HR Technology Conference 2014: HCM Roundtable

Every year we’re trying to figure out what’s next.  7 years ago, I started hearing about social HR everywhere, but the market really wasn’t ready.  Every HR organization thought that social was a bad idea, with personal privacy challenges looming to kill any social enterprise initiatives.  2 years ago, we all took for granted that social was going to be a part of our businesses, and this year it really seemed like social finally became its own and is permeating many of our HR processes and technologies.  It lonely took 7 years after the vendors and advisor market predicted it for it to become reality.  (LOL)

During this year’s HR Technology  Conference HCM roundtable, it was fascinating to hear what everyone was working on (it was the first question posed to the group, and I’m not trying to bash any vendor, but I am representing my opinion of the answers).

  • What was fascinating was that 2 of the vendors were talking about a great user experience (Oracle Fusion and Ultimate).  Wait a second.  We’re still talking about UX?  How did these 2 vendors get a seat at this panel and only have UX to offer up for what’s new in the product.  It’s unfortunate.  Y’all gotta do better than that.
  • 2 of the vendors talked about machine learning.  (ADP and Workday).  Machine learning was part of an overall theme of the conference, and there was a follow-up conversation in this panel about it, but these 2 vendors were the ones who brought it up as a focus area in their opening comments.  When I think about social HR 7 years ago, I think that machine learning is what the next few years might be about and it seems like 2 vendors want us to know that they’re on top of it.  What is surprising here is who the vendors were – and it shows us that there can be surprises.  It wasn’t Oracle and SAP with their deep (and legacy) analytics engines and mountains of programmers.  It was ADP (wh-wh-wh-what?!?!  I LOVE that ADP is thinking about this as they have the largest client/employee base to run analytics off of.  Maybe I don’t give them enough credit.) and Workday (ok, maybe predictable since they seem to be thinking/innovating faster than the others).
  • Last up was SAP.  Can anyone say “extensibility?”  Actually, SAP was gearing up to talk about some really cool metadata and object architecture that will create extensibility, but they got cut off from a time perspective.  Leave it to SAP to make things more complex, but if we can get to configurable extensibility, that’s pretty cool.  Honestly, I would have expected Oracle to be on the extensibility bandwagon based on their application architecture.

I’m hard pressed to say whether machine learning or extensibility is what’s next, but I’d think that all the vendors should be working on both of them.  UX is table stakes, and you should not be allowed to talk at the table (or panel as it was) if that’s what you’re working on.  My guess is that SAP will have some chops in the machine learning space, but it just was not what they wanted to focus on.  It’s also interesting that ADP and Workday were not on the extensibility front as it’s clearly a focus area for the very large customers that SAP has as its client base (but maybe that’s why SAP is so focused).

In a few vendor comments unrelated to the HCM roundtable, the HCM vendor space is going to start reaching parity in the next year.  Oracle and SAP are picking up steam and finally starting to look competitive.  First of all, lets agree that I HCM software in vendor demo booths while I was at the conference.  The following is an aggregation of vendor demos and conversations I had with conference participants.  Here are a couple of comments around gaps or deficiencies that I’m still watching out for based on those conversations:  (alpha order)

  • ADP:  I was really quite pleased to see their new UX.  I can’t remember what it’s called, but they’ll be rolling it out to all of their products so that no matter what you’re on, you’ll have a similar experience.  My concern is really still around the back end.  ADP’s ability to stitch together a common front end on top of multiple back end (and still mainframe?) systems is pretty good, and perhaps when you’re outsourcing everything but the core HCM to a best in class payroll and benefits vendor, it might not matter what the back end looks like.  Maybe.
  • Oracle:  The main question is in the UX.  It’s simply not seamless, and it goes to the point of why they were focused on UX in the panel. It’s way better than the last couple of years, but one goes from the cool “mobile apply” look and feel into a slightly different transaction screen, into a completely non-appy environment in just a few clicks.  The first couple pages are well executed, but it just feels like they didn’t finish the job as you continue through a manager transaction.  The second question is in their customer base for sold Fusion Core HCM.  As I talked to conference participants, they were getting numbers from the Oracle booth anywhere between 400 to 600 (note to Oracle, please get your story straight).  There are still a lot of conference participants wondering why Oracle is giving Fusion HCM licenses away for free if they have market demand in the 100’s of customers.  It’s just not adding up, and nobody I talked to could figure out the story.
  • SAP:  I’m pretty sure that SAP is on its way to filling a few gaps.  Certainly per the above comments, if they are working to fill extensibility gaps that its large enterprise clients will need, they are also going to figure out benefits administration, timekeeping and payroll.  I talked to one conference participant who was told that benefits administration will be available to demo this quarter, and another who said they were told it would be in Q4 of 2015.  Either way it’s coming and that’s good news.  I think SAP’s original philosophy that payroll, time and benefits get outsourced, but for the top 250 clients in size, that’s a hard position to maintain.  (I don’t consider SAP cloud payroll to be comparable to Employee Central in architecture, agile configurability, or usability, so that’s why I harp on it.  I know that SAP would disagree).
  • Workday:  Everyone has been uber positive about Workday for years.  The questions among conference participants seemed to be around the viability of their recruiting module.  Granted this is their newest module, and the top vendors seem to have the capability to innovate rapidly over a couple release cycles.  Just as I’m confident SAP is going to figure out benefits quickly, same goes for Workday recruiting.

Having said all of this, I’m actually quite pleased with the vendor space.  The last couple of years (no matter what Oracle and SAP say) have been relatively uncompetitive.  There has been one clear winner in the market, and the fact that I don’t have to say who it was is a good indicator that it’s true. I think 2015 will get a bit more competitive, but 2016 will become an all out war.  This post is definitely “negative” about what my concerns might be, but what I don’t mention is the huge progress that all of the vendors have made and the very long lists of things they have done well and right.  I’m going to get in trouble from the vendors over this post anyway, but either way, I think 2015 is going to be interesting.  More viable vendors is always a good thing.

(Last comment.  I thought long and hard whether to post this.  Some vendor somewhere is going to be pissed at me, but at the end of the day, there were only 5 HCM vendors on stage, so any exclusion is not mine.  Also, each vendor chose to talk about what they talked about.  Perhaps they didn’t have enough time, but again, if Oracle really wanted to talk analytics but didn’t get to it, that’s not my fault.  Each vendor decided what they wanted to focus on by themselves.  The opinions in the latter half of this post are based on talking to other conference participants and seeing each of the vendors demo at their booth.  Posting this also saves me the effort of writing a year end post.)

Is Cloud The Way To Go?

So I had to upgrade my cell phone contract.  I used to be on this thing where I had a bucket of minutes and text messages to use, and now I’m on exactly the opposite.  I have unlimited phone and text and about 10 GB of data I can use every month.  It really points to a shift in how we as users of wireless devices are working.  Less and less of our days are spent actually talking to each other, and more of our days are spent collaborating through various mechanisms that involve data.  I will admit to spending an exceptional amount of time browsing news on my phone, looking through facebook updates to keep tabs on people, and using my phone for work emails.  Nobody calls me anymore, and if they do, I get my voicemails through data (I read my VM, have not listened to one in years).

One of the big questions these days is about SaaS and Cloud.  Should we do it?  Should we stay on PeopleSoft or SAP HCM?

The answer for SaaS is a definitive Yes.

At some point, be it this year, next or in 5 years, you are going to move to the cloud.  I’m not an opinion about your current on-premise strategy, and I’m not making a judgment of you if you disagree.  I’m simply stating a fact.  Let’s tale a look at the facts:

  • ADP: The actual development of the Enterprise HRMS client server product is probably severely limited.  I don’t even know if they sell it anymore.  We do know that ADP Vantage is what they are selling and developing.
  • Oracle / PeopleSoft:  We’ve all heard about applications unlimited, but for those who thing that in 2020 we’ll still be going to a PeopleSoft Track at OpenWorld, I think you really have to evaluate your reality.  The developers are all on Fusion.  Let’s say you are right and there is still a PeopleSoft product in 2020.  How long do you think it will have been since your last major product enhancement?
  • SAP: Well, there’s HAHA, and there’s SuccessFactors.  Either way, SAP kind of knows that they are pouring development resources into the cloud.  Same conclusion as with PeopleSoft – it will be around for a while, but that’s not the whole reality.
  • Workday:  It’s already in the cloud from the start – no discussion here.
  • Talent Management: It does not really matter if you bought Taleo, SuccessFactors, Cornerstone, PeopleFluent, (I’m going to get in trouble for leaving out 50 companies), you bought into the cloud long ago for TM.

I’m not really trying to change your mind on the cloud here.  It really does not matter.  If you are an HR technology buyer, you simply don’t have a choice.  The vendors and the industry are in the midst of choosing for you.  In just a few short years, all of your premise based HR technologies are going to cease or significantly slow their development efforts and fully shift to the cloud.  If you want to be on a product that will be continuously developed, that is where it will be.

Just in the same way I really don’t have a choice to stay on my old cell phone plan, the world is moving on when it comes to HR applications.  It’s time to move with it.

Fusion HCM Website is Up

Just an FYI since this appears to be about the softest launch we’ve seen in ages.  Considering we’ve been waiting for Fusion for a while.  Here’s an FYI that the website is up and perhaps the software is in GA (but you’ll have to ask Oracle to confirm that)

http://www.oracle.com/us/products/applications/fusion/hcm/index.html

Bill Kutik and the Direction of HR Technology

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.