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HCM War in Silicon Valley!

What are the three biggest players in HR technology up to these days? Surprise, surprise: They're trying to outdo one another.

Monday, October 1, 2012
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If you're not a venture capitalist, there are still at least two ways to discover the major trends in HR technology in Silicon Valley. The first is to spend a full day with each of the three remaining big vendors -- Oracle/Taleo, SAP/SuccessFactors and Workday -- getting briefed by their senior executives. In July, that meant hearing the dogs of war barking!

The second is to spend a quieter two months viewing about 120 online demos from 40 much-smaller companies (many, but not all, in the Valley) for the "Awesome New Technologies in HR" session at the HR Technology® Conference in Chicago, where you may be reading this.

After doing both exercises, I can say they are both enlightening in very different ways, especially when they reveal two or more companies doing the exact same thing! More interesting when the smaller companies do the same thing as the large, though both sized-companies do it no less frequently. Sometimes one has knowledge of the other, and sometimes not. Which is exactly how you define a "trend" in the software world!

Everybody Wants to Catch Workday

Let's look at the Big Boys first, particularly the rabbit, Workday.

Now we know from Workday's S-1 (the first SEC filing for an initial public offering) that over the last seven years, the company has had astonishing growth: lately, about 100 percent year over year. That it has sold to 325 customers, with about 200 of them live, of various sizes up to Flextronic's 200,000 employees.

The number sold to includes 34 customers (as of July) that bought financials. In fact, about 10 percent of the HCM customers -- including Brown University, Netflix, SallieMae, TripAdvisor and Chuck E. Cheese's -- ended up buying financials as well.

Isn't that the world just turning itself upside down? HCM finally being bought first, instead of being thrown in for free with a financials purchase, as in the really old days? More than 17 of those customers are live on financials.

Compare that to these earlier numbers (all from the end of July) from the competitors:

Being so HR-focused, we often forget Oracle has Fusion applications for all seven ERP functions: financials, supply chain, CRM, etc. In July, Oracle reported selling 200 Fusion customers and HCM accounted for 100 of them. Of those, 25 were live on various HCM modules. So HCM has accounted for half of Fusion sales thus far out of seven application suites! No wonder Oracle President Mark Hurd is coming to speak at the conference.

At SAP/SuccessFactors, the focus is on Employee Central, the core system of record, the HRMS that has been (and continues to be) integrated with the talent-management applications. Employee Central (again in late July) had sold 110 customers, with about 60 live.

Workday just released HCM Update 17 (with three released a year) and Employee Central has had 15 releases (four a year.)

But most of that Employee Central work was before SAP took over, changing the rules of the game by declaring that Employee Central would, in effect, be SAP's SaaS R/4 and, therefore, had to meet the needs of SAP's current customers by being as global (54 countries) and as functional as the on-premise R/3.

No small job, but SAP is no small company and has assigned 400 new product managers and developers to make it happen.

Of course, Oracle already has a Fusion core HRMS. The company said in July (and repeated in a TweetChat at the end of August) that four customers are live on the core product, including Elizabeth Arden. But Oracle still has to complete Fusion's talent-management suite by integrating Taleo recruiting and learning -- two modules Workday also still lacks. And Fusion HCM has had only four releases, making it a toddler in the SaaS world.

Now, both companies have already beaten Workday head-to-head in competitive product selections. They briefed me explicitly about the names of their new customers (not to be disclosed), what systems they had been using, their numbers of employees and modules purchased. The two even occasionally mentioned beating each other, but Workday was the subject most of the time!

Remember, software is organic -- like a baby, in fact. As it gets older, it gets better from a lot of people using it, complaining or making helpful suggestions, and the vendor responding -- and constantly innovating.

So, putting technology differences aside for a moment, Workday's fundamental tactical advantage is clear: About 200 customers have been kicking around Workday HCM; four (or 25, if you like), Oracle Fusion; and 60, earlier versions of Employee Central.

That advantage obviously goes away with time and how much time is unknown. I'd say the game changes when those numbers start getting closer to each other. especially when Oracle makes enough customers deliriously happy and live on all of Fusion HCM. Once those customers become solid sales references, Oracle can fully engage its giant sales machine. Ditto for SAP.

Then Workday will need every dime from its IPO.

Oracle/Taleo vs. Workday

Job No.1 at Oracle HCM right now is getting the Taleo applications integrated into Fusion. Of course, Taleo recruiting has been integrated many times over the years into PeopleSoft, Oracle and SAP HCM because it's simply better than the recruiting application those on-premise systems offer. But find me someone with anything good to say about those integrations, particularly the customers!

Now, Oracle is determined to do it right. While most of my past Oracle briefings focused on the product road map of new things to come, this one spent a lot of time on a road map of "integration priorities." It was delivered by Jason Blessing, formerly the top product and development executive at Taleo, and now Oracle's senior vice president of talent management. His getting that spot speaks volumes about the respect (and need) Oracle has for the Taleo talent-management applications.

Once it has integrated Taleo's applications, Oracle may have a real product advantage over Workday, which is still relying on partners for recruiting and learning.

In late July, Blessing's entire Taleo team was in place at Oracle: all the general managers of all the products, plus their strategy, management and development people. Sorry, but let me take note of the irony that those hundreds of heavily subsidized developers in Quebec City that Canadian-born Taleo has enjoyed employing (and hardly paying) for 14 years are now being hardly paid by Oracle!

First order of business in the integration is the conflict I've been nagging about since talent management started: the talent profile. Every system has one: So whose are you going to use (or fuse)? Oracle's plans are best expressed by one line from one slide: "Fusion Profile + Taleo Profile + External Data (e.g. LinkedIn Profile)." No details yet on this first fusion.

The second fusion is a superset performance product using the best of Oracle Fusion and the best from Taleo's performance applications. This is, potentially, a very powerful combination with performance, goals, talent review, succession, and career and development plans.

At the same time, the former Taleo executive in charge of its compensation application, James Harvey, says Fusion's comp is three times better, sealing the long-rumored death of Taleo comp. The Taleo talent suite -- still to be sold separately -- will soon include Fusion compensation. R.I.P.

Oracle is creating a new Talent Snapshot, a subset of the talent profile for ease of use. Funny, Workday is doing the exact same thing, and I know those two haven't been talking.

The last hole in Fusion is time and attendance, also in SaaS for SAP. Workday announced its "Time Tracker," just in time for the S-1. Can the other two be far behind?

My favorite news is that Oracle (and Workday, again) are both adding "faceted search" -- familiar to all users of eBay and LinkedIn -- featuring a series of categories and check boxes. Good-bye to trying to construct those cool Boolean search statements that only recruiters and research librarians can do.

Obviously, faceted search only works on highly structured database records, but Talent Profiles (however they turn out) and LinkedIn profiles are certainly that. Keywords are still allowed.

Oracle has its own private social network to offer customers called Network@Work, which is already embedded in HR. So far, Workday is offering an integration with Chatter, the internal social network from Salesforce.com. Oracle has also spent a lot of time creating its "Predictive Business Intelligence," which, in addition to generating reports using real-time transactional data, can predict involuntary termination.

SAP/SuccessFactors vs. Workday

Integration is every bit as important for SAP and SuccessFactors, which has also already been integrated into many SAP HCM systems. And they, too, talked about an integration roadmap.

The two are focused, first, on "hybrid deployment," long touted by Oracle Fusion as "co-existence" -- meaning, an on-premise SAP HCM customer buys SF's SaaS apps and they work seamlessly together. Group Vice President David Ludlow says the data-integration piece is done; the process integration is expected by the end of the year and beginning of 2013, while the user experience is being delivered in waves.

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A data extract tool from SAP HCM to SF has been available since early May. And, the company has committed to delivering all the necessary pre-built integrations for the two products by next year's Sapphire user conference in the spring.

Like Oracle, SF already offers its own private social network, called Jam, which is a mash-up of two acquired companies: Jambok and CubeTree. From Jambok's legacy of informal learning comes an incredibly easy way for shooting and posting videos to the comment stream.

But the real focus at the company is building out Employee Central, the core HR system.

Plenty of companies have already bought it -- 110 of them as of late July, including some as large as 220,000 employees -- but reaching the functionality of the new R/4 still remains a future goal. However, is it good enough today to compete with Workday? Apparently, three companies (not disclosed) chose it head-to-head against Workday. But these individual cage matches are so hard to know about. What was the prospect's pain point? What were its must-haves? What does the prospect need from an HRMS?

Oracle has a Fusion SaaS payroll, as does Workday (for a limited number of countries). SuccessFactors is currently using 11 country payrolls from R/3 and hosting them for customers as a single tenant if a SaaS solution is required. Eventually that will go up to 54 countries, and multi-tenancy is on the road map.

Besides Employee Central, the other work in progress at SF has been recruiting, the last talent-management app it wrote. Luckily for everyone, the company bought Jobs2Web, now being sold as Recruiting Marketing, which may have saved Recruiting Execution from being just another applicant-tracking system.

True, SF may have sold more than 450 Recruiting Execution systems, but Taleo's sold nearly 800 to large companies. Does that mean either one is particularly innovative? Well, setting up a private Jam conversation inside Recruiting Execution for everyone who's interviewed a candidate was a truly great idea when I first saw it two years ago. I'm glad it finally made it into the software.

But Jobs2Web makes SF truly innovative. Several of the Valley start-ups I saw recently do exactly what J2W is doing for early adopters: letting an employee scan his or her LinkedIn (or Facebook) connections, match one of them to an open job and help the employee make a referral!

Now that's what I call social recruiting! Not creating a company page on Facebook or LinkedIn. But that functionality is available elsewhere.

The Start-Ups

My favorite pair of start-ups was Gild and Talent Bin, which do know each other. Both vendors read and analyze the "social exhaust" of people -- the things they write and "like" on social networks -- to create profiles of them and match them to jobs. The resulting profiles are like LinkedIn, only better, they say. Because both vendors are in the Valley, the object of their quest is software engineers, to find and qualify them for jobs. Talent Bin already had, on its road map, broadening its application to include other job categories and, therefore, got selected for the session.

Did you know I have been seeing demos of applicant-tracking systems and other recruiting products for 23 years? And every single one -- without exception -- has used some variant of a "Java programmer" as its example of open job and candidate search!

Several companies were trying to super-charge referral programs by greasing the skids for employees. Their products read through an employee's contacts on various social networks (with permission, of course), matching them to available jobs and then asking the employee to refer the specific friend to the specific job.

Then there are two companies trying to simplify the employee survey business, dominated for years by Gallup, Kenexa (soon to be part of IBM) and Sirota, with their armies of organization-development professionals. These two vendors say the process doesn't need to be so hard and can offer an analysis of results when the survey is finished, instead of two months later. One of them, Culture Amp from Australia, will be at the conference's "Awesome New Technologies for HR" session, showing its product, Murmur. 

HR Technology Columnist Bill Kutik is the co-chairman of the 15th Annual HR Technology® Conference & Exposition, which is scheduled to be held in Chicago Oct. 8 through 10. He is also host of The Bill Kutik Radio Show®. He can be reached at bkutik@earthlink.net. You are invited to comment on this column at the HR Technology® Conference LinkedIn Group, which does not require prior or future HR Technology® Conference attendance in order to join.

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