BlogERP: Jim Holincheck's HCM Software Blog

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).

HCM and Talent Management Studies

A hat tip to Gautam Ghosh, Jon Ingham, and the Talent Management Blog for links to many different studies that have been published about HCM and talent management.

• Ernst and Young: 2007 Aging U.S. Workforce Survey
• IBM: Unlocking the DNA of the Adaptable Workforce
• InfoHRM: The New Frontiers of Human Capital Measurement
• McKinsey: How businesses are using Web 2.0
• Towers Perrin: Global Workforce Study 2007
• Watson Wyatt: Watson Wyatt’s 2007 HR Technology Trends
• Watson Wyatt: Global Strategic Rewards Report

Check out all of the blog posts (I linked to key ones, but there are definitely additional ones from those who pointed out the studies) for additional color on these studies.

Vendor Shootouts and Battles (at Conferences)

Jason Averbrook has a great post on the Knowledge Infusion Center of Excellence blog called "What to learn from Shootouts and Battles of Software Vendors..".  For those not aware, the HR Technology Conference does these shootouts/battles each year where typically three or four vendors square off against each other to demonstrate three or four short scripted scenarios.  In most cases, the audience gets to vote for which vendor they thought was best in each scenario.  At the end of the session, the audience gets to see who they voted for as the best vendor (for each scenario and in aggregate).  Afterwards, the winning vendor often announces in a press release that they won the shootout/battle.  Jason does an excellent job discussing the dangers of using this kind of venue to choose a vendor.  I will not rehash it here.

As a history lesson, the first shootouts, at least to my knowledge, were done at the Andersen Consulting Software Spectacular shows in the 1990s.  My old boss, Brian Sommer (see his blogs Software Safari and Services Safari), came up with the idea (Brian please correct me if I am wrong).  We did it a little bit different from how Bill Kutik has set up the ones at the HR Technology Conference.  We created scripted scenarios (five or six).  Instead of having everyone on a main stage, we had breakout rooms for each vendor (usually five or six vendors).  We would give each vendor thirty minutes to demonstrate each scenario.  We scheduled the scenarios so that an attendee could go to all of the scenarios for one vendor or go to see the same scenario from each vendor.  We also had proctors in each room to make sure that the vendors stayed to the script.  Our goal was to create a one-of-a-kind educational opportunity (to see the same scripted scenarios for five or six vendors in a half a day to a day) for our attendees.

Now that you know my experience with this in the past and present, I thought I would put forth my suggestions for shootouts/battles in the future at the HR Technology Conference (or any other conference that has them -- and I have mentioned them to Bill in the past):

• Do not have the CEOs drive the demonstration.  I think having a short introduction by a vendor CEO where he/she can give the elevator pitch about the company is a good thing.  However, I think the experts, rather than the CEO, will typically provide more information to customers
• Do the shootout on the show floor.  This combines the Software Spectacular approach with the HR Technology Conference approach to some extent.  I would allow any vendor who wants to participate to do a scenario in their booth (why limit it to three or four vendors?).  I would give each vendor 30 minutes to demonstrate the scenario.  I would publish the schedule of scenarios as another track at the conference.  There is not as much theater to this approach, but I think it increases the educational opportunity for attendees
• Get rid of the scoring.  The Lawson/Oracle/Workday battle this year was not scored.  I believe it was highly attended (I was not able to attend) and attendees still got to learn a lot about the vendors and the products.  Again, the scoring makes for great theater (and press releases), but it adds nothing to the educational value for attendees in my opinion

What do you think?   Do you like the shootouts/battles as they are?  Do you like my suggestions for improvement ?  What would you like to see at a conference?

Oracle OpenWorld 2007 Tidbits

There were no major announcements around HCM, but there were some important learnings for customers at the conference:

• More than 400 customers have either upgraded or are in the process upgrading to version 9.0 of PeopleSoft HCM according to Oracle
• Version 9.1 of PeopleSoft HCM is expected in Q4 of 2008. The major theme for the release is improving the talent management capabilities (no big surprise). Beyond talent management, other enhancements include support for multiple encumbrances in public sector, local payroll support in additional countries, and expanded use of the approval/delegation engine
• Version 12 of Oracle E-Business Suite HCM has one live customer
• Oracle demonstrated the Fusion Compensation Workbench as an example of the changes that they were making for Fusion. Oracle showed the use of PeopleSoft-like Tree functionality within a data grid to allow expanding and contracting of items within the grid for example

Gartner is working on an Event note for the whole conference (to which I am contributing).  There will be more details as well as well as more analysis in that research note.  I will post a link (subscription required) when it is published.  I did not get a chance to see too many user presentations at the conference, but I did get a chance to speak with a number of customers.  Regardless of which product line, the message was pretty much the same.  Talent management was on the top of the agenda for 2008 investments.

KronosWorks 2007

I have spent the last two days at KronosWorks.  Here are my top-of-mind impressions:

- Kronos puts on a good conference.  They had strong keynotes from Marcus Buckingham ("Play to Your Strengths") and D. Michael Abrashoff ("It's Your Ship").  It did not hurt to have the Blue Man Group open the conference either to energize an audience.

- Kronos provides good access to customers at the conference.  They schedule some specific analyst sessions but provide a lot of time to go customer sessions.  I sat in on a great customer panel just for analysts where both good and bad were discussed.  I also attended a case study on Caribou Coffee that discussed their use of competencies and assessments.  Good stuff.  Caribou is a great example of leveraging analytics to drive talent management practices that lead to improved business performance.

- I also learned Workforce Acquisition v 7 has been problematic for a number of customers.  These customers were trying to assess the impact of the Deploy acquisition and determine whether they fall back to v6 or move to v8 (Deploy).  The timing of the conference was good because it provided these customers an opportunity to gather needed information.

- On a more personal note, I borrowed Diane Morello's presentation,  "The Quest for Talent in the Digital Age".  I gave it twice and probably did not do it the justice she would have done, but the content overall resonated well with the audiences.  I was struck by how much both audiences latched onto social networking as a key issue. 

I am writing this post on my Cingular 8525 device using Typepad Mobile.  I apologize in advance if there are any grammatical errors or typos (no spell check).