A recent Bill Kutik Radio Show featured Tom Keebler of Towers Watson.  Tom is the Global Practice Leader of the TW HR Service Delivery Practice, and each year they run an HR Technology Survey that is probably the second largest in the industry (Lexy’s from CedarCrestone is significantly larger this year).  The TW survey is sometimes hard to get a hand on since it is distributed probably only to survey participants and Towers clients.  However, Bill gave us a brief look into some of the more interesting results of the survey, and for me, most of them happened to be in the vendor space.

While it’s no surprise that PeopleSoft has the most installs for core HR, it might come as a surprise that SAP has about a 20% market share.  This seems to be reflected in my own consulting as the number of SAP related projects or the number of core HR selections that involve SAP seems to be on the upswing.  The reasons for this seem to be simple.  In the large employer space, the number of companies who own SAP ERP far outstrips Oracle in any flavor including PeopleSoft.  All this means is that most of these large organizations already own SAP HR for free.  If you think about either SAP or PeopleSoft licensing when you get to 50k or 100k employees, you could really be talking about $5M to $20M annual software maintenance, so if you’re going to get HR for free, there seems to be some benefit to implement it.  That said, the integration that exists from a data and workflow perspective within SAP is hands down the best in the industry.  SAP flows transactions between ERP components like nobody’s business in real time.  Since PeopleSoft does not have nearly the same traction in other ERP modules (like supply chain, finance or CRM) they can’t boast the same thing.  There are of course tradeoffs in functionality or usability, but SAP seems to be catching up in the space.

What comes up as more of a surprise is that trailing PeopleSoft and SAP was ADP in 3rd place.  While I don’t know what the breakdown of ADP subscriptions is for small, medium and large employers, it’s probably safe to say that most of the subscriptions occurred in the TW small to medium space – that is under 20k employees.  What this does say about ADP is that they are getting lost of traction where organizations are still finding significant value in outsourcing payroll.  My thoughts on this is that 5 years ago when we were all excited about multi-threaded HRO, organizations are pulling back and looking at the ADP and Ceridian’s of the world to do single function outsourcing.  So while ADP’s Enterprise HRMS (v5?) is gaining momentum, I’m guessing that ADP’s GlobalView partnership with SAP is also doing well.  There are not that many organizations that can do global outsourced payroll like ADP can, and so companies with a major geographic footprint only have one place to go if they want a single vendor scenario.  (Single vendor yes, but lets remember than SAP and Cornerstone OnDemand are also part of the mix)

Last up on the list of interesting points was who the up-and-comers are.  This list seems to be based on who companies are planning to select or will be implementing in the next year.  On this list were Workday and SAP.  Again, the SAP is described above, but Workday has gained such traction in such a short amount of time that you have to be interested if they can keep up with the demand.  Certainly as the first true SaaS core HRMS, they have the ability for now to roll out functionality enhancements in the way that first generation Talent Management vendors were in the early days.  Second of all, their partnership for implementation with the Jeitosa’s and Towers Watson’s of the world should give them a bit of breathing space should the volume be larger than Workday can staff for internally.

It is a bit surprising to me that core HR seems to be changing at the pace that it is.  Usually when a market reaches a point of maturity, the vendor space settles down.  However, with the increasing viability of SaaS and the changing attitudes towards HR outsourcing, we continue to see an evolution of buying habits.  Here’s to core HR and keeping it fresh.

Note:  Sorry about the badge Bill, I’m just jealous I didn’t get a banner that looked like that.

I usually write about cycling here, but I generally make it no secret that I’m a wannabe foodie. ¹  Great food is sometimes about simplicity, and other times it’s about depth and flavor combinations.  I was recently at Osteria Mozza in Los Angeles² where I had a squid ink pasta with Dungeness crab, sea urchin, jalapenos, all bathed in great olive oil and sea salt.  This is not something I would have put together at home, but it was absolutely splendid.

Sometimes you get something so wholly unexpected that there is really no way it should be good, but it turns out wonderful.  At BI-Rite Creamery in San Francisco, you have Sam’s Sunday, a chocolate ice cream with bergamot olive oil, maldon sea salt and whipped cream.  Not sure who thought of the idea of putting olive oil on chocolate ice cream, but it’s about the best thing I’ve had in San Francisco (the sea salt over chocolate might be obvious though).

Here’s the point.  Sometimes one dimensional, single flavor, simple items are delightful.  But sometimes you just have to put things together that nobody really wants and expects to create delightful experiences.  HR is a silo, and within HR, we have silos.  Payroll hates HR (rightfully so), the comp guys think they are so much more analytical than the rest of us (they are), the talent guys are naturally cross functional but somehow still don’t collaborate well.

At the end of the day, we don’t get good product if we don’t collaborate cross functionally.  We are no longer in a world of functional HR.  We are in a world of end user, employee and manager delivery.  They don’t see us as functional, they see us as HR.  They don’t care if we talk to each other or not, because they don’t even know we have silo’d separations.  All they care about is that things work seamlessly.  Process flows from one to the next.  Portals represent all the information they need to know.  And call centers and HR business partners are a one stop shop.

It does not matter that we have our own little internal conflicts, but that’s not usually the barrier.  The barrier is just that we’re not used to working with each other.  We don’t get in the same room often enough, and when we do it’s the directors, not the practitioners (Directors seem to feel the need to be gatekeepers – this is counter-productive).   Enough with the projects that I can’t reach broadly because of political expectations, or can’t talk to someone because they don’t like someone else.  You’re leading yourselves to failure, even as you tell me you want to be collaborative and cross functional.

(This post was written in 2009 with nobody in particular in mind.)

1. My other blog is a food blog [back]
2. Osteria Mozza is a partnership with celebrity chef Mario Batali [back]

I’m sitting on a plane (delayed of course for 4 hours) thinking about the people around me.  I have the fabulous exit row seat on the A319 where there is no seat in front of me.  The guy in the middle next to me is great.  He’s not a talker, he’s slim, does not intrude on my space at all, and basically minds his own business and his own space.  (My policy on planes is that the guy in the middle seat gets both armrests unless s/he happens to be rude, in which case any “nice” policies go out the window.)  The guy sort of in front of me has decided that since there is no seat in front of me, that he will use my foot space as his trash bin.  He’s basically been dropping his garbage literally on top of my feet for the last couple hours.  I basically kick it back at him at which point he turns around and gives me a nasty glare.  I don’t know why, but I really like order.  Things should go in their appropriate place.  When things go elsewhere where they don’t belong, problems seem to start.

For some reason, this has be thinking about systems of record and why this is such a hard thing to implement well.  There seem to be lots of battles around system of record.  Should your employee address reside in your HR or payroll system?  Assuming they are actually different systems, some people will argue that all core employee indicative data resides in the HR system as the primary and gets interfaced to payroll and everywhere else.  In general however, if the address is not current in the HR system, the ramifications are relatively minor.  In the payroll system, local taxes can go awry, garnishments are not paid or are calculated incorrectly, and year end tax statement go to the wrong place.  Then there is the never ending argument that comes from Payroll departments.  HR just does not care as much about these things.  Let’s say things are still entered manually (god forbid).  HR departments might sit on an address change for a while, but Payroll departments are all over it.

I also think about competencies.  Do competencies belong with job data in core HR? or do they sit better with all the talent stuff in a talent system?  Wait, wait, you have multiple talent systems?  Which talent system?  Are the competencies designated with the job analysis?  And do we care where the competencies are designed if they are only utilized at the talent process level?

It really comes down to data governance (do we hate data governance yet?  We should, but we don’t because not enough of us are doing it well yet).  I was recently speaking to an organization who decided that the global employee addresses were owned by the legal department in the organization.  They decided it was not HR or Payroll simply because there were enough compliance issues from global safe harbors to payroll compliance and data privacy that it could only be owned by legal.  In turn, it would then be legal’s right to decide where the system of record would be.  When it comes down to competencies, who owns this thing?  Is it compensation?  More often than not it’s talent, but this is indeed one of those data elements that get defined in such a cross functional way that it’s hard to navigate the waters.

The hope is that with the continued evolution of real time API’s and middleware, integration of data elements keeps getting easier and the conflicts that arise due to systems of record ease.

We always end up talking about employee adoption whenever we are implementing anything whether it’s technology, process or anything else.  When we talk about adoption, we’re really talking change management, and in that we are talking about changing both behaviors of people as well as attitudes.  We want to convert both their minds as well as their actions on a daily and ongoing basis.

To really create change and adoption, we often talk about certain change paths we need to make inroads with.  First, there has to be leadership support.  Hey, if the leaders are not sure, there is no way we should be rolling anything out.  They need to be on board and vocal about it.  Second, employees need to feel like they have some skin in the game – like they have some form of influence in their own future.  Third, they have to understand what the benefit it.  And this benefit is not the benefit to the organization, it’s the personal benefit they derive that makes them feel like it’s worth the effort.  In some cases, the organizational benefit will be the personal win.  But lets face the facts, it isn’t always.

To really see successful adoption companies need to focus on the benefits of the user first and the benefits of the company second.  You can’t approach a user and ask them to change behaviors because it benefits the company.  Companies need to approach the user and tell them how it will benefit them.  This is a bit of psychological approach but it’s important.  Employees put their needs first and company needs second so if you show them how Enterprise 2.0 can help them make their job easier then they are much more likely to listen. ¹

The concept of the “personal win” has been being used for years by sales people.  They realize that if you want an executive to buy a product, not only does it have to be the right thing for the organization, but the executive has to feel like they also derive some benefit.  The same goes for employees.  The personal win is not the threat of consequences if they don’t adopt the program, and it’s not usually the meager incentive compensation that is tied to performance either.  Rather, it’s how their lives are made easier, or given skills to make them more marketable, or provided with opportunities to interact with peers and supervisors.  The personal win in most cases not only makes the employee more interested in the program, but it will increase their engagement to their job.  Finding the right personal win tells employees that you’re looking out for them as well as making their jobs easier.

Jacob above is right.  We don’t usually tell people how the program benefits them.  We assume people are so engaged that telling them it helps the company is all we need.  I doubt we are really that good.  We need to target our communications better and increase our adoption and success rates of implementations.

1. Morgan, Jacob, December 21, 2009.  “Strategic Principles for Enterprise 2.0 Implementation.  Retrieved from http://www.20adoptioncommunity.com/ on December 22, 2009. [back]

If you ever look at a snowflake dangling from the window at your local Macy’s or Bloomingdales, realize that this snowflake is only a piece of marketing, there to draw your eye, but not an accurate representation of reality.  You see, most marketing snowflakes have either five or eight sides to them.  Nobody seems to know how or why this happened, but I suppose some marketer out there thinks that it is more aesthetically pleasing to have a five or eight sided snowflake.

The reality of the snowflake is that they almost always have six sides.  Sometimes they may have three or twelve, but those are relatively less common to the six sided variety.  The reason for the multiples of three is simple, snow is made up of water, or H2O molecules, and chemically have so many bonds to offer to other H2O molecules.  The end result is that water molecules can create snowflake structures with three, six or twelve sides.

The beauty of the snowflake is a wonderful thing.  Certainly it does draw our eye and our attention.  Certainly the thought of beautiful fresh white snow brings to mind a white Christmas, skiing through fresh power, kids and snow angels, or whatever else you have in mind.  But at the core, it is still just a marketing figment of our imagination, inaccurately portrayed.

Manager and executive dashboards are quite the same.  Often, we have planned and conceived for months or years about how to best capture the attention of our executives and bring them thoughtful HR data.  We’ve given them tools and pretty graphs, and indeed, these dashboards carry the flare and flash that can draw anyone’s attention with a state of coolness and color.  But at the end of the day, the dashboard is just the dashboard.  VP’s of HR and other executives often don’t really look at the dashboards we’ve worked so hard on.  They might glance at a particularly high turnover rate, but rather than digging through the detail themselves, they might instead pick up the phone and call they nearest HR director with an inquiry about what’s going on.  At the end of the day, they still rely on the same old mechanisms for information.  They want us to create reports, and have meetings.

The cause of all of this is particularly simple.  Executives have no use for data.  The best representation of an HR analytic, whether it be a trended graph, or some sort of drill-through crafty piece of eye candy, is still just data.  What executives want is information, and our dashboards still don’t interpret data for them.  That’s why they still need the rest of us, our reports, and the face time in meetings.

I don’t think I’m being critical of dashboards – in fact I rather love them.  But we have to understand the gap if they are to get better.  Dashboards can give execs a glance at the health of their organization, but they don’t provide understanding and diagnosis.  We need to be able to provide information, not data.

I must say that sometimes M&A transitions are a pain in the *** for HR and HRIT practitioners.  It’s quite rare in my experience that a merger will be a pure 50/50%, more often than not one of the merger partners is getting a tiny fraction more than 50% and so can govern the decisions within the deal.  Additionally, mergers often deal with business systems and sales synergies first, financial systems second, and anything else that is not HR.  Pretty much, HR comes last, but while often considered a tactical decision, our stuff is far from tactical.

Especially with domestic M&A, the tactical decision is often about how to merge payrolls in the quickest and most efficient manner.  I’ll hazard a guess that if there are 2 organizations and one is on PeopleSoft and the other on ADP outsourced, the organizations that only focus on the tactical will more often than not put the entire population on ADP.  ADP has a pretty incredible ability to get large organizations onto a single domestic payroll quickly and effectively.  However, mergers often fail to look at the impacts of the HCM and talent systems which are critical.  If you were to combine core HCM and Talent systems, then the combined organization might actually have a different perspective on how to merge payroll data.

I’m totally ok with in-house HCM with outsourced payrolls and benefits by the way, but taking the easy solution often does not account for strategic long term systems design.

When we get to global organizations, it’s often more complex.  Many global organizations will simply take whichever system the acquirer already has.  Once again, this is more of a function that HR is last in line rather than what is best for HR.  Systems integrators in M&A are looking at the core business solutions and really could care less about HR.  A couple of the decision criteria here should be about who is more integrated to start with, and who has the more powerful system.  We should be looking at long term systems planning instead of short term gains for the combined business (but M&A is often about short term shareholder gains unfortunately).  We should also be looking at long term integration possibilities and who has the roadmap that gets the combined organization there sooner.  Integration is not just about systems that contain the whole global population, but also about achieving process standardization across multiple divisional organizations and systems such as talent acquisition, talent management and HCM.

It’s a tough call of who should win the HCM battle in M&A, but all too often it’s not even a valid decision point as M&A system integrators (consultants usually) don’t put enough thoughtful analysis into HR.  At the end of the day it’s about synergies, not easy and tactical wins.

Karen Beaman over at Jeitosa recently wrote about the unbundling of HCM systems that we’ve been seeing for many years now.  She is exactly right, that often times the unbundling of HR applications away from a central ERP system provides for more agile HR service delivery.  Traditional ERP systems have not been growing at the pace they once were, Talent systems are getting implemented left and right with little or no coordination, and we seem to be going into a market where point solutions rule.

This shift is causing the modern organization to un-bundle and then re-bundle their activities and infrastructure into more agile, nimble structures that can change and scale up or down as business needs dictate. So what does all this means for the modern HR organization and for HR technology? HR has long been an organization that has worked across boundaries, and functions such as benefits and payroll have long been outsourced to third-parties. Yet, the un-bundling of HCM will have a much farther reaching impact. Beyond benefits, payroll, and call centers, we are seeing the un-bundling of HR services from RPO (recruitment process outsourcing) to off-boarding and the un-bundling of HR technology from licensed enterprise resource planning (ERP) software to subscription-based software-as-a-service (SaaS). ¹

I have nothing against either the point solution or the ERP system.  Either way there are tradeoffs to be had.  What an organization decides to implement is really quite up to it’s own needs.  However, there are a few problems I constantly see as organizations go towards a path of more point solutions:

• Forgetting that there is a lot more integration in an ERP system than meets the eye.  Simple data interfaces are often not enough, and while every vendor touts tight integration, rarely is it true.  You can get enough integration, but at some point, you just need to realize the tradeoffs.  Let’s take job and competencies for example.  Job definition and benchmarking is a core part of the core HCM system, and it honestly should live in the HCM and not somewhere else.  To do good job design and benchmarking, you should have job attributes associated with it, some of these come in the form of competencies.  However, if you put competency libraries in the core HCM, you now have a (perhaps) very large set of data that needs to get integrated with every talent application that you own.
• Forgetting the foundation is also a very common problem.  Not only do some organizations deal with having talent systems that are independent of their HCM, but some have multiple talent systems.  Trying to cross the lines on those same foundational competency data models across recruiting, performance, development, learning and succession platforms is a major headache if you decided to source each component independently.
• Forgetting the process is my last major headache.  One must really ask the question if you can have a single end to end process that managers will love if you have so many systems.  After all, usability is probably more important than functionality, so forcing managers to have different user experiences for performance, compensation, etc is a major risk from the change and adoption standpoint.

I’m not suggesting that ERP is the way to go.  Indeed there are major benefits to going the point solution road, but we often forget that it’s not as easy as an interface.  There are some pretty serious integration, process, service delivery and change issues to be tackled here.  Forget them, and risk failure.  Even the best laid out plans for system implementations can’t help you if you ignore them.

1. Beaman, Karen.  May 27, 2009.  “Unbundling HCM.”  Retrieved from www.jeitosa.com on September 15, 2009. [back]

Global HR data is tough. Often times when we’re thinking about implementing a global core HR system, or a global data warehouse, we implement these systems according to a U.S. centric view of the world. (I’ll note here that I once worked with a U.K. based company that looked at their core HR system with an EMEA view of the world). This is rather disadvantageous since one of the ore problems with global implementations is that you usually start with skepticism and disengagement. This only increases when you propose your U.S. centric view of the world.

Translating not only data elements but any definition you are going to use is simply a starting point in translating data across global geographies, countries and business units. Before embarking on the implementation of systems, it’s truly useful to get some things straight. To do this, I’ll just give a couple of the more obvious examples.

– EEO (race) Codes: We love to report on EEO codes in the U.S. So much of our reporting is defined by these EEO categorizations, but we also know that EEO is exclusively a U.S. concept. As you travel globally, you quickly realize that race and ethnicity is not at all meaningful. If you go to Japan, they really could care less, since 99% of the population is actually Japanese, but they might care about ethnic variations in Japan. You might go to the Middle East where race and ethnicity does matter, but they also may want to know for discrimination purposes if you are Sunni or Shiite. In the end, most implementations I’ve done decide that trying to define and categorize race across the globe doesn’t actually make sense. Instead, they go after the thinks that they can collect like age and gender.

– Exempt versus non-exempt: Again, this is a U.S. centric concept that is defined by FLSA. If you went around the globe and talked about exempt employees, your audience would be bewildered. While it’s not a direct and perfect translation, most other organizations in the world can indeed relate to overtime eligible or not overtime eligible. Simply changing the data labels allows you to move forward with a global terminology that makes sense to everyone.

One of the key failure points of global implementations (there are many however) is the lack of common definitions across the globe. As soon as your global population feels that this is just another corporate initiative that U.S. stakeholders will benefit from, your international population will disengage. There are all sorts of prepatory activities you need to tackle prior to implementing, and data definitions is probably one of the first you should tackle.

I was recently getting caught up on some blog reading and noticed Josh Bersin’s post on the Talent Management Software Slump.  I’m not sure if I’m just a pessimist, but I thought I’d post a reply.  (granted, Josh wrote his post in early May…

Despite this difficult Q1, we believe the market is going to come roaring back in Q2 or Q3 of 2009.  Most of the private companies we talk with (Plateau, CornerstoneOnDemand, Learn.com, GeoLearning, Halogen, and others) tell us that while they had a weak Q1, they have seen tremendous growth opportunities in Q2.

First, the mid-market and small enterprise segment of talent management is starting to grow rapidly.

Fourth, there is still tremendous demand for talent management software.  In today’s rapidly changing workforce (from layoffs to restructuring to rapid growth), the value of this set of software is greater than ever.  While Q1 was tough for vendors, most buyers only postponed their purchases – giving themselves more time to evaluate options and improve their own businesses.  In Q2, Q3, and Q4 these companies will buy these systems.

So my thinking on the slump basically reflects back to 2001 when the dot-com bubble “burst.”  When that happened, basically, HR technology spending totally dried up.  It actually took about 3 years for HR technology spending to come back, and when it did, spending came back with a vengeance.  My theory on this was that when spending cuts happened in 2001, HR technology was among the first to be cut.  Then as the recession ended and things got better, neglected business critical technologies were upgraded, implemented, and restored.  Things like CRM or supply chain that didn’t get needed upgrades for months or years got the first funding dollars.

As we all know (or think), in most companies HR funding is a lower priority than other business functions.  I don’t see any reason to see this to be any different as the economy recovers this time.  As organizational revenues recover, employees will be rehired or returned from furloughs, business critical applications will be maintained first, and budget cycles will still lag a year behind needs.  Before an organization goes out and spends $100K or even $1M on any HR application including talent management, there are a whole lot of other unspent business critical dollars that will probably come first.  HR budgets that got slashed in 2009 will still remain slashed in organizations with any governance at all.  Perhaps some organizations will get dollars in their budgeting cycles at the end of this year, making dollars available in 2010, but I’m guessing that 2010 budgets will focus in other areas than HR.

Perhaps Josh is a better judge than I am though.  It may indeed be possible that certain talent applications will actually fare better than most other HR technologies.  Performance and Succession ran such high profiles in the last few years that we can only hope executives remain enamored with those technologies.  I’m not a big fan of looking at vendor pipelines for guidance on future sales.  Every vendor (application, outsourcing, or consultancy) has great looking pipelines right now.  Salespeople seem to be sandbagging as much questionable prospecting into their pipeline portfolios as they can right now, as much to remain optimistic as to try and keep their jobs.  Pipelines are also more robust in number of prospects, but smaller in terms of deal size.  The mega deals that have kept vendors going for years will be slower to rebound.  I think that most organization will have to deal with the technologies they were able to install in the last couple of years and hope they continue to work for a couple more years.

Perhaps the statement that we now live in a “point solution world” for HR is a bit bold.  Certainly in large and medium sized organizations, ERP deployments are still strong.  However, we do know that these same organizations are increasingly looking at point solutions even if they have had long term ERP strategies.  Current day economies combined with lower short term costs for SaaS provide good business cases for deployments that have to happen in the next couple of years, or as bridges of functionality until a long term solution has been developed.  The question in the marketplace is now “what is happening in core HR?”

Core HR is more of a commodity than ever.  Truly it has simply turned into a specific set of functionality, and that which made it strategic before has been ripped out of core and placed into other applications or engines.  First, let’s look at commoditization.  At one time, the ability to provide table driven data validation, full effective dating, and robust compliance was the domain of a few major players.  Now, these functions are a part of almost all major HRMS solutions offered at any price.

Second, we look at functionality that used to make core HR solutions strategic.  I’ll call these workflow and analytics.  From the process standpoint, end to end solutions no longer exist in the HRMS application.  Indeed, end to end workflow barely exists at all.  Point solutions have virtually disabled the ability to flow work and approvals through multiple products with different approvals in each.  While it is possible to utilize a workflow engine to accomplish this, the cost is prohibitive to all but a few very large organizations, and I have not seen HR a high enough priority anywhere to deploy it.  Analytics on the other hand have almost been fully removed from the HRMS application.  Value can’t be provided by core HR if none of the talent, payroll and benefits data sits in other applications or outsourcers.  Indeed, as the value of analytics comes from cross functional data analysis, business intelligence is really the domain of massive data warehouse applications.

Third, the old employee and manager self service systems are mature and ubiquitous.  Having employees enter in their new phone number is not very exciting anymore, and the real self service functions of performance reviews or compensation processes are generally removed to the talent systems.  Instead, we move to massive portal environments that remove the existing self service functions from each individual application and centralize the user interface.

If indeed the HRMS application has been commoditized in terms of functionality, then the lowest price point that offers scalability and good data architecture (not all applications out there are very pretty from the backside) would seem to suffice.   Scalability obviously so that your organization can not only grow, but store greater amounts of employee effective dated rows over time.  Good data architecture because the ability to port data into data warehousing applications as well as integrating to other point solutions will be made much simpler.