality.  SAP is releasing EPs twice per year (it has already released two).
• SAP provided some stats from surveys of their customer base.  It indicated that 65% of R/3 4.7 customers that are doing an upgrade to ERP 6 are doing a technical upgrade, 25% are adding functionality (via EPs), and 5% are planning to use it as a full Business Process Platform (using ERP 6 and NetWeaver as the basis for delivering business processes enterprise-wide).  It also indicated that 15% of the installed base is on ERP 6.

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?

SAP SAPPHIRE 2007

I am at SAP's SAPPHIRE conference this week.  I am not going into all of the key themes from the conference.  We will be publishing a more comprehensive event note after SAPPHIRE in Vienna (we have more analysts attending there due to a conflict with Gartner Spring Symposium this week).  However, I wanted to comment on one key theme.

That theme is SAP as a platform for Business Network Transformation.  What is Business Network Transformation?  Well, it is the ability for a company to work with business partners (e.g., customers, suppliers, etc. -- the network) in a more agile fashion to gain and sustain competitive advantage.  It is an admirable goal.  However, it is a hard one to achieve.  Any transformation requires the right strategy, people, process, technology, and work environment.  SAP provides the technology and support for business processes, but it does not provide the rest.  Arguably, SAP can point to its ecosystem efforts and say that partners can provide the necessary services to fill in the gaps.  However, it is not a simple endeavor as the efforts in Business Process Engineering in the 90s has shown (and this was within the four walls of the enterprise).  I will be interested to see the customer examples that SAP puts forth to demonstrate how they enabled this.  Good customer examples were lacking at the Industry Analyst Summit last December.

The Importance of Ecosystems

We have published a lot of research at Gartner (here is a research note that describes criteria for evaluating innovation from ecosystem partners that links to some of the other research) on the concept of Ecosystems and how the big enterprise application vendors are starting to build them.  Phil Wainewright at ZDNet did a good post identifying the constituencies that are trying to get into the Ecosystem game. 

We have not seen too many HCM vendors jump on the Ecosystem bandwagon yet, but if some of the early vendors have success, it may spur more movement to align with a specific ecosystem providers.  Keep track of which vendors have become ecosystem partners as you make decisions about new HR technology.  In addition, dig under the covers to find out if the vendor has just a marketing relationship with the ecosystem provider or if they have really created deep product integration (including standardizing on the ecosystem vendor technology platform/architecture).  Not all partners make the same level of commitment to a particular ecosystem.

More on the SAP Industry Analyst Summit

It is interesting to see some of the perspectives in the blogosphere about the SAP Industry Analyst Summit.  Dennis, Jeff, Jason, and Dan weigh in on various parts of the Summit.  Thomas from SAP also gives his $0.02 worth.  Josh does a good job describing the goodness of "SOA by Design".  One thing I did not see in all of this commentary -- and it is quite surprising -- is the historical context around the new product "SOA by Design" (aka Project Vienna, A1S).  This is not the first time SAP has created a product that was originally targeted at the midmarket or divisions of larger companies on a new architecture. 

Anyone remember R/3?  This was the same exact positioning SAP had for R/3 when it was first released circa 1992.  At that time, R/2 was the enterprise solution that most customers used.  R/2 ran on the mainframe.  R/3 was a client/server solution that ran on Unix.  It took several years for SAP to add functionality and improve the scalability of R/3 so it could be a replacement for R/2.  When R/3 was introduced, SAP, to some extent, was in the right place at the right time with the right product.  I do not think they thought in 1992 that R/3 would be a successor product to R/2.

SAP is older and wiser now.  Though it will not say so publicly, I do not think it would be too disappointed if "SOA by Design" became the successor product to mySAP Business Suite.  SAP has an ambitious goal of having 100,000 customers by the end of the decade.  "SOA by Design" will need to play a major role for SAP to achieve this goal.

SAP Industry Analyst Summit

SAP puts on a nice event annually for industry analysts to help keep us up-to-date on everything (and there is a lot).  I will not spoil the fun and reveal what is in the Event note that will publish next week.  However, I will point out there were a few surprises like the announcement of a new SOA-based/SaaS solution for the midmarket.  There is a good description of this on the Ponderings of Woodrow blog.  I also spent a good amount of time getting more detail about Duet and SAP's Information Worker strategy.  The short story is that it is a good start, but there is still much unrealized potential (more on this in the Event note).   See my rant on user-centricity for more details.

What are Clients Asking About -- Week Ending August 4, 2006

Last week, there were four major themes from client inquiry were:

• Talent Management Applications (including inquiries on Recruitment, Performance Management, and Talent Management Applications Suites)
• Workforce Management Applications (Time and Attendance, and Expense Management)
• HRMS
• Specific Vendors (SAP, Oracle, Kronos)

Talent Management application inquiries were the leader this week with the rest split evenly among the other themes.

In terms of the breakout of inquiries, we had the following:

• End User Inquiries-- 71%
• Vendor Inquiries-- 5%
• Vendor Briefings -- 19%
• Investor -- 5%

Interesting Gartner HCM Research from March to June 2006

It has been some time since I posted links to interesting Gartner HCM research so I thought I would give you an update. Below are research notes that I thought would be interesting. If you look at the list, you will not see my name as an author. I was a contributor to many of the notes, but not an author. Stay tuned. I will post some of my research in the next few weeks.

Begin 'Future-Proofing' Your Software Investments: Understand the Most-Critical Uncertainties in the Future of Software

Author: Thompson, Ed; Friedman, Ted

All aspects of software, from technology and markets to usage and licensing models, will change radically during the next 10 years. Every CIO should recognize the most-critical uncertainties related to the future of software. These uncertainties are grouped into four categories of related factors.

Retail Time and Labor Solutions Bridge Gap Between Planning and Execution

Author: Daikoku, Gale

Despite significant investments in supply chain and other tools to help with merchandising decisions, results will fall short of expectations if stores can't execute initiatives as planned. As retailers decide where to spend their next IT dollar, store execution should be high on the list.

Integrated Financial and Human Capital Management Applications Make Sense, but Not Always

Author: Rayner, Nigel

Many organizations are considering replacing best-of-breed administrative applications with integrated solutions. This offers potential benefits, but the scale of these benefits depends on several factors. This decision framework enables users to assess if these benefits outweigh any challenges.

ExcellerateHRO-Cardinal Health Deal Heralds Healthcare HRO

Author: Brown, Robert H.; Lovelock, John-David; Stone, Lisa

ExcellerateHRO's and Cardinal Health's human resources business process outsourcing deal shows how such services are gaining popularity in the healthcare industry. Look to see if ExcellerateHRO posts other wins in 2006.

Evaluating Software-as-a-Service Providers: Questions to Ask Potential SaaS Providers

Author: Lheureux, Benoit J.; Desisto, Robert P.; Maoz, Michael

More software functionality is being delivered in the form of software as a service. We provide key issues that users should discuss with SaaS vendors.

Software as a Service: Negotiate Key Terms to Avoid Unexpected Costs

Author: Bona, Alexa

Gartner is seeing more software deals purchased "as a service." In these deals, the contractual terms are different from traditional on-premise perpetual licenses. Buyers must understand the hidden costs and different types of protections needed to negotiate sustainable deals with predictable costs.

SAP Pricing in Evolution: Five Key Items to Negotiate With SAP

Author: Bona, Alexa; Disbrow, Jane B.

Many organizations find SAP's licensing and pricing complex. Because SAP is a strategic vendor with a high initial and ongoing investment, this lack of clarity and predictability brings significant risk. Focus on five areas to avoid unexpected costs and improve flexibility.

Technorati Tags: HR, HCM, HRMS, HR BPO, SaaS, Software-as-a-Service, Workforce Management

Gartner HCM Research from February and March 2006

Cool Vendors in Human Capital Management Software, 2006
Author: Holincheck, James

Summary: These "cool vendors" represent emerging trends in HCM technology. They take familiar HR and workforce problems (such as timekeeping, analytics, recruitment, employee engagement surveys and benefits) and use new technology to achieve improved results.

Best Practices for Uncovering Differentiators in Midmarket Financial and HR Evaluations
Author: Herrmann, Michael E.; Recknagel, Kirsten L.

Summary: When midmarket organizations are evaluating financial and HR solutions, they should employ three techniques to highlight the differentiators necessary to make well-informed decisions.

Continued Consolidation Headlined the Human Capital Management Software Market in 2005
Author: Holincheck, James

Summary: The HCM software market continued to consolidate in 2005. In 2006, if you make new HCM solution decisions, consider the effect of ongoing market consolidation. Before making any HCM software purchases, evaluate vendors' underlying talent management application suite strategies.

Findings From the Gartner 2006 Global Research Meeting: Prepare for the Business Application Decision Olympics
Authors: Rayner, Nigel; Genovese, Yvonne; Holincheck, James; Eschnger, Chad; Phelan, Pat

Summary: For multinational companies, recent vendor consolidation in the business application market appears to have simplified selection decisions between megavendors SAP and Oracle. The opposite is true, however; many users will face hard decisions through 2012.

Gartner HCM Research for the Week Ending 1/6/06

Market Focus: BPO Competitive Landscape, Worldwide, 2005
Author: Tornbohm, Cathy; Brown, Robert H.; Goldman, Matthew
Summary:
Global business process outsourcing providers include specialists and generalists; top providers vary by geography and process. Insight into the top worldwide providers by revenue helps BPO providers plan competitive, market-entry, acquisition and partnering strategies.

Ready Your HR and Payroll Applications for Australia's WorkChoices Legislation
Author: Ganly, Denise
Summary:
Sweeping industrial relations reforms are expected in Australia. Businesses need to assess how human resource and payroll applications will have to be changed to address the new legislative requirements.

Market Share: ERP Software, Asia/Pacific, 2004 (Executive Summary)
Author: Kumar, Pranav; Eschinger, Chad; Dharmasthira, Yanna
Summary:
The Asia/Pacific ERP software market grew 19.6 percent to reach $418.9 million. SAP continued to be the market leader. China replaced Australia as the largest market.

Technorati Tags: HR, HCM, BPO, Australia, Asia/Pacific, HR BPO