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.