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HR Technology Column

Performance Management Becomes the New Recruiting

With performance management the central application of the talent-management suite, vendors are selling huge numbers of their products right now. But with so much business at stake, their market is starting to look like recruiting, which has never been pretty.

Monday, May 7, 2007
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Because there are so many of them and their customers switch vendors so frequently, recruitment-systems vendors have always formed a market I've long described -- to their agreement and bemusement -- as the most competitive, contentious, backbiting and mudslinging in HR technology, certainly, and perhaps in the entire software business.

Now performance-management vendors, driven by a blazing hot market, are giving recruiting vendors a run for those same adjectives.

Case in point. SuccessFactors, seen by many as the industry leader, issued a press release in April trumpeting their largest SaaS (Software as a Service) hosted installation to date -- 85,000 employees of Wachovia.

That same afternoon, competitor Authoria sent the press a "response pitch" (not a press release you can find on their website) essentially saying, We spit on their 85,000 (my words). We have six SaaS customers with more than 100,000 employees, including one with 340,000 (their words).

Vendors don't just sell you their product. They also try to convince you not to buy the other guy's, and that can be done in a wide variety of ways. In the old days, IBM's helpless competitors always accused the giant of spreading FUD -- fear, uncertainty and doubt -- about them.

Some vendors still do.

On May 2, SuccessFactors again blew their horn by announcing they had gained 170 new customers in the first quarter of this year. Justified crowing, since that is an extraordinarily high number, especially if it continues on track to become 680 for the year.

At the bottom of the release in the standard company description known as "boilerplate," SuccessFactors said it had "grown in the past 12 months from 346 customers to over 1,300 customers."

Bam! Within hours, another competitor, before a scheduled interview, sent me pages from SuccessFactor's own WebEx presentations seeming to show that total could not be true. And common sense would tell you it required selling an average of 240 customers every quarter for the last year, yet they never made a fuss until hitting 170.

Or it could tell you that the company counts its customers differently, which turned out to be the case.

Rob Bernshteyn, vice president of product marketing, explained in an interview that in their presentations, SuccessFactors only counts customers for its mid-market and enterprise products. But the 1,300 total includes sales of its "Manager's Edition" for very small companies starting at two employees, which make up the difference. Fair enough.

But you'll really see the fur flying this week when Gartner's HCM analyst Jim Holincheck releases his long-awaited MarketScope report on vendors selling talent-management suite applications, including performance. Because CIOs are the largest subscribers and readers of Gartner's reports, it's hard for HR to understand their market-moving power, especially from an analyst as well-regarded in our field as Holincheck.

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After six months of thorough investigation and analysis, including talking with customers, a MarketScope basically judges leading vendors in a market by dozens of criteria. Though the summary categories are labeled "Promising, Positive, Strong Positive," it doesn't take much to translate them into the familiar grades of "C, B, A."

No vendor will get an A in his report, unlike the three who did in his previous MarketScope just for their performance-management applications, though many will get Bs. So we'll likely be spared what has happened before when a vendor gets an A: flogging it to death. Vendors with As have spent large sums of money to link to the full report from their Web sites and sometimes e-mail blast the link to prospects.

Instead, we'll hear hair-splitting among the many B vendors, trying to distinguish themselves from one another.

And expect it all to get much more competitive, contentious ... etc.

HR Technology Columnist Bill Kutik is also co-chairman of the 10th Anniversary HR Technology Conference & Exposition® in Chicago from Oct. 10 to 12. The full agenda will be available this month at www.HRTechnologyConference.com. He can be reached at bkutik@earthlink.net

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