BlogERP: Jim Holincheck's HCM Software Blog

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? 

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?

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?

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.

Why We Need Workforce Decision Support

SystematicHR had a post discussing how much it costs to drive up revenue by 1%.The post correctly points out that there are a number of talent management "levers" an organization could pull to help achieve the increase in revenue.  In addition, the post discusses the need to look proactively at how an organization spends its HR budgets.  I would take it one step further.  Organizations need to understand the impact of the various "levers", they have at their disposal and make fact-based decisions about which ones (or combination) to deploy.  The answers are in the data that many companies are already collecting (or will collect when they finish implementing their talent management applications).  Also, when the data is not there, companies need to learn how to test different levers to understand their potential impact (sort of analogous to marketers test marketing new products in new markets).  In the "Hype Cycle for Human Capital Management Software, 2007" (Gartner subscription required) I called this Workforce Decision Support.  If you will be at the HR-XML Global Partnering & Integration Summit in Las Vegas on September 27, please come to my presentation where I will discuss this (and more about future trends in HCM software) in more detail.

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.

Taking the Next Steps with the New Competencies for HR

First, let me start with a hat tip to the Knowledge Infusion blog.  It had a post about an article published in the June 2007 issue of HR Magazine called "New Competencies for HR".  It is a really good article about research that was done to identify the key competencies that embody high-performing HR professionals.  It was an extensive study (pretty much like a 360 degree assessment) of HR professionals across more than 400 companies.

I would not quibble with the six competencies identified.  HR professionals should use it as a useful aid in career development.  I think it is a bit of a stretch though to say that this research provides a "framework for thinking about how HR drives organizational performance".  Maybe it was not discussed in the article (and I am certainly interested in being corrected if it is part of the research), but I did not see any discussion of how the research makes the link between the competencies identified and high organizational performance. 

I think it would be a great idea to take the assessment data and analyze it with business performance data (e.g., market value, profitability, etc.) to see if there is any correlation (or better yet causality) between high proficiency in the competencies identified and high business performance (similar to what Watson Wyatt does at a company level in its Human Capital Index studies). 

To me, that is where the rubber meets the road.  It is well and good to say that we assessed high performers and these were the key competencies that they shared.  It is a whole other thing to say we that we assessed high performers and that these key competencies are the ones demonstrated by those high performers that differentiate high performing companies.

What do you think?  Is it too much of a stretch to link the competencies of individuals in the HR organization to key overall business metrics?  It may be.  It may be impossible to establish any correlation (much less causality).   However, even if we cannot find the link at an individual level, we may be able to find it at the organizational level (aggregating the information from the individual competencies) and draw some useful conclusions.

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.

My Recent HCM Research

Here are links to some of my most research notes (subscription required):

The Pace of Consolidation Accelerates in the E-Recruitment Software Market -- Large vendors that have not had a presence in talent management are buying their way in through increasing mergers and acquisitions. Talent management vendors are trying to get to a critical mass to compete with the larger, more-established organizations.

Magic Quadrant for E-Recruitment Software, 2006 -- Due to the maturing market for e-recruitment software, Gartner has produced a Magic Quadrant. The vendors included here provide Internet recruitment applications for the full requisition-to-hire process to companies with more than 2,500 employees.

SumTotal Aims to Lead Talent Management Market With MindSolve -- By acquiring MindSolve, SumTotal Systems gains a strong talent management offering, including e-learning, employee performance management, succession management and compensation management applications.

Predicts 2007: Software as a Service Provides a Viable Delivery Model -- Adopt SaaS first using a modular and incremental approach. SaaS predictions provide overall guidance for SaaS delivery adoption and specific market outlooks for human capital management, e-commerce and integration as a service.

Workday's Initial HCM Offering Is Intriguing but Unproven -- The startup Workday's Human Capital Management software-as-service solution includes innovative technology and has had some initial success. Prospective customers will face the usual risks of early adopters.

Case Study: Workforce Analytics at Sun -- Sun used workforce analytics to understand the financial impact of and to target its spending around its mentoring program.