A Story of Firsts
Two wildly different firsts occurred recently in HR technology. One involves the industry's first complete talent-management vendor, HRsmart, which was acquired by Deltek, a company you may not know. And the other, SAP/SuccessFactors' first Analyst Strategy Day, where it revealed that SAP's first new software version in 22 years will not include on-premise HCM.
By Bill Kutik
One nice thing about being in the same industry for 26 years is that, after losing touch with people you know and like, they always pop up again years later.
Pete Mann was vice president for strategy and corporate development at Authoria (now PeopleFluent) for 10 years. Which means he selected and bought other companies for it.
For the last four years, he has been doing the same and more at Deltek, a software vendor for project- and people-driven businesses. He recently telephoned to tell me Deltek had just finished acquiring HRsmart.
HRsmart has long occupied a warm spot in my heart for many reasons.
First, when the talent-management wave really started forming in 2005, HRsmart already had all but one of the applications built in-house and integrated. True, its customer sweet spot was only small- and medium-sized businesses with 5,000 employees or fewer. But the software worked!
Later, it wrote the last missing application, compensation. Recruiting had been its first, and Pete says recruiting is still its best-selling module.
HRsmart has more than 1,000 customers around the world. That includes a substantial presence in the Middle East because Founder and CEO Mark Hamdan is Lebanese and closed lots of deals there personally. Also, Monster has been reselling HRsmart for years.
The second reason for my affection is that Mark is one of the great gentlemen of our industry. I'll never forget him taking part in a Talent Management Shootout at HR Tech 10 years ago, when I got into a dispute on stage with Authoria about how much time it had remaining to demo. Pete was probably sitting at the Authoria table at the time.
Mark stood up and said, "I'll give them some of my time"! Astounding, considering he was competing against Authoria in the same event, which Authoria won by skating around some rules, a fact discovered much later.
Lastly, the Shootouts had run their course by 2010, because, by that time, most vendors only wanted to demo their own scripted scenarios (written to make them look terrific, of course) and not ours. After 33 vendors eagerly started the process to take part, only three ended up willing to present. Which wasn't enough!
I telephoned Mark, asked if HRsmart would reconsider its decision not to compete, and his Chief Product Officer Hanny Shehadeh took up the challenge and basically won the last Shootout! So we share a lot of discontinuous history together.
Its new owner, Deltek, started its business 30 years ago selling software for finance, project, portfolio and resource management to companies selling the time of their expert employees.
Its first customers were government contractors (eventually including divisions of the aerospace giants: Lockheed, Northrup and Boeing), and architectural and engineering firms.
Later, it branched out to the other usual suspects where professionals' time is the unit of value: systems integrators (Unisys, CSC), huge consultancies (Deloitte, Accenture, PwC), and law, accounting and marketing firms. Now it reports 18,000 customers.
It's long had its own HRMS (even payroll and benefits for some industry verticals), but now, the HRsmart talent-management applications will be integrated with it. Pete was also brought in to move willing Deltek customers to the cloud and says he has been 30 percent successful so far.
The acquisition should give Deltek new chops against its usual competitors: Microsoft Dynamics, SAP, Oracle and NetSuite, which recently acquired professional services firm Open Air.
SAP Analyst Strategy Day
A long time ago, there were seven or so major IT-analyst firms, and they all required their analysts to live near their headquarters. Consequently, vendors could brief them all in a three-day New England road trip: fly to New York City; rent a car; drive to Stamford, Conn.; stop in Framingham, Mass.; and then finish in Cambridge, Mass., and Boston. Drop off the car and fly home from Logan with more or less everybody covered.
These days, analysts live wherever they want, and while the major firms are down to three (Gartner, IDC Forrester) and are still located along the original path of pain, boutique firms have proliferated, along with research firms. Plus "influencers" is now a more inclusive category.
So major vendors such as ADP, Workday, Kronos, Ceridian, Cornerstone, Infor and now, finally, SAP hold "Analyst Days" and pay expenses to fly the analysts all to a hotel. There, senior executives give group presentations on the latest product and company news and strategies, mingle at cocktail parties and meals, and hold short scheduled private meetings. And, of course, they answer a blizzard of questions and very occasionally get useful feedback.
Now the competition extends to entertainment. Mike Ettling, SAP's president for its HR Line of Business, signed a welcome letter promising attendees "a real San Francisco experience" at its day in Baghdad-by-the-Bay. Analyst Relations and Director of Communications Deb Lyons certainly delivered on that with a private tour of the Keith Haring exhibit after closing hours at the de Young Museum in Golden Gate Park.
Starting as a graffiti artist in the early 1980s, social activist Keith Haring later drew his figures doing provocative things. The museum's chief curator peppered the tour with an academic art-history commentary; nobody fainted, and it certainly felt like San Francisco.
In his presentation, Ettling immediately took on the elephant in the room. The week before, SAP had announced its first new software version in 22 years for nearly all its modules! S/4HANA will follow R/3, which ran through the era of client/server and web-based applications, following the mainframe version called R/2. It is SAP's next version of on-premise software, as well as software for customers wanting their own customizable instance in a private cloud or sharing a multi-tenant version in a public cloud.
Despite recently buying the back cover of The New Yorker magazine to advertise its HCM solutions, SAP had not said a word about what it meant for HCM.
Mike explained there would be no new S/4HANA code-line for on-premise HCM solutions. And no customizable private cloud option either. The only migration available was to SuccessFactors public cloud applications, including its core HRMS, Employee Central.
It was as deep a line in the sand as Oracle executive Paco Aubrejuan, then in charge of PeopleSoft, drew several years earlier, when he told me: "There will be no PeopleSoft 10 because that is Fusion HCM." (To explain and update his remark, he meant there would be no new on-premise version of PeopeSoft, only Fusion, now called Oracle HCM Cloud.)
The SuccessFactors cloud applications will be S/4HANA apps by the summer of 2016, Mike said, which is no small job no matter how much or little of the code gets recast.
As president, Mike sits on top of all business operations for HR software. In addition to having 700 salespeople dedicated to selling HR products, he is expanding customer service with new departments and hires.
Mike brought in another old acquaintance of mine and his, Keith Strodtman, to head the Customer Office and Adoption, which means making customers successful (believe it or not!). That's a perfect role for Keith after his increasing outsourcing responsibilities at PwC, Ceridian and then NorthgateArinso, where Mike was president before joining SAP.
In fact, in a recent video interview with me, Mike describes his vision that customer service in the cloud has to be very similar to customer service in outsourcing: it needs to happen every day, with the cloud vendor taking responsibility for delivering every aspect of the solution.
There was much crowing about the growing success of Employee Central, with Mike declaring the fourth quarter of 2014 the best sales quarter overall in SuccessFactors' history. Sales of EC have grown 92 percent from 296 at the end of 2013 to 567 at the end of 2014. Two big EC wins last year in North America were Whirlpool and Kellogg.
All the executives seemed eager to emphasize that, overall, 59 percent of SuccessFactors' bookings came from outside North America, while only 17 percent of Workday's bookings were international. No one bothered to extend that math to make the obvious point that Workday (which Ettling declared to be SAP's only HCM competitor) is still closing more deals than SAP in the United States.
I don't know how Oracle HCM feels about falling off SAP's competitive radar, but the battle for HCM in the cloud just keeps getting fiercer and fiercer.
HR Technology Columnist Bill Kutik is co-chair emeritus of the 18th Annual HR Technology ® Conference & Exposition, returning to Las Vegas, Oct. 18-21, 2015. You can comment on this column at the Conference LinkedIn Group, which doesn't require prior or future conference attendance to join. Listen to The Bill Kutik Radio Show ® for his provocative interviews with HR thought-leaders. And watch the premiere of his new video series, Firing Line with Bill Kutik™. He can be reached at firstname.lastname@example.org.