Further Consolidation in the HCM Space…And it is Far From Over

September 2, 2010

 

Two or three years ago, HRchitect clients were typically buying one talent management module at a time. They would buy the most urgently needed application at the time and then evaluate their options again later when it was time to purchase an additional module. Even though they would evaluate their incumbent vendors, this would sometimes result in organizations buying that second or third module from a different vendor because that new vendor may have become stronger in that area than when they were first considered.

That trend has changed in the past year or so where clients are buying multiple modules or entire talent management suites at once vs. one-off stand-alone applications. Organizations today appreciate integrated talent management and prefer dealing with one software vendor. They don’t want to manage multiple talent management software vendor relationships, don’t want to take responsibility for all the interfaces, etc. It’s probably also a sign that the economy has improved as people are truly buying multiple modules at one time.

HRchitect defines Integrated Talent Management (ITM) as a comprehensive approach to maximize the engagement, performance and effectiveness of the workforce by deploying integrated processes and enabling technologies is never more true than it is today.

Organizations are buying into the concept of tighter integration of learning management, performance management, succession planning, and compensation management built around a competency model. Vendors were fighting the notion for a while of completing their ITM integration, but now really understand why it is important. In addition, most vendors will agree that Talent Acquisition is not as important to be in the mix, but should still be offered by the vendor.

Except for the lower-end market, the typical corporation has also bought into the fact that strategic human capital management will come from one software vendor while transactional HRIS will come from a secondary software vendor.

Taleo Acquires Learn.com

In light of this, here are some of our specific thoughts on the Taleo acquisition of Learn.com that took place yesterday, September 1, for approximately $125m. We think this is a phenomenal acquisition for a couple of reasons.

For starters, Taleo as now the #1 talent management software company, sorely needed an LMS and competency management at its core. The learning market has particularly become hotter this past year or so as people have been replacing homegrown systems and older LMS applications. We have also seen the market change where people would buy an LMS in the past for a specific division of their company and are now looking for more comprehensive enterprise-wide applications.

A positive is that HRchitect has routinely ranked Learn.com as one of the top learning systems that we track. Similar to Taleo’s acquisition of Worldwide Compensation last year, Taleo has once again bought a quality product vs. just adding “brochure-ware”. Learn.com has a well developed learning system, and a good customer base as an extra bonus.

Taleo is already far along in integrating their compensation system into their organically developed performance management system.  The work ahead of them now will be in integrating their performance and compensation system into their newly acquired learning system. We are sure from Taleo partnering with Learn.com for some time now, they have already gone down this road for quite a few customers.

With Learn.com typically being a “mid-market play”, this is a perfect marriage for Taleo Business Edition customers (their mid-market product). There may be more of a challenge for Taleo Enterprise customers, as it is not typically a market that Learn.com has played in, as well as this may be a challenge for global organizations as Learn.com has typically been a “domestic play”.

Based on Taleo’s track record of integrating best of class products, they have the cash, the expertise and the resources to make good on promises to their combined customer base.

Lastly, with the addition of LMS, Taleo is now one of only a handful of companies that offer all the talent management components that HRchitect identifies in the Suite Life of Integrated Talent Management report. In the end, we believe Taleo will have one of the tightest integrated talent management suite offerings.

HRchitect also believes that this will spur large talent management software companies like SuccessFactors and Peopleclick Authoria to acquire an LMS in the very near future, and I am sure that is well underway for both of them.

Kenexa Acquires Salary.com

Also announced on the same day (actually before Taleo’s acquisition of Learn.com) was Kenexa’s acquisition of Salary.com for $80m. Salary.com has not been profitable and its stock price plummeting for some time now, so this looks like an attractive buy as we believe Kenexa can cut the bleed through economies of scale.

This acquisition brings Kenexa a wealth of compensation expertise and a robust compensation product line. Kenexa was in the process of developing a compensation system of its own, but has now bought one of the most robust compensation systems on the market. It also buys them an additional performance management application, which also brings up the challenge of  deciding how many to support. While Kenexa’s 2X Perform is fairly new, Salary.com’s system has gotten raving praise and won the HR Technology Conference shootout as well as an HRchitect Beauty Pageant in the past.

As we have seen in the past, after their acquisition of BrassRing and WebHire, is that Kenexa offered multiple applicant tracking systems. HRchitect believes we can count on this to be the same case in the interim, where Kenexa will offer multiple performance management systems but eventually center in on one. The Salary.com performance management system might be attractive to Kenexa since it is already integrated with the Salary.com compensation product line.

Salary.com also brings to Kenexa literally thousands of smaller customer organizations that Salary.com has sold into over the years.

A bonus in the purchase is Kenexa picks up a complete HRMS that Salary.com bought two years ago from Genesys. Salary.com didn’t do much with this product line but it still has a loyal customer following and a very robust payroll, human resources, and benefits application. With Kenexa putting the right window dressing around it to provide a consistent user interface and by creating tighter integration with its talent management modules, they would have an opportunity to compete with vendors such as Ultimate Software, ADP, NuView Systems and Workday. The jury will be out on how Kenexa delivers in integrating these together as they have typically not done this quickly, instead choosing to support multiple applications, as pointed out earlier. However, due to recent development activity from Kenexa, dedication to a uniform product line, HRchitect believes this will be a focus of theirs.

As HRchitect pointed out in its Integrated Talent Management report, we expect over the next 3-5 years to see the integrated talent management suite and core HRMS begin to converge into a single integrated Human Capital Management system.  The major ERP vendors such as Oracle, SAP and Lawson will continue to add more talent management features to their suite of products while the talent management vendors are beginning to add more HRMS capabilities. Or in the case of this acquisition, a talent management software company acquiring an HRMS and then working to integrate it into their talent management suite.

One of the other attractive items of the purchase is that it brings Kenexa a very well branded consumer site that has been an industry standard for benchmarking salary data.

With these two exciting acquisitions, the StepStone acquisition of MrTed a short while back, along with the recent acquisition of Workscape by ADP, stay tuned and hold on tight to see what happens next! No matter what happens, HRchitect will be here in our continuing efforts to help you solve the puzzling world of HR technology.


theHRshow 2009 Has a Great First Day of Vendor Panel Discussions

June 11, 2009

 

After many months of anticipation, theHRshow 2009 virtual event finally arrived today with five different vendor panel discussions.

The day got started with the Onboarding Systems vendor panel. Dan Katavola, EVP of Consulting Services with HRchitect was the moderator and the vendors included Emerald Software Group, KMS Software, SilkRoad Technology, and Verifications, Inc.

Then I moderated the Talent Management Systems vendor panel that included Authoria, HRsmart, Kenexa, Taleo, and Workscape.

John Hinojos, the HRchitect VP of Consulting Services then moderated the HR Systems Vendor Panel which included NuView, Patersons, and Spectrum HR. Two last minute cancellations made this the smallest panel of the day.

I was then up again as the moderator of the Learning Management Systems Vendor Panel which included Cornerstone OnDemand, GeoLearning, Plateau Systems, Saba and SumTotal Systems.

The final panel of the day was moderated by Rick Fletcher, President and Founder of HRchitect and was all about Recruiting Systems Vendors. This panel included HRsmart, iCIMS, Kenexa, nowHIRE, Peopleclick, and Taleo.

Day 2 will continue on Thursday with 10 great sessions throughout the day from leading experts in the HR industry.

Multiple tracks of sessions will take place on June 11 and June 12 around:

  • Talent Acquisition including Onboarding, Assessments, Background checking, and more
  • Talent Management including Compensation, Performance Management, Workforce Planning, and more
  • Emerging Trends and Technologies including Social Networking, Web 2.0, HCM portals, and more
  • HCM Strategy
  • Managing HR Systems
  • Professional Development

The show is completely free, thanks to the generosity of HRchitect and our sponsors. All you need to attend is access to a computer with an Internet connection!

HR professionals can visit www.thehrshow2009.com and select “Agenda” on the right of the screen to see a complete list of sessions. Simply register online for as many sessions as you’d like.

 

 

Matt Lafata, HRchitect


The Suite Life of Integrated Talent Management Report – Available FREE for a Limited Time!

March 7, 2009

 

This report was released in May 2008 and was the first in HRchitect’s ongoing HCM Technology Reality Check series.  The main focus of The Suite Life is to provide readers with the real world perspective that has been gained through hundreds of software evaluation, selection, and implementation projects conducted by HRchitect consultants over the past decade. Also contained within the report are insightful summaries of the top ITM suite vendors in the industry.

 

While we have sold this report for $495, it can be yours for FREE simply by sending an email to info@HRchitect.com with your name, company and contact information and let us know what kind of HR technology related topic you would like to see covered in a future blog or webinar. It’s that easy! As we are in the early stages of the 2nd annual report, we wanted you to be able to reap the benefits of our hard work that culminated in the original report.
 
Each of the 21 vendors summarized in The Suite Life were asked to complete a detailed survey outlining their products’ capabilities, technology platform, global coverage, customer implementation, and major areas of differentiation.  These surveys, combined with reviews of each company’s website and collateral and insights from HRchitect resulted in the vendor summary section of the report.

The report delivers a concise overview of the ITM software market, including dynamics, enterprise and mid-market segment characteristics, fundamentals of the vendor landscape, and critical ITM decision drivers. The report concludes with recommendations to help firms negotiate the complicated ITM landscape, and provides specific summaries of the major ITM software vendors that will give prospective buyers a head start in evaluating “best fit” solutions for their organization.

 

Executive Summary

Integrated Talent Management (ITM) is a major focus for many organizations today, and one of the hottest development issues facing HCM software vendors. Organizations across the globe are concerned with finding enough skilled labor to accomplish their business objectives, given the potential of continuing talent shortages in critical skilled positions. Upcoming retirement of the Baby Boomer generation, changing demographics, and skills gaps due to education shortfalls all have the potential to dramatically impact an organization’s ability to attract, develop, and retain the right talent. In response, many firms are attempting to weave disparate HR processes and technologies into a comprehensive approach to maximizing workforce performance. For most firms this is a challenging, multi-year project that involves strategy development, process redesign, change management, and implementation of supporting technologies. Organizations face a bewildering array of technology solution providers who claim to deliver comprehensive ITM suites, and it is often difficult to separate vendor hype from the realities that customers experience as they try to implement these systems.

 

Market Dynamics

HRchitect defines Integrated Talent Management (ITM) as a comprehensive approach to maximizing the engagement, performance and effectiveness of the workforce by deploying integrated processes and enabling technologies. ITM technologies are a subset of HCM, and includes recruiting, onboarding, performance, learning, compensation, succession, career development, competency management, assessments, and workforce planning. The power of the ITM approach principally resides in how firms can design processes and supporting technologies to leverage the natural linkages between these functions to enhance overall workforce efficiency and effectiveness.

 

As market interest in ITM solutions has grown, technology providers have responded by attempting to broaden their functional footprint to encompass more discrete ITM functions. Vendors have also substantially increased their ITM marketing, sometimes in advance of the delivery of actual capabilities. There has been a great deal of merger and acquisition activity that has further confused customers and prospects. HRchitect believes that assessing two fundamental factors will help prospective buyers properly segment the ITM vendor community:

 

  • The vendor’s entry point into the ITM market (e.g., niche provider from one of the ITM functions, core HRMS platform vendor,  HR outsourcer)
  • The vendor’s approach to expanding their ITM footprint – organic development, acquisition, or some combination of the two

 

In addition, participants in the ITM market would do well to consider the following trends over the next few years (explained in detail in the full report):

 

·         The overall human capital management software market will continue to consolidate – driven by multiple vendor types (e.g., core HCM platform providers, ITM vendors, “aggregator” HCM firms, niche vendors) either seeking to expand their ITM coverage, or ceasing operations.

·         Marketing and development efforts around ITM suites will continue full force, as vendors seek to differentiate their functionality and approach to ITM. There is not yet a mature ITM vendor that has competitive offerings for each component, and this will not change for several years. HRchitect continues to see that the outcome of evaluation/selection projects depends heavily on the requirements of the functional area ranked as most critical (from either a timing or business-impact perspective) by the organization.

·         Niche and ITM suite vendors have generally increased their feature/function lead –  ERPs (e.g., Oracle, SAP, Lawson) and core HRMS platforms (e.g., Ultimate Software, NuView, Spectrum) will continue to invest in ITM, but will not close the gap with the ITM niche providers or ITM suite vendors – with one possible exception (see the full report to find out who).

·         Firms will continue to try to rationalize their application portfolio by implementing ITM suites and reduce integration issues – however, because the depth of functionality is rarely at the same level within the ITM suites, customers often are not yet willing to settle for the level of missing feature/function in critical ITM areas in exchange for integration.

·         The linkage between Performance, Learning and Succession is emerging as the most critical for ITM — the emergence of this cluster has some implications for the ITM market; those vendors that began with learning capabilities and have expanded into performance and succession will have a longer-term advantage due to the depth of integrated functionality.

·         Organizations are increasingly trying to satisfy multiple types of recruiting with a single solution, attempting to address professional, hourly and contingent requirements on a single platform.

·         The use of competency data to link ITM components will continue to grow.

·         Despite the marketing emphasis on feature/function, vendor service and support are key to long-term customer satisfaction – HRchitect believes that  the vendor community would do well to up the ante in their customer-support functions, and take the view that a satisfied customer base will ultimately increase profitability and viability over the long term.

Matt Lafata, HRchitect


Congratulations to our Performance Management Systems Beauty Pageant Winner – SumTotal Systems! Mid-Market HRIS pageant takes place Friday, February 20.

February 20, 2009

 

On Friday, February 19, HRchitect held the sixth installation in our Beauty Pageant webinar series, this time focusing on Performance Management Systems. Participants included leading vendors in the EPM world – Cornerstone OnDemand, Salary.com, Sonar6, SumTotal Systems, and Workscape

 

At the end of the action-packed webinar, which was rescheduled from February 6, SumTotal Systems was crowned the winner with Cornerstone OnDemand the runner-up. The presentations were fantastic and HRchitect would like to thank the vendors for participating and the attendees for judging the contestants.

 

I would also once again like to extend my personal thanks to Tiffany Appleby, HRchitect’s Director of Marketing and Corporate Communications, for her incredible work in making sure these pageants run smoothly. It’s not an easy task coordinating every vendor’s presentation, setting up practice runs, and then running the program the day of the event. Tiffany is a tremendous asset and I couldn’t do all this without her.

 

The HRchitect beauty pageant series of webinars has quickly become the buzz of the industry since its debut in November 2008. This series of webinars covers a different area of HR technology with each event and is presented two times a month. The concept allows attendees to see presentations from up to six leading vendors in a fun and informative format where the audience votes on the winner at the conclusion.

 

Past Winners:

In November, iCIMS won the Talent Acquisitions Systems pageant and Cornerstone OnDemand won the Talent Management Systems pageant. Then in December, GeoLearning won the Learning Management Systems pageant. In January we had our Mid-Market Talent Acquisitions Systems pageant and iCIMS was crowned the winner and then our Onboarding pageant was held where SilkRoad was the winner.

 

The Beauty Pageants schedule continues as follows:

 

February 20 – 11am CST – Mid-Market Human Resource Information Systems (HRIS)
March 13 – 11am CST – Time & Attendance 
March 27 – 11am CST – Workforce Planning
April 10 – 11am CST – Compensation Management
April 17 – 11am CST – Succession Planning

 

The Mid-Market HRIS pageant will take place on February 20 and participating are leading vendors NuView Systems, PDS, Salary.com HRMS & Payroll and Spectrum HR.

 

In case you have missed any of our Beauty Pageants, you can view them here. The Beauty Pageants have become the buzz of the industry because of the way they provide exposure to a handful of leading vendors in a 90-minute fun and informative format. Watch this blog and our web site for updates on all of our upcoming Beauty Pageants and register today so you won’t be left puzzled by HR Technology!

 

Matt Lafata, HRchitect


Integrated Talent Management (ITM) Market Factors – Part 3, Niche and ITM Vendors vs. ERP Vendors

August 11, 2008

In the first two parts of this ITM Market Factors series, we covered the market factors of “Consolidation” and “Marketing”.

 

HRchitect believes that a number of other factors will impact the evaluation, selection and implementation of ITM applications over the next 12-36 months. In this blog we will cover Niche and ITM Vendors vs. ERP Vendors. We also reveal the one ERP vendor with the best shot at closing the talent management gap the fastest that we alluded to in our July 16, 2008 blog about Market Trend Predictions.

 

 

Niche and ITM suite vendors have generally increased their feature / function lead – ERPs (e.g., Oracle, SAP, Lawson, Workday) and core HRMS platforms (e.g., Ultimate Software, NuView, Spectrum) will continue to invest in integrated talent management, but will not close the gap with the integrated talent management niche providers or talent-management-system suites – with one possible exception (see below). To put this observation in context, it’s necessary to understand some basic market dynamics:

 

For the niche provider, ongoing innovation is key to survival – maintaining a 12-18 month feature/function lead over the ERP vendors is necessary to continue market momentum and get enough new deals to guarantee continued solvency. For each Human Capital Management functional area there are generally two to three ‘thriving’ niche vendors and another three to five ‘surviving’ providers that are nimble and agile enough to stay ahead of the ERPs.

 

The emergence of the ITM suite vendors has further confused prospective customersas these providers have generally achieved sufficient revenues and customer base to thrive, and have built a partner ‘ecosystem’ that rivals (in miniature) the ERPs. However, due to their niche heritage, most of these vendors have maintained the more agile development environments that enable them to maintain an innovation advantage.

 

The innovation gap varies by functional area, as the pace of innovation has slowed in more mature areas such as Recruiting and Learning Management, while Workforce Planning, Succession Management, and Career Planning remain quite volatile.

 

ERP vendors have much larger development organizations than either the niche vendors or full-suite providers; however, that resource is spread across a vast application portfolio. In addition, satisfying the broader customer bases of these providers makes it a real challenge to respond quickly to changes in market conditions.  ERP product managers are faced with the daunting task of determining just how much functionality (combined with the advantage of built-in integration) is enough to “tip the scales” for a representative slice of the market.

 

The historical “balance of innovation” was dramatically affected by Oracle’s purchase of PeopleSoft in early 2005. The development focus for Oracle’s HCM applications (not only PeopleSoft, but E-Business Suite as well) was fragmented for almost 18 months as Oracle tried to determine sales, marketing, and development strategies in the aftermath of Larry Ellison’s infamous “Fusion” announcement. Oracle’s internal thrashing provided an unprecedented opportunity for niche ITM vendors to extend their innovation lead, and also gave the larger players in the space the breathing room to consider expanding their own application footprint via organic development and/or acquisition.

 

It is clear that both Oracle and SAP continue to invest substantially in expanding their

ITM footprint, and both deliver some strong capabilities in a tightly integrated environment. However, their development organizations will not be able to close the existing 18-to-24 month lead the niche providers have in feature/function. The midmarket core HRMS platforms will continue to try to build enough ITM capabilities into market core HRMS platforms will continue to try to build enough ITM capabilities into their product line to meet the needs of less complex firms in that space; this functionality is generally not robust enough to compete with the ITM suites.

 

The one possible exception to this trend is Lawson Software, a longtime ERP vendor that focused on US healthcare, retail and professional services organizations in the late 1990s, but has now broadened into global and manufacturing firms with the Intentia merger in 2005. Over the past two years Lawson has substantially increased overall HCM development efforts, including significant improvements in recruiting, performance management, and compensation capabilities. This functionality has been packaged into a Strategic HR product line (announced with four charter customers in March 2008), along with an updated user experience that incorporates many “Web 2.0” collaboration and communication features. Although the product is new and has a limited number of customers, Lawson seems to be the lone ERP vendor that has made some headway against the ITM suite providers. 


Solving a piece of the puzzle… 
Matt Lafata, HRchitect


Prediction of Integrated Talent Management (ITM) Market Trends Over the Next Few Years

July 16, 2008


Of course nobody can predict the future (although many have tried) and so many factors in our industry and our economy can affect even the best of predictions. It’s always fun to look back at predictions from years ago and see how close, or how off the mark those predictions actually were. As a history buff, I love to look back on those kinds of things but I won’t bore you with all of that…  at least not at this point.

However, as leader in HR Systems Strategic Consulting and Talent Management Systems consulting, HRchitect feels like it has a pretty good grasp on where this marketplace is going. Below are eight predictions for the ITM Market…  

  • The overall human capital management software market will continue to consolidate – driven by multiple vendor types (e.g., core HCM platform providers, ITM vendors, “aggregator” HCM firms, niche vendors) either seeking to expand their ITM coverage, or ceasing operations.
  • Marketing and development efforts around ITM suites will continue full force, as vendors seek to differentiate their functionality and approach to ITM. There is not yet a mature ITM vendor that has competitive offerings for each component, and this will not change for several years. HRchitect continues to see the outcome of evaluation/selection projects depend heavily on the requirements of the functional area ranked as most critical (from either a timing or business-impact perspective) to the organization.
  • Niche and ITM suite vendors have increased their feature/function lead – ERPs (e.g., Oracle, SAP, Lawson) and core HRMS platforms (e.g., Ultimate Software, NuView, Spectrum) will continue to invest in ITM, but will not close the gap with the ITM niche providers or ITM suite vendors, with one possible exception. Can you guess who? It’s certainly not obvious, and probably not who you may be thinking it is. HRchitect explains more in its report, “The Suite Life of Integrated Talent Management” and will reveal the answer in a future blog.
  • Firms will continue to try to rationalize their application portfolio and reduce integration issues by implementing ITM suites – however, because the depth of functionality is rarely at the same level within the ITM suites, customers often are not yet willing to settle for the level of missing feature/function in critical ITM areas in exchange for integration.
  • The linkage between Performance, Learning, and Succession is increasing in importance for ITM – the emergence of this process ‘cluster’ has some implications for the ITM market, as those vendors that began with learning capabilities and have expanded into performance and succession may have a longer-term advantage due to the depth of integrated functionality.
  • Organizations are increasingly trying to satisfy multiple types of recruiting with a single solution, attempting to address professional, hourly and contingent requirements on a single platform.
  • Use of competency data to link ITM components will continue to grow.
  • Despite the marketing emphasis on features/functionality, vendor service and support are key to long-term customer satisfaction – HRchitect believes that the vendor community would do well to up the ante in their customer-support functions and take the view that a satisfied customer base will ultimately increase profitability and viability over the long term.

Solving a piece of the puzzle… 

Matt Lafata, HRchitect

 

 

 


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