Birth of a New Era

Social media is finally converging with enterprise HR applications and bringing exciting innovations, thanks to the efforts of companies such as SuccessFactors, Oracle, SAP and others.

Thursday, September 16, 2010
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Pssst, want to know a major trend in HR technology?

Nearly every HR vendor I spoke with this year -- especially in July, during my annual week of briefings in Silicon Valley -- had a mobile application under development or already deployed. Certainly a major trend, but perhaps less interesting to me because my own cell phone, rather than being smart, is developmentally disabled. But it does have a physical keyboard!

Instead, what was much more impressive to see -- after at least three years of people talking about it -- were major vendors finally integrating social-networking functionality into their applications. Not just delivering a separate module to create an internal corporate Facebook, LinkedIn or Twitter, but actually inserting networking capabilities into existing applications to make them smarter, better and faster.

I think this marks a new era in enterprise software, and the exciting part is that it's just beginning! Oracle, SuccessFactors, SAP and many others seem to be leading the charge.

The Wait is Over

At least the wait to see Fusion is over. Nothing much still is being said about when and how to buy it.

When I wrote my HREOnlineTM column in July about Oracle, I hadn't yet registered for the annual Oracle OpenWorld user conference in San Francisco, nor had I seen the agenda. When I did, I found five distinct sessions on Fusion HCM, including two specifically on what it means for PeopleSoft HCM Enterprise or Oracle HCM EBS users.

So, clearly, a lot of the 5-year-old questions we've had are about to be answered.

I'm sure there will be plenty of questions left over for top Fusion HCM executive Gretchen Alarcon at her Q&A and demo session with me at the HR Technology® Conference on Sept. 29. This will be the first public demonstration of Fusion outside an Oracle or Oracle user event.

The New Era

Fusion will clearly be part of the new era I'm describing. Unfortunately, I missed Gretchen's demonstration of Fusion at OHUG (Oracle HCM User Group, including PeopleSoft), always an enormously useful conference, but open only to those two groups.

But Jason Averbook, CEO of Knowledge Infusion, was there, witnessed it and says that Fusion straddles both sides of the fence: "Since Oracle develops tools, platforms, middleware and applications, [it] can and [has] created collaborative enterprise capabilities separate from the application layer. So depending on a company's preference, networking can be deployed as part of a process, like a performance or talent profile or separately as a social network at work."

I can't wait to see it.

The first example of the new era was Taleo's performance module, which allowed for a minimal social network to collect feedback throughout the year on an employee's performance and have it available for the manager at review time.

But nothing I've seen exemplifies the new era better than SuccessFactors' plans to integrate functionality from CubeTree -- a social-network vendor it recently acquired -- into its recruiting application, already in Version 2 and live at its largest customer, Siemens, in two countries.

Consider what you already know about recruiting as a multi-person, collaborative process. Any candidate being considered for a position of director or above has at least five interviews: with the boss or hiring manager, with colleagues, even with direct reports or the manager's boss. And many applicant-tracking systems today allow each interviewer to enter notes and impressions about the candidate.

But SuccessFactors plans to let them all discuss the candidate online, just like on a social network, within a strictly defined group visible only to the interviewers. Discussions that formerly took place via e-mail, over the telephone or even in person could now all take place within, and be facilitated by, the recruiting application. All captured, archived and auditable.

Talk about reducing friction in an HR process! And making it quicker and smarter.

In addition, CubeTree allows for shared documents, so the candidate's resume can be posted to a small group and also be open to discussion. "Hey, I worked at that company she lists as a former job, and I never heard of that division."

"Well, it is a big place; they were a client at my last job; and I worked with that division, though not with her."

Imagine!?! True collective intelligence.

I've been following electronic recruiting since it was born in 1988/89, and I've never seen a new process feature so original and useful. It will also be used in onboarding, as Cornerstone OnDemand has already done.

SuccessFactors has similar plans for new collaboration and workflows for all its apps. Next up is goal-setting, then compensation and analytics. How would you like to type a question about a bar chart and have someone answer it? That's one goal in analytics.

Of course, SuccessFactors will also offer CubeTree stand-alone as the internal corporate social network. So employees can search their company's talent profiles to find experts with answers -- informal learning many vendors are already facilitating, including Saba, Plateau and Workday (shortly).

Search hits in CubeTree, however, will be based not just on profile information, but also on participation in the network: the answers to other employees' questions and the content of discussions started or commented on. A useful refinement of the expert concept.

Naturally, similar innovation will extend to SuccessFactors' growing HR module that I've written about, EmployeeCentral, which has 50 mostly smaller clients on it today. SuccessFactors has committed to development partner EMC -- a $14-billion company with 46,000 employees in 16 countries -- that it can shut down its ancient PeopleSoft 7.5 system and be fully supported by EmployeeCentral by May 10, 2011.

SuccessFactors goes to market calling EmployeeCentral "the next-generation core system of record." Dave Duffield, CEO of Workday, and many other HRMS veterans will tell you a "system of record" has for 20 years included benefits and payroll, neither of which SuccessFactors intends to create, acquire or sell. Surprisingly, in this context, HR technology guru Naomi Lee Bloom doesn't agree that a SOR must do all three. She calls that traditional combination the HRMS.

Instead, Naomi defines a SOR by what it does. If it can process completely all of the relevant business events (effective dated for past, current and future), deliver the needed inquiries/data analyses/reporting, is built on a fully compliant and global underlying object model needed to manage every aspect of the organization's and worker's lifecycles, and can accommodate all of the incoming/outgoing data needed to drive and record the results -- not only of payroll and benefits administration but also the myriad other corporate processes that depend on the SOR's data -- then it meets her test for being a "system of record."

Yes, she wrote that in an e-mail to me. Does the phrase "steel-trap" come to mind? That's one reason I'm looking forward to her "Great Technology Debate" with Gartner Managing Vice President Jim Holincheck at the conference.

I don't know if Naomi's been chatting with SuccessFactors, but Vice President of Global Product Strategy and Management Dmitri Krakovsky claims EmployeeCentral will basically do all that, plus offer employee and manager self-service and rules-based bidirectional workflow.

But Naomi quickly adds in her note that offloading payroll and basic benefits administration to third parties is a huge challenge when a modern SOR comes up against those rather dated applications.

SuccessFactors has hired a former consulting partner at both PwC and IBM Global Business Services to build its own systems-integration organization that will focus largely on training integration partners for EmployeeCentral, which will obviously need a software ecosystem to meet the needs of large organizations.

Nomenclature aside, SuccessFactors is taking a fresh look at the HR system, and two principles set its view apart from others: Processes are collaborative, not linear. And mistakes should not be treated as exceptions but as a normal part of processes. EmployeeCentral is still a work in progress.

For the first principle, consider an everyday manager transaction: transferring an employee. The employee could be found through an actionable org chart, already part of SuccessFactors' talent-management applications. Then in his or her talent profile (combining traditional HR data), the boss is changed. Then the change is sent to yet another closed CubeTree group of people who need to approve it.

A social-network negotiation and conversation can ensue. People can approve the transfer in parallel or be organized in a multi-step, somewhat serial hierarchy for approval. If old-fashioned linearity is the objective, each approver can be on a separate level. All of this is graphical, of course, with people's pictures.

Workday has a similar business collaboration process available now.

As for the second principle, though the workflow is rules-based, exception handling is natively built into the application -- so a mistakenly included approver, for instance, can be simply dragged and dropped out of the group or a new one inserted the same way.

What happens when everyone approves the change? Does the system automatically accept and process the transfer or does HR continue to act as gatekeeper? Whichever way you like it.

While I have serious doubts that SuccessFactors can finish building all of this in eight months, I have no doubt that EmployeeCentral will work differently than any HR system we've ever seen. Whether it's an SOR or just an HR module, that's very exciting.


Older Player in a New Era

With all due respect to Dr. Martin Luther King, when I heard that David Ludlow, after 10 years of running SAP's HR product, was moving onto something new and innovative, I wanted to shout: "Free at last, free at last, thank God Almighty, [he] is free at last."

When every discussion of a new software initiative has to start by identifying the member of the Executive Board in Walldorf, Germany, who supports it, you know there's a soul-sapping bureaucracy to navigate.

Aside from some old pros at Workday, David has more experience with HRMS (and everything ever integrated with it, including talent management) than any other vendor executive I know. And he's not yet 50, having worked a previous 10 years at Tesseract, our HRMS mainframe gold standard.

Now David's creativity and enthusiasm have been renewed by his new assignment of creating innovative SaaS-edge applications that will tightly integrate with SAP's on-premise HR system. Dawn Crew, former head of global HCM marketing, will take over his job as head of product strategy, with the typically inscrutable SAP title of "VP, HR Solutions."

And no surprise, the ideas David is fleshing out -- under the general category of Next Generation HCM -- are all about the convergence of social and enterprise software. Think of them as HCM On Demand.

He's not as far along as SuccessFactors, but his first planned product is going to connect with performance and career development, and he describes it, without revealing details, as "Facebook and HR." He wants to create "Career On Demand," which will allow uploading traditional resumes to help build talent profiles for employees.

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In doing so, he is aided by SAP's own acquisition of Business Objects, the analytics vendor. When independent, Business Objects acquired a text-analysis product that SAP has turned into a new resume parser. No one has ever been happy with software's ability to recognize what's what in a resume, and one SAP recruiting client is testing to see if it's a better parser.

It's one small part of an ambitious project called Talent Connect, which seeks to bring all recruiting stakeholders together in one environment -- and pulls all the pieces together: web crawlers, social networks and, eventually, employment agencies.

David has been talking to LinkedIn for years about using it both for sourcing and employee information. He continues to pursue the idea (heretical in many quarters) of bringing the social network inside the company's firewall, or at least the employees' information in it.

The acquisition of Business Objects has also spurred a major effort to create a strategic workforce planning system, with general availability scheduled for March 2011 (only six months away). Plus 10 new analytical dashbords.

Electric Kool-Aid Acid Test

Vendors such as Taleo, SuccessFactors and Peopleclick Authoria are rushing to abandon the talent-management label in order to sell into the C-suite.

Problem is, I still think those folks don't much care about employees below their immediate reports. Instead, they focus on the operational metrics of the business. I can just imagine some CFO saying, "Oh, yeah, employees have something to do with that, I guess, but give me some numbers to show me exactly how!"

Many have drunk the Kool-Aid that has deluded HR technology vendors over the years into thinking they could sell HR software -- stuff for employees! -- directly to the top. Every one of them I know has failed -- so far, anyway.

Maybe, just maybe, things are changing, and I'm being too cynical. At its analyst day, Kenexa President Troy Kanter said that half a dozen new clients came directly from the C-suite. Plus, he claimed that, among current customers, decisions to buy more Kenexa products and services were coming 75 percent of the time from those environs.

Workday, on the other hand, continues trying to change the game by connecting people to the work they do -- a new concept for HR software and a value proposition Workday hopes will appeal to HR, operations and the C-suite. Its notion of Unified HCM -- once confined to the traditional HRMS and the talent-management applications -- now firmly includes work and most significantly, the true cost and value of it.

By connecting work, workers and performance, Workday wants to deliver business-user decision support that can help optimize the workforce and increase organizational capacity.

Companies are buying it, and also subscribing to the SaaS software. In July of last year, Workday had 59 customers live and 92 signed. This July, the numbers have climbed to 104 live (including 20 on payroll) and 160 signed. Gross revenue this year is projected at more than $100 million

The company's goal of marrying HR to work continues to get more ambitious. The centerpiece is Workday's unique Worker Spend Management module, which Vice President of Financial Management Product Strategy Mark Nittler has been building out, now collaborating with Vice President HCM Product Strategy Leighanne Levensaler. The first year it handled only employee T&E and approvals.

Last year, WSM covered elements of business resources (employees' laptops, cell phones, expensive calling plans, company cars, etc.), procurement (purchase orders) and, most importantly, service procurement, which includes contingent workers and professional services.

Now, Nittler wants it to include the costs of all work -- "the money spent on, by and for people" -- which requires a task I don't believe anyone has ever taken on: modeling all of the complexities of work itself. Utterly appropriate, given the company's name, I guess, but a little daunting in its breadth.

Closer to the ground, Workday Labs has been established as a center of innovation. In addition to creating Workday add-ons for Outlook (e-mail and calendar), integration to Google Calendar and Microsoft's Pivot experiment for interacting with massive amounts of data, Workday Labs is working on a social-media project code-named "Red Rover."

This is planned to be a Twitter-like stream of any-time talent feedback, plus social analytics and an expert-finder.

Workday's market acceptance continues to grow. Towers Watson (the merged comp and benefits giant) sold its PeopleSoft and SAP HR implementation practices to focus exclusively on Workday. Perhaps it read its own 13th annual HR Service Delivery Survey, which found SAP and Workday tied at 15 percent each as the leading choice for respondents buying an HRMS. Workday was up from 0 percent in 2008 and 9 percent in 2009.

And someday soon, Workday will be regularly going face-to-face with SuccessFactors, just as it did at EMC.

HR Technology Columnist Bill Kutik is co-chairman of the 13th Annual HR Technology® Conference & Exposition in Chicago, that will be held Sept. 29 to Oct. 1, 2010. You can comment on this feature at the Conference LinkedIn Group, which does not require prior attendance to join. He is also host of The Bill Kutik Radio Show®. He can be reached at .  

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