Another Course for Cornerstone?
Long the market's favorite talent-management-suite vendor, Cornerstone has continued to prosper (even becoming profitable!) as the market has turned to buying end-to-end systems instead. While keeping its historic position as a top learning vendor, the company over the past three years has been developing light Core HR functionality (an HRMS). Will that be enough to turn the corner?
By Bill Kutik
Almost before you ask him, Cornerstone Co-founder and CEO Adam Miller will tell you that despite adding a light HRMS (happily now called "Cornerstone HR" to keep it simple) to the company's talent-management suite, he has no intention of competing with the Big Three (SOW: SAP SF, Oracle, Workday) for end-to-end deals.
But then he reveals his heart by wondering aloud whether people shouldn't start including Cornerstone in a new "Big Four."
"Sorry, get in line behind ADP," I tell him, noting that by market share, ADP is already the fourth HCM provider.
Adam has known for more than three years that the window for independent TM suite vendors was slowly closing. Even while his salesforce continued to sell TM to on-premise Oracle/PeopleSoft and SAP users (not ready to rip-and-replace and picking his cloud offerings over their own vendors') and even to new Workday customers (with its own learning years behind Cornerstone's incredibly mature offering).
And there are still at least 20,000 large companies around the world running at least HR on-premise. Plus lots more SMBs, which sometimes have no HR software at all. Adam calculates that addressable market at $50 billion.
So does Cornerstone now have what it takes to grab its full share?
It's certainly well provisioned to do so. After abandoning a global strategy of using local partners for sales, Cornerstone now has its own offices and people in 17 countries outside the U.S. (compared to Workday's 19, but Workday has a ton more offices in this country.) They sell and service clients in 191 countries.
Europe has been Cornerstone's best market for its HR module so far. Many of its more than 50 customers have been signed there, though not all are live. What do they have in common? Adam says they have a need to modernize, sometimes to consolidate dozens of systems inherited through acquisitions, but don't have the budget to rip-and-replace.
He hasn't found any commonality in prospects' vertical industry, size and even home country. After expecting many to be small, Adam reports signing customers with 50,000 to 100,000 employees.
He says Cornerstone HR can overlay an existing system and provide the integrations and functions described below.
Remember, Cornerstone still has enormous opportunity selling TM to new and existing customers. A lot of those 20,000 on-prem companies have resisted inducements to rip-and-replace from SOW for up to 10 years, and some are instead buying TM apps in the cloud.
Cornerstone's own customers are hardly saturated. While 2,500 of the 3,000 already use learning, performance is in only half of its base while recruiting (its newest product) may be in only a fifth. So Cornerstone has lots of cross-selling and green field opportunities in TM without Core HR.
But since it wants to get into the horse race, let's stroll to the paddock and see what it's got.
I was surprised when I realized that SuccessFactors followed a similar pattern to Cornerstone's: building out its full TM suite and then adding Core HR, which it calls Employee Central. Both also rely on partners for some of the functionality normally part of Core HR but either monstrously big or too boring to build.
Though the integrations are not yet complete, Associate Vice President of Product Management Summer Rogers says Cornerstone HR relies on ADP for payroll, Kronos for time & attendance, an EMEA vendor named e-Days for absence management and an as yet-to-selected provider for benefits administration. In EMEA, benefits is a small thing bundled with payroll, while in the U.S. you know it can get terribly complicated.
Happily, Cornerstone has spent its entire life integrating with larger systems. It has a new tool called Transform to accelerate and ease the always-painful process of normalizing data from multiple systems. It is using Dell Boomi for integrations, the first tool SAP used to integrate with SuccessFactors.
It is also hoping to layer its own UI over its partners' UI to give users a unified UX. The first product to get that will be e-Days, but I can't imagine ever doing it to ADP.
What Cornerstone HR does include is a lot of functionality that was conveniently already in its TM applications. Core Administration has had effective dating added and already had the talent profile that was core to TM, now a user record with the untouchable fields of promotions and salaries, etc.
Organization Management was already separately in each TM module to create the divisions and departments every company -- no matter how flat its structure -- must have.
Self-Service was obviously in TM -- always the point of those applications -- but has now been extended to such Core functions as requesting time off.
Workforce Planning was launched last year as part of Cornerstone analytics, which has benefitted enormously from the acquisition of Evolv in 2014.
As has Reporting & Analytics, which has been built out. In 2010, Adam cleverly slid into his standard contract a clause authorizing use of clients' anonymized data, so the new benchmarking facility just announced should be robust.
Of course, these days analytics has to include engagement, including pulse surveys to determine how many employees are actively trying to sabotage your company. That's no joke: it's actually a category explanation in the famous Gallup Survey. Happily, also on the roadmap is adding what actions can be taken to increase engagement.
There's also Employee Relations, a quaint term for a quaint function: fighting unions hammer and tong. Also more modern functions for call centers.
In recruiting, after years of promising full CRM "next year," Cornerstone has decided not to re-invent the wheel and partnered with SmashFly for e-mail campaign management.
Instead, internal development time has been spent making corporate career sites better and adding an incredibly cool feature showing the career paths of previous incumbents in the job being applied for. While not a new idea (Taleo had it at least 10 years ago after James Harvey created performance), Cornerstone's is visualized very well with flow charts.
Being Cornerstone, the major emphasis of its recent Analyst Day (which I missed for the first time in nine years) was its new modern learning platform, which sounds like what SOW is still reaching for. Being me, you're best served reading about that from Josh Bersin or Brian Sommer.
See you at the pari-mutuel betting window. Two dollars on Cornerstone's nose?
HR Technology Columnist Bill Kutik, as chairman emeritus, will help celebrate the 20th anniversary of the HR Technology® Conference & Expo, returning to Las Vegas, Oct. 10-13, 2017. Will you soon be talking to your HCM system, like chatting with Siri or Alexa? Find out on the 30th episode of his broadcast-quality video series, Firing Line with Bill Kutik®.