The Next Chapter

Service-oriented architecture and the emergence of the talent-management suite are changing the HR technology landscape.

Friday, September 1, 2006
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Big-system HR-management-system users need to get ready over the next two years for the most wrenching technical change since moving from client/server to Internet applications. The next generation of enterprise applications is starting to emerge after incubating for years at SAP, Oracle (including PeopleSoft and JD Edwards), Lawson and Workday, PeopleSoft founder Dave Duffield's new company.

This will surely be a major topic of discussion at the 9th Annual Analyst Panel at the HR Technology Conference® in Chicago on Oct. 5.

Every major vendor and consultant shows the same slide of historical platform migration: from mainframe to client/server to Internet to service-oriented architecture. Doubt its importance? Naomi Lee Bloom, a technology guru who started her career nearly 40 years ago as a mainframe Assembler programmer, calls it "the biggest change in software architecture in my lifetime, potentially causing the largest software replacement."

She will be discussing the importance and subtleties of SOA in her closing keynote at the HR Technology Conference®. The first question users always ask is how disruptive this latest transition will be: Will it be similar to a software version upgrade or more like implementing a whole new system? The answer, of course, depends on whom you ask. The better question is, What will be the business and end-user benefits from this transition, beyond making life a lot more interesting for big-company IT departments?

With SOA as a backdrop, the trend to break down HR's traditional functional siloes and integrate the six or so applications in the talent-management suite has become a tidal wave -- the primary goal for vendors of every size offering broad functionality. The suite's key application -- performance management -- continues to sell like hotcakes, with some surprising new innovations appearing that may finally lead HR into competency-based management.

Defining SOA

So what exactly is SOA? Minneapolis-based Lawson offered the following definition in a presentation: "SOA is a new programming model for designing, constructing, managing, deploying and executing applications. In SOA, independent application components are built and deployed as reusable services using standards-based interfaces. In SOA, an application is built by stringing together those reusable services."

That's about as simple as it gets. Old monolithic strings of computer code broken down into small, reusable objects that can easily be replaced, reassembled or reused. Sometimes written from scratch or layered around existing business logic. Sound like object-oriented programming from 20 years ago? Or similar promises the software industry has made off and on for the past 30 years? It does.

But it is finally made possible by the emergence of standards, and the new power and performance of modern hardware. At the very least, SOA promises end-users the flexibility to pick and choose among various vendors' products without lengthy integrations.

The two big technical questions are: First, how granular (or small) will the reusable services be? The smaller they are, the more flexible they'll be. Second, how much will vendors use this opportunity to correct the accumulated workarounds and mistakes of the past and change the structure of how the application accepts and stores data? They could end up producing brand new software that might not be compatible with what you're running now. That would require a new implementation.

With vendors still using different names for different elements of the SOA architecture, answers are hard to come by. Just try asking three for their definition of "Web services." Nevertheless, here's a brief summary of what the major players are up to with SOA and their latest product releases:

At Oracle, the former PeopleSoft HCM strategy executives now in charge point to their old customers moving from Version 7.5 (still client/server applications) to Version 8.0 (the first real Internet product) as the last great leap, which many customers considered a new implementation. They admit the move to SOA and Fusion HCM (the combination of Oracle, PeopleSoft and JD Edwards products) will be similarly difficult, especially with a new data model that is not backwardly compatible, but insist it will still feel like an upgrade with new automated tools supplied to ease the process.

Gretchen Alarcon, vice president of global HCM strategy for Redwood Shores, Calif.-based Oracle, says the scope of what the Fusion HCM will do is almost locked, and the market requirement documents are being written, which is the last step before the programmers take over, with delivery promised in late 2008.

Oracle, however, appears almost to be making it easy for customers not to switch to Fusion. Its new "Applications Unlimited" program promises future new releases for all systems (Oracle, PeopleSoft and JD Edwards), but with no specific promise of how many or for how long. Similarly, its "Lifetime Support" policy guarantees those with recent releases will never be completely cut off from support. But the most startling news is that Oracle continues to sell the PeopleSoft HRMS to brand new customers, more than 100 in its fiscal year ending May 31!

That may not be the most practical move for new customers, since Oracle has made clear Fusion HCM will be based on the latest Oracle HRMS (Version 12, out by the end of the year) while cherry-picking features from the other two. Inevitably, it will be harder for PeopleSoft customers to switch to Fusion, but maybe some never will. Don't forget that dozens of companies still run Tesseract, long after its heyday as the gold-standard HRMS in the early '90s. Companies switch when compelling business needs make them do so.

Unlike Oracle, Lawson intends to maintain separate product lines following its May acquisition of Swedish ERP vendor Intentia International, which had no HRMS. For nearly four years, Lawson has been building a toolkit to get to SOA, its first new architecture in 17 years. Lawson says the new applications will be an addition to the existing ones: an evolution and not a replacement. The plan is for business analysts rather than technical programmers to be able to create new applications. "Project Ordway" will be the new packaged SOA strategic HR applications (including the talent-management suite) for both Lawson and Intentia customers. No delivery date has been set.

SAP seems to be taking the strongest evolutionary path. Its mySAP ERP 2005 (including HCM and Financials) went into general release in June with substantial SOA elements built in. The first version of SAP's now-famous partnership with Microsoft to use Office desktop applications as an interface to SAP enterprise applications (first called Mendocino and now named Duet) has also shipped with a complete services architecture. And company executives said they will not change the HCM data model, which has long been evolving.

As part of its commitment to TMS integration, SAP has re-architected its Succession Planning module, completely integrating it with E-Recuiting and adding new links to Learning and Performance Management. In fact, it is built with E-Recruiting objects. It also extended the notion of a "talent pool" to include candidates as well as employees, and created the role of talent-development specialist (with its own portal) for the person charged with overseeing it.

That functionality will be pushed out to others in the enterprise by the end of the year. Potential successors are ranked by their readiness for a position. "We think this will cast a wider net than traditional, siloed approaches," says David Ludlow, vice president of global HCM solutions.

For recruiters, SAP has made major changes to E-Recruiting (as promised last year), creating a highly configurable dashboard. It allows them to act on a group or a single candidate and has added confirmations to candidates, particularly important with Europe's Work Councils. Assessment questions can be stored in different languages and the answers retrieved in the recruiter's own language.

Resume Mirror is used for parsing and extracting resumes; T-Rex, SAP's own engine, is used for search, though not yet conceptual search. Hiring managers and recruiters can both access the application through Duet (for an additional fee), sending interview requests, for example, directly from Outlook. By the end of the year, SAP will offer additional talent development analytics (a warehouse is required) and a simplified user interface for search. It has already simplified its professional user interface, making it more like a commercial Internet interface, mindful of the next generation of workers coming down the pike.

For its part, Walnut Creek, Calif.-based Workday is using all the same new technologies as these vendors (as reported last year). But lacking any old customers, it is developing its HR management system without any concern for backward compatibility or keeping it to an upgrade. It will be a new implementation for all customers. The company is not talking to the press until its official announcement, expected in the fall.

The Talent Wave

The talent-management suite is not just a major focus for SAP and the other vendors, but also those best-of-breed vendors that have announced new TMS pieces in the past year, including Taleo, Vurv (formerly Recruitmax) and Authoria. In addition, five learning-management-system vendors are building a TMS, four of which may be taking part in the "Industry's First Integrated Performance and Learning Management Shootout" at the HR Technology Conference® on Oct. 5: Cornerstone OnDemand, KnowledgePlanet, Plateau and Saba.

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One of the most interesting approaches is from the PeopleSoft group within Oracle. Version 9.0 scheduled for delivery by the end of the year will include full "profile management" for defining, recruiting, measuring, developing, rewarding and advancing talent -- in short, the complete TMS. Profile management is also on the list to become part of Fusion.

What links all the applications together are Job Profiles and Person Profiles, with parallel attribute fields that include some competencies. The profiles will be delivered with the product and can be user-defined or purchased from third parties. The point is the profiles become the consistent, standard definitions for your company's people and jobs.

In recruiting, for example, Job Profile could be used directly to generate a job requisition. It then can be used to match up against a candidate profile. For performance management, the profile's content can be pulled into an evaluation document, and when that's finished, the Person Profile is updated. For learning, a gap analysis can be done between the two and used to create learning objectives. The Person Profile is updated as courses are completed. Compensation is not yet integrated.

It's a compelling vision for how competencies can underlie and integrate the TMS. But in the end, the winner may be the company that fills in all the blanks for you.

Performance Management Sells

All the surveys already say it, but actual sales figures from two market-leading, best-of-breed vendors -- Halogen and SuccessFactors (both building out to become TMS vendors) -- best illustrate how hot performance-management software has become. Halogen sold more than 200 modules in 2005, not all performance management. SuccessFactors sold products to 189 new customers during the same time, many of them larger companies, they say. But the truly startling number is that SuccessFactors gained 85 new customers in the first quarter of this year alone.

This trend has been growing for at least the last three years, while consultants were busy trying to determine which HR programs and practices increase company profitability. Without a solution ever being found, the focus has now shifted to a more fine-grained problem: which competencies in which positions (a specific instance of a job) actually make the company more money? It is the new Holy Grail.

When it comes to competencies, HR often can't get past the first step: defining the competencies (and their associated behaviors) for every position in the company -- especially when the consultancies selling competency libraries (rarely more than 80 percent complete for each position) start talking about arranging interdepartmental committees to decide on them!

Now, in partnership with Minneapolis-based Personnel Decisions International, Lawson has come up with a clever way to do it, which might get you close to the Holy Grail. Lawson Performance Management is in two parts: Lawson's own GoalView, which is about the "what" of establishing and tracking goals, and PDI's TalentView, which measures the "how" of performance with assessments and rankings. More importantly, LPM includes 70 competencies and more than 600 behaviors with models already embedded in the product. Obviously, clients can build their own custom models from scratch or accept PDI's.

The process starts with a job-analysis questionnaire given to everyone already in a position that asks them to rate the relevance of various competencies and behaviors to be successful in it. The questionnaire is about five pages with 50 questions, room for free-text and takes about 30 minutes. This determines which content in the model is correct for your company.

"Lawson will also do the job analysis for our clients and recommend the models as a consulting service," says Larry Dunivan, vice president of global HCM products.

Then there's performance assessment, which in LPM is not numbers but descriptive text about behaviors with buttons above them (and even between them for splitting the difference!) for raters to use. Once the high performers in the job are identified -- and PDI does some proprietary analysis -- individual competencies, and even one of the four or five behaviors related to it, can be identified as key to business success -- at least in theory.

Lawson is first trying out LPM internally. But its objective certainly seems what performance management should be about. PDI also sells its part of the product separately.

HRE's Technology Columnist Bill Kutik is also co-chairman of the 9th Annual HR Technology Conference® in Chicago, which runs Oct. 4 through 6. Kutik can be reached at    

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