Dispatch from 'Disneyland'

Looking for new ways to innovate, the major HCM vendors are focusing their energies on talent management and Web 2.0. Here's a report from a weeklong tour of Silicon Valley's HCM software vendors.

Monday, September 1, 2008
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Every July, I take a weeklong tour in Silicon Valley to uncover some of the major trends among the largest HCM software vendors. While getting full-day briefings and learning so much new information in so short a time can be brain-busting, it has been a great way to discover new patterns.

No surprise, talent management remains the No. 1 priority this year. But it is now closely followed by a renewed emphasis on globalization. Web 2.0, meanwhile, continues to grow in importance, but its use still remains largely internal for the vendors without customer offerings.

Of course, there are brand new ideas (detailed below) and some improvements driven by market perceptions. But sometimes it seems as though vendors are holding back to make a big splash with their announcements at the HR Technology Conference®, running Oct. 15 through 17 in Chicago.

I know one talent-management-suite vendor not willing to talk publicly about writing its own recruiting application from scratch (someone other than SuccessFactors, which is now about half finished with its recruiting application for the large market). Naturally, as co-chair of the conference, I am completely torn about that strategy! But here is the latest from what I still like to call Disneyland, because Silicon Valley conducts business like no other place on earth!

Oracle Grows and Fills Holes

Despite a recent analyst report to the contrary, Oracle claims more than 40 customers are live on last January's Release 12 of E-Business Suite HCM (EBS). In that release, the Redwood Shores, Calif., company has added seven country localizations, bringing the total to 30.

With country extensions done by partners, the number grows to 38. EBS adopted the look and fonts of PeopleSoft's HCM Enterprise in that release. The specs for EBS 12.1 are set, with a "controlled release" (what used to be called "beta," but without much time to use any feedback) to a few customers this month and generally available "a few months thereafter."

Among many new features, 12.1 will add Peoplesoft's HR Help Desk; integrate with new Fusion Edge Applications (small stand-alone functional pieces) and with PeopleSoft incentive compensation; improve Business Intelligence Publisher, which includes reporting and formatting; upgrade on-boarding from what's now just a list with Web services (similar to what SAP is doing); integrate with Enwisen's knowledge system; and, of course, add talent-management enhancements.

In the area of performance, those enhancements include cascading objectives, offline appraisals (long a dream of former Oracle HR product head Joel Summers) and close-to-comprehensive succession planning. Recruiting will get a full employee referral program (though no link yet to payroll for awards), improved candidate communications and interview scheduling, and upgraded search for sourcing candidates.

Other new features for talent-pool management, including a dashboard, will be announced at Oracle Open World later this month.

Oracle is putting special emphasis on the least sexy areas in HR: Time & Labor, Workforce Scheduling and Absence Management. Those applications traditionally comprise Workforce Management (WFM), usually associated with hourly workers in retail verticals. "The reason," Product Strategy Director Sherri Bartel explains, "is partly because Oracle and PeopleSoft are not perceived to have it!"

Well, they both do, and the next versions will include a bi-directional, real-time integration between the offerings. And with the integration of the 2005 acquisition of retail specialist Temposoft, both products are trying to give Workbrain (now part of Infor) and the former Campbell Software (long part of SAP) a run for their money.

No surprise, PeopleSoft Enterprise 9.1 (scheduled for 2009) is following a similar path. In last December's Release 9, three country extensions were added for a total of 20. None will be forthcoming for the Middle East, since EBS has that part of the world covered. Absence Management will get global functionality.

When the new release of PeopleTools is finished, Enterprise will sport an entirely new look and feel that could rival the "wow" of Taleo's Performance Management interface. This will be facilitated by elements of Fusion Middleware being brought into PeopleTools.

The specs are also set, and 9.1 will be filling in some long-recognized gaps in Enterprise functionality, especially in the areas of compensation and succession. In talent management, the emphasis is on enhancements rather than integration. Cascading goals will be added to performance. Work continues on Profile Management (set to be in Fusion), including the Job Profile being used to create requisitions in recruiting. Succession will get real-time visualization, again much like Taleo's and SuccessFactors'.

Compensation is getting the largest number of new pieces, including a global-compensation manager tool, a grid-like user interface, planning through integration with performance, delegation of authority and approvals, and embedded analytics in a manager's dashboard.

Oracle's promise of Applications Unlimited -- upgrades for users of all the major applications Oracle has acquired -- has certainly come true. Whether Fusion also becomes a reality, no one can say except Oracle, which hasn't yet revealed what's in Fusion.

SAP Reaches for New Usability

SAP, headquartered in Newtown Square, Pa., has frozen its current release of SAP ERP 6.0 HCM and plans to only release Enhancement Packs of new functionality every nine or 11 months through 2013, rather than the dot releases Oracle has returned to (but may also be abandoning). While new objects can be added and old ones layered for the promised Service Oriented Architecture in these packs, customers are being promised an evolutionary path with no worries about big upgrades.

Enhancement Pack 3, released last December, plugged many of the long-criticized holes in E-Recruiting. In fact, Microsoft (which, while long an SAP shop, has tried a half-dozen different recruiting systems) is now live on it in 31 countries, though not yet in the U.S.

Enhancement Pack 4, scheduled for November, includes a large investment in a new user interface that was developed with the assistance of an outside design firm. The enhancements are mostly in talent-management applications, with usability increased in most of them by what the company formally calls "SAP Talent Visualization by Nakisa 2.0," the partnership between SAP and Nakisa that was announced last year and has since been enhanced by the latter's decision to hire a few key former SAP HCM employees.

"Two-thirds of the work in November's pack was on the user interface," says Vice President of HCM Solution Management David Ludlow, who's based in SAP's Palo Alto, Calif., office. "So we have usability and are only missing the perception of our usability."

November's pack will include fundamentally redesigned Succession Management with the Employee Profile consolidated to one page, development plans added, a new Talent Review Meeting featuring a talent pool not tied to a job family and cascading competencies.

In addition to the new interface, Performance Management will have cascading objectives -- both top down and bottom up -- and (planned for 2009) a calibration feature that's integrated with compensation and is unique to the industry. It allows managers to look at employees and calibrate them relative to each other, even creating a bell curve. And below, the compensation results of the manager's assessments are shown graphically.

Thumbing its nose at Oracle, SAP points out that offline performance appraisals have been available since 2006.

For 2009, SAP also plans the most ambitious onboarding module in the industry, covering the period from offer-acceptance to three to 12 months after starting work. It will be independent of E-Recruiting (why was onboarding ever part of recruiting?), yet still integrated with it. E-Recruiting will get a Candidate Profile that's the same as an Employee Profile.

Clearly, innovation continues at SAP.

Workday's New Ideas

Dave Duffield's fifth start-up, Workday of Walnut Creek, Calif., continues to move forward. In July, 54 customers had been signed (more than double all of 2007) and 25 were in production (four with Financials). Two-thirds of development remains dedicated to HCM. Revenue last year was $26 million. And U.S. payroll is generally available now, with new country versions being added furiously. Also, as expected, Workday is generating new ideas.

During the current focus on talent management and the panic about the talent shortage, much attention has been paid to how much people cost their companies. Historically, that calculation has included only payroll (sometimes also for contingents) and benefits.

Rarely counted are the assets employees are given -- such as laptops, desktops, cell phones, etc. -- or the cash expenses of having them work (travel and expense), those usurious cell-phone plans, etc. Now, Workday has created a new module called Worker Spend Management that will, for the first time, give HR a view into the organization's total people costs, including contingents. It will be formally announced this month and already has early adopters.

It comes from the fertile brain of Vice President Mark Nittler, already turning the world of financial applications upside down. But not all of WSM is so original. SAP HCM has long included travel-and-expense functionality, though most think it odd that it does. Several years ago, Oracle and PeopleSoft (then still separate) spent a lot of money rewriting their "person" model so a contingent could be entered into the HR system. But only a handful of HR departments bothered, happy to leave contingents connected to the procurement department.

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Like all Workday applications, WSM is employee-centric. Which means it links all the assets mentioned above (and more) to the person, creating a custody relationship -- unlike linking the person to the asset, which is what the procurement function does. Contingent labor acquisition involves the same processes in HCM as in procurement. The purchase of services is also included, always a knotty problem for procurement since no object is received.

"This helps businesses manage the business," Nittler says, repeating the theme of all his ground-breaking work. "We already have payroll and benefits, and all these costs were missing and falling through the cracks of other systems. Now, companies can know their total people costs."

Another new Workday offering may be completely derivative of a former company's product but is useful nonetheless. Workday Benefits Network will connect insurance carriers directly to their customers and employees. The goal is to generate a monthly bill that both sides will accept immediately without the standard three weeks of haggling about the dates of covered employees being hired or let go.

This was the rarely discussed value proposition of Employease, the on-demand HRMS that was run by PeopleSoft alumnus Phil Fauver, until it was sold to ADP. In July, Workday had a dozen or more carriers signed up (hoping for 50 to 100 by year's end), and more importantly, 27 of its 54 customers have bought it. Carriers ride free.


Everybody Still Talking 2.0

You can't attend a conference or Webinar, or read a white paper, without hearing about Web 2.0 in the enterprise. The idea of bringing social networking, ease-of-use, outside data and sheer fun of the consumer Internet to enterprise applications is now universally regarded as inevitable. (The HR Technology Conference® is just as guilty, featuring a full track of sessions on the topic, including a panel with the top HR-product executives from Lawson, Oracle and SAP -- each joined by a client -- discussing their Web 2.0 plans.)

Oracle still calls it Employee 2.0, while SAP calls it Enterprise 2.0. For now, both are only experimenting internally. But last year's pilots, mock-ups, prototypes and ideas have become real systems.

Oracle has created an internal social network called Connect, and the entire company is on it. Connect borrows most of the features familiar to users of LinkedIn and Facebook: creating your profile, listing your contact information and interests, inviting others to join your network and broadcasting your activities to them. Vice President of Global HCM Strategy Gretchen Alarcon says real company work gets done there, as well as on Facebook, one of her favorite activities.

Since last year, SAP's membership of its internal social network, Harmony, has soared from 1,600 to 6,000 users -- with no corporate fiat or even encouragement, just employees inviting each other. It has become a project of SAP's Design Services Team, tasked with bringing the power of graphic design to the company's strategy, communication and software.

Harmony feels more like a next-generation work portal than a part of Oracle's social network, with its lightweight collaborative space, a message center, "my latest project" and the barest of personal profiles with little more than contact information. But it does have an "ask & answer" feature for finding internal experts (most experts agree that knowledge management has become personal-information sharing and collaboration).

We'll have to see what their clients have been up to at the HR Technology Conference®, including SAP's customer Nokia, whose representative has the promising title "Senior Manager, New Web Experiences, Global HR." Will all that be on cell phones?

Lars' New Idea

SuccessFactors' flamboyant CEO Lars Dalgaard has always been direct: "HRMS is dead!"

Of course, every company still needs the payroll and benefits administration of an HRMS, but those have long been HR's most frequently outsourced functions. Lars thinks the Employee Profile, which SuccessFactors and every other vendor of talent-management suites and ERP is developing, can effectively substitute for the employee record-keeping function of core HR. SuccessFactors of San Mateo, Calif., has largely abandoned its previously announced intention to write its own HRMS.

Guru Naomi Lee Bloom agrees that a system centered on the Employee Profile could become another flavor of HR service delivery. Of course, PeopleSoft already has one in its HRMS, and Fusion will supposedly include one, too. But this idea might solve the biggest problem I see ahead: If you have multiple systems, which vendor's employee profile do you use? This is certain to be a topic at this year's Analyst Panel at the HR Technology Conference®.

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